Charity shock: Where auction cash really goes
Australians are buying auction items at charity dinners without being told that large chunks of money are actually going to profit a private company.
Sydney-based Helping Hand Group offers free auctions help to charities without revealing to bidders that only a tiny fraction of the money they raise actually ends up in the charities' bank accounts.
And it does not reveal that co-founders Richard Ernster and Oliver Slobodetsky also own the company that provides the overpriced holidays they auction - or that there have been 12 complaints about them to the NSW Department of Fair Trading.
Australians donate more than $10 billion a year to charity and watchdogs have called for greater transparency from businesses involved in the sector.
NSW Better Regulation minister Kevin Anderson said on Sunday: "Anyone who seeks to undermine the charitable fundraising process could face penalties under the government's strict charitable fundraising laws.
"We want to ensure that when people give money to charity they can have confidence that their money is going where they think it is."
The Daily Telegraph is not suggesting Helping Hand Group should be penalised.
The company has offices in Australia, New Zealand, Singapore and Hong Kong and boasts it has raised more than $110 million for charities in its 21-year existence.
Mr Ernster lives in a lavish $10 million, five-bedroom, multi-level, clifftop home overlooking Gordons Bay at Coogee, which he shared with wife Liz until their recent separation.
Two weeks ago Helping Hand Group ran an auction for the Commando Welfare Trust at Doltone House in the city and auctioned off several holidays including in Tuscany, New Zealand and the Hunter Valley.
Commando Welfare Trust executive officer Steve Pilmore said just $500 of the $7000 Tuscan holiday donation went to the charity.
"We went into it with our eyes open," he said. "Helping Hand gave us a holiday in the Hunter Valley which went for $5000 so that's why we were happy with them."
Despite that, the charity made just $45,000 on the night, which Mr Pilmore said was about "$1 an hour for the effort that went into organising it''.
The holidays offered at the auction were provided by a company called Goodwill Getaways, which a company registration search reveals is also owned by Mr Ernster and Mr Slobodetsky. The properties can be booked on websites such as Stayz for at least a third cheaper.
Complaints about them on TripAdvisor include one for the Rendezvous Reef Resort in Port Douglas, Queensland which listed a litany of complaints about the "low budget, bare bones" accommodation.
The manager of the resort wrote back: "Goodwill Getaways owns four villas in the Rendezvous complex which are booked and managed separately from the resort."
Mr Ernster said: "Some of the Goodwill Getaways properties are owned and some are leased.
"Supplying Goodwill Getaways packages is a service we provide to event organisers to assist them, when they are unable to source their own donated packages for their auctions.
"From our consignment items, every cent above the consignment cost, goes to the event organiser. We do not take any commissions on any items sold at fundraising events," he said.
On the same day Helping Hand were auctioning its sister company's holidays at the Commando dinner they were also going under the hammer at a Caritas Women for the World lunch at The Ivy.
A Caritas Australia spokeswoman said using the firm meant the charity did not have to put resources into "picking up the phones and asking people to donate prizes which can be quite difficult".
"We don't pay any fees to use Helping Hand, we don't have any cash outlay, which is why a lot of charities use them. We don't have to pay them to be there and provide a service. We just make money."
Bigger charities such as The McGrath Foundation source their own auction items. They then pay for-profit companies like Galabid around $4000 to provide mobile phone technology for auctions and ensure charities get 100 per cent of donations.
Jessica Bowman, founder of The Good Cause Company website which provides advice on giving to charity, said: "When you see people capitalising off peoples' goodwill like this it is quite sickening."
But she said people were reluctant to make a fuss.
"It is one of those things where people do not feel they can question or complain because if you say anything bad about charities you are a bad person.
"I saw a brochure from an auction run by Helping Hand, there was nothing to show that they were not a charity or the amount of money that was being donated.
"It is not that they are misleading, they are just not specific and when you do find out the truth it is very disappointing," she said.
Mr Ernster said his companies "receive positive feedback on a weekly basis from guests at events who have purchased our consignment items".
"There are also literally hundreds of guests who continue to purchase items, have great experiences and seek out fundraising events that we are involved with to purchase more items and contribute to good causes at the same time.
"On the rare occasion during the last 21 years that we have received a complaint, we take then matter seriously and attempt to resolve.
"We are aware of one matter that dispute has reached arbitration stage, and always work towards a mutually positive resolution," he said.
CHARITY BIDDERS NEED CLARITY
The Commando Welfare Trust is a fantastic charity and its efforts to help pay off paraplegic commando Tim Pereira's $300,000 mortgage reduced me to tears.
Fuelled by the need to help and, I confess, a reasonable quantity of red wine, I waved my hand during the charity auction and bought a $7000 holiday for 10 in Tuscany.
"You idiot!" Mrs Benns said when she discovered what I had done. "How are we going to get 10 people to come to Tuscany?"
After an uncomfortable night on the sofa with the dog I resolved to call Goodwill Getaways and offer to pay the charity donation and the auctioneer's slice of the pie but cancel the holiday in a bid to get the remainder of the money back.
"Absolutely no refunds," came the reply. Entirely correctly, it turns out, because auctions do not have a cooling-off period.
But then Steve Pilmore, executive officer of the Commando Welfare Trust, told me that the charity received just $500 of my $7000.
That's less than 10 per cent.
No-one would be stupid enough to buy a holiday unseen at a no-refunds auction … unless it came with the clear implication that it would be benefiting a really good cause. And this was not.
Further investigation revealed that holiday company Goodwill Getaways is actually owned by the same men who own auctioneers the Helping Hand Group. Two private, for profit companies, that sound like charities, are using sympathy at a charity auction to flog holidays in properties they either own or lease.
None of that was made clear in any of the documentation at the charity dinner. Helping Hand Group co-founder Richard Ernster ducked responsibility for that saying: "Auction materials are produced by the event organiser."
And what about these holidays? The properties Goodwill Getaways own or lease seem to be booked out in the peak times - such as July in Italy - leaving you paying top dollar for a chilly week out of season. That same villa I paid top price for can be booked on a booking website for just over $4000. Paying extra wouldn't be a problem if all the money went to charity but it doesn't.
Mr Ernster said his company had a strict no refunds policy to protect charities from a change of mind.
But if an event organiser ever requests a refund "we always have provided such a refund without question".
I agree, the charity component needs to be protected but why should a commercial transaction with a holiday company be protected? I will certainly be testing that.
But that's not the real point. If I am going to spend money I cannot afford at least I want to be reassured that money is going to a good cause.
I want to know that my money is going to help commando Tim Pereira pay off his mortgage and not into the coffers of a private company.
To donate to the Commando Welfare Trust go to: https://www.commandotrust.com/donate