Charity begins at home. And sometimes ends in jail.

June 4, 2008 9:02 AM

The Banyan Tree Foundation promised to take donations from contributors to be redistributed to worthy Canadian recipients. The foundation also gave donors inflated charity receipts for tax declarations, and donors were encouraged to borrow money to contribute even more, and did... from a company now owned by Banyan Tree president Robert Thiessen. Now, the money has stopped flowing, and the Canada Revenue Agency (CRA) has called the organization a "sham" and is going after Banyan donors for past charity receipts totalling more than CAD$100 million.

The charity is still listed as a charity, which is provoking anger in the House of Commons. Many donors are participating in a class-action lawsuit against the Foundation.

This type of donating, known as tax shelter donations, has been the subject of previous precautions by tax authorities and charity law specialists, and has caused problems for donors in the past as well.

posted by Shepherd (12 comments total)

If only there was a website that rated charities like these, so donors could be assured their money was being well managed.
posted by Baby_Balrog at 9:26 AM on June 4, 2008 [7 favorites]

Ha! I thought about putting a link to that in here (I'm relatively new to MeFi, but I've caught up on Major MeFi Drama Of The Past) but it seemed tangential and a bit mean, seeing as those guys were Pepsi Blue but not overtly scammers, IIRC.

But yes, it crossed my mind.

In the end, as much as I hate to agree with our current Conservative overlords, if you donate $2K to charity and they give you a $10K tax receipt and you just play along for the tax refund, you deserve to get dinged for it down the line. I was amazed to discover that this thing is not new, and that nobody's shut these schemes down conclusively yet.
posted by Shepherd at 9:40 AM on June 4, 2008

Oh well done 'rog, well done.

You can, however, check out returns for Canadian charities
posted by mce at 9:41 AM on June 4, 2008 [1 favorite]

I've watched this story with some interest. On the face of it, it looks like stupid people getting hooked by the old "too good to be true" offer. But a complicating factor is that Canada's official tax collectors, the Canada Revenue Agency, started the investigation some three years ago and only just this year got around to issuing refund demands to everyone who received the tax credits. Which means that, by implication, they allowed the scheme to go on for two full income tax cycles even after their own internal yellow flags were up. And as the original poster noted, even after the story broke, the "Registered Charity" status for Banyan was still in place on CRA's own website as recently as a couple days ago. (I haven't checked in the last 48 hours.)

So some consumer stupidity, yes, but apparently with the implicit sanction of the Canadian federal government's own oversight agency.

For me, any belief in the veracity of Banyan's "good work" vanished when I saw their founding weasel interviewed on the national news -- he's awash in the trappings of an obscenely wealthy lifestyle and has put lots of little ownership smokescreens in place to make it look like much of it, including a Ferrari (no doubt required to speed his visits to the beneficiary food banks), belongs to someone else.

Coupling CRA's almost criminal inaction with the fact that it took a forensic accountant to discover that huge amounts of monies raised are actually rolled back into Banyan fundraising and self-promotion rather than for the benefit of the charities that people thought they were supporting, and I can still manage some sympathy for the little people who got fried in this one.

But only a little.
posted by Mike D at 9:55 AM on June 4, 2008

Aren't banyan trees parasites? (also known as strangler figs for their propensity to "strangle" their hosts)
posted by Auden at 10:57 AM on June 4, 2008 [1 favorite]

There is Banyan Tree Foundation in the US, but it is completely unrelated to the Canadian one.
posted by kimdog at 11:44 AM on June 4, 2008

In the end, as much as I hate to agree with our current Conservative overlords, if you donate $2K to charity and they give you a $10K tax receipt and you just play along for the tax refund, you deserve to get dinged for it down the line.

Absofuckinglutely. The idea of tax credits for charitable donations is probably a good thing--nothing like a dose of self-interest to get people to give.

But people complaining about getting caught? Fuck off.
posted by dirtynumbangelboy at 11:45 AM on June 4, 2008 [1 favorite]

There is Banyan Tree Foundation in the US, but it is completely unrelated to the Canadian one.

Yikes, I bet they're pissed right now. And busy. Poor folks.
posted by aramaic at 12:02 PM on June 4, 2008

I worry more about people that are already cynical about charities just getting pushed right over the goddamn edge with this one. If you just catch it on the news it blurs past as "BIG CHARITY IS SUPER-CORRUPT" and reinforces all the bad charity memes already in play.
posted by Shepherd at 12:36 PM on June 4, 2008

But in-fact corruption among big charities has been a major problem. Universities are much usually better charitable destinations. They also have obnoxiously large overhead but they do more too.
posted by jeffburdges at 10:20 PM on June 4, 2008

Update: It's not online yet, but I'm listening to the CBC's international news at 6:20 on June 26 right now, and the claim that Banyan Tree is using a Bahamas company, Hampton Insurance, to issue payments to Canadian charities seems to have been an utter sham. Click here for a podcast of The World At Six; relevant material begins at around 18:00.
posted by Shepherd at 3:24 PM on June 26, 2008

Shouldn't 'using a Bahamas company' have been the 'hey this may be a scam' clue?
posted by dirtynumbangelboy at 12:02 PM on June 27, 2008