'Three Cups Of Tea' Author Fights Accusations

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Best-selling author Greg Mortenson has been defending himself against accusations that his homegrown charity may have misspent public donations. A recent article and 60 Minutes story allege the author of Three Cups of Tea used those donations to help hawk his books. While the accusations have not been proven, the shock waves are already hitting his charity, and the non-profit world in general.

SCOTT SIMON, host:

Greg Mortenson has been defending himself this week against charges that he fabricated stories in his best-selling books, and that that his homegrown charity may have misspent public donations. News reports this week alleged that the author of "Three Cups of Tea" used those donations to help sell his books. Now, Greg Mortenson denies the charges, but as NPR's Larry Abramson reports the shock waves are already hitting his charity and the non-profit world in general.

LARRY ABRAMSON: Greg Mortenson's charity, the Central Asia Institute, is a non-profit rock star, a homemade success story built on the fame of its founder. The organization raised over $13 million in 2008, and again in 2009, to build schools in Pakistan and Afghanistan. Now, questions are being raised about whether much of that money was used to sell Mortenson's books.

Mr. TREVOR NEILSON (Co-Founder, Global Philanthropy Group): And I fear that it's going to have a chilling effect on international philanthropy.

ABRAMSON: Trevor Neilson is co-founder of the Global Philanthropy Group, a consulting firm that helps non-profits find a good management plan. Neilson says whether or not of the charges against Mortenson are true, the episode underscores how little government oversight non-profits face.

Mr. NEILSON: There is absolutely no way that any local, state or federal government agency can do a meaningful job of policing the activities of non-profits around the world.

ABRAMSON: Neilson and others say, the IRS does not have the resources to go to Afghanistan to see whether those schools really exist. As the IRS requires, the Central Asia Institute posted copious records documenting all the schools Mortenson claims to have built.

But investigations by journalist Jon Krakauer and TV's "60 Minutes" allege some of those schools are empty and others have no money for daily operations. CAI also boasts it spends 85 percent of donated money on programs. But Greg Mortenson has acknowledged that sum includes education of potential donors and book buyers in the United States.

Since these charges came out, Greg Mortenson has said some of the money may have disappeared in the pockets of a dishonest local in the region. That may be, says attorney Doug Charnas of the firm McGuire Woods. But tax regulations say it's the job of the non-profit to make sure the money is spent properly.

Mr. DOUG CHARNAS (Attorney, McGuire Woods): You will see that there's an obligation to make sure that you have sufficient oversight of the funds that are being spent overseas.

ABRAMSON: Tax records show CAI spent over a million dollars on travel in 2009 alone. That's probably not what donors to Pennies for Peace had in mind. This CAI program encourages U.S. schoolchildren to collect pennies to fund schools in central Asia.

Andrea Schwalm is a parent and member of a church in Patchogue, New York. After helping to raise $300 in pennies last year, her church is already thinking about ending its participation. She says people have doubts.

Ms. ANDREA SCHWALM: We should not affiliate ourselves, our church and our youth with an organization that seems tainted.

ABRAMSON: Regardless of the real story, many donors may shy away for the time being. Reputation is everything, especially for an organization that is grounded in Mortenson's tales of promoting peace through books, not bombs.

This episode also shows just how tough it is for average donors to understand how non-profits really work. Donors who go to websites like CharityNavigator.com can see that CAI had high ratings right up until this week. Now, that site has posted a donor advisory about Mortenson's group.

Greg Mortenson would not speak to NPR. He's defended himself in print articles, saying he's a lousy manager with a great cause. And even some of his critics, including writer Jon Krakauer, say Mortenson has done a lot of good. Greg Mortenson promises more answers after he has surgery next week.

Larry Abramson, NPR News.

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