Wyclef Jean has become the face of the Haitian disaster. He's there now pulling bodies out of rubble. But more indications are emerging that his charity, Yele Haiti, is not the best place for your money to go right now.
After we picked up on the Smoking Gun's item today on Yele Haiti's atrocious financial management in the past—including failing for years to file tax returns, paying more than $400,000 to commercial entities owned by Jean, and being repeatedly dissolved as a corporation in the state of Florida —a source familiar with the foundation's operations contacted us to express concern that the tiny operation is at risk of being overwhelmed with donations that have no hope of reaching the ground in Haiti any time soon.
In a nutshell, the source says, "Yele Haiti is not a disaster relief organization." According to MTV, Jean's pleas for money via Twitter and television appearances asking people to text "yele" 501501 for a $5 contribution had brought in more than $1 million to the organization as of yesterday. But large first-responders usually have the resources to move money quickly to where it's needed, either by virtue of prepositioned disaster fund, large pools of money that they can shift among accounts as circumstances warrant, or access to a bridge loan to get money flowing. Yele Haiti, which as of 2007 had no paid staffers and currently, according to the source, has one employee who works out of the kitchen in Jean's Manhattan recording studio, has no such capacity. So it can spend whatever money it has on hand—at the end of 2007, it had roughly $500,000 in cash and liabilities of more than $900,000—but after that it has to wait for any donations made over the last three days to actually clear and show up in its bank account. And again, because it is a small player and uses a small firm to process its online donations, the source says, that process can take "two weeks to a month."
"There are groups you can give to right now that have already spent the money before they received it," the source says. "Yele Haiti is just not set up for a huge campaign like this. It's great that Wyclef is there—he should be there. But there's no need to position his charity the way they're doing right now. It's not right." Yele Haiti is will be one of the beneficiaries of George Clooney's "Hope for Haiti" telethon to be broadcast next week, and "there's no reason for that," the source says.
Jean has repeatedly demonstrated a long-standing commitment to help the people of Haiti, and has worked earnestly toward that goal over the years. His presence there right now and urgent appeals for help are evidence of that. But even if he can overcome the penchant for "financial shenanigans" that the source says he is "notorious for" among people familiar with Yele Haiti's operations, Yele Haiti is better situated to deliver second-order aide and help begin the rebuilding process once all the donations come through. "Yele Haiti will be doing great work in Porte-au-Prince two months from now, after all the disease vectors are taken care of and reconstruction starts. But in these crucial days and weeks, people with specialized skills and scale are needed. Why not give your money to one of the larger NGOs?"
Hugh Locke, Yele Haiti's president, says donors can be assured that their money will be well-spent. "I'm confident that anybody who gives money to Yele Haiti for emergency relief can be sure it will be used effectively. We may be a small organization, and there are handicaps. But there are also efficiencies." Locke says the foundation has already allocated $1.5 million for an airlift due to leave Miami early next week, and is in the process of seeking bridge financing to raise more money as it waits for donations to hit its account. He dismisses the delay in online donations as a matter of days, and says he's already taken steps to speed them up. As for text-message donations—that money never hits the account until the person who sent them pays their cell phone bill weeks later, a circumstance that affects charities large and small alike.
"We've got a team of 15 people on the ground in Haiti, and a warehouse, and contacts with people in the neighborhood," Locke says, repeating Yele Haiti's extensive experience getting food out into dangerous neighborhoods for the UN's World Food Program after Tropical Storm Jeanne in 2004 and the 2008 world food crisis. He says the organization's relationships and knowledge of Porte-au-Prince make it better suited, in some cases, to get relief into the neighborhoods than larger organizations. And he says that the established charities that have sought out Yele Haiti for collaboration—including the World Food Program and Americares—wouldn't have done so if it couldn't actually get the job done. "They came to us," he says, "and not the other way around."
Still, there are those "shenanigans": The $31,000 in annual rent, for instance, that Yele Haiti pays to Jean's production company Platinum Sound to rent what the source describes as a spot in the kitchen in Jean's studio for one staffer. Locke acknowledges that part of the studio's kitchen area is reserved for Yele Haiti, but says other desk space, the shared reception area, and shared conference rooms are included in the below-market rent of $2,600. As for why Jean is charging anything in rent, Locke says, "The business that he co-owns wasn't able to make that offer."
Another strange Yele Haiti expense—$100,000 to Platinum Sound in 2006 as a performance fee for Jean playing a fundraiser in Monte Carlo—included payments for musicians and production costs, Locke says. Only $25,000 or so, he says, accounted for Jean's fee.
The source familiar with Yele Haiti's operations says the most outrageous expenditure—$250,000 in 2006 to purchase airtime on the Haitian television network Telemax, which Jean and his business partner own a controlling interest in—is even more troubling than it seems. Jean actually used Yele Haiti's money to initially purchase Telemax, and came up with the idea of the donated airtime after the fact to explain the expense. "That money was taken out of Yele," the source says, "and the story was concocted afterward. Hugh Locke looked at the balance sheet and saw $250,000 missing. Wyclef said he'd already spent it on Telemax. Locke said, 'We can't do that. This can't be fraud—we have to get something in return.' The only thing they could get back from Telemax was the airtime, which they did."
Locke flatly denies that account, saying Jean had already made the Telemax purchase before Yele Haiti bought the airtime. "We wanted to establish a mechanism for getting information out in Haiti," Locke says, "and it made sense for us to purchase airtime in bulk in advance to get a better rate." So why didn't Jean just donate the airtime then, since he owns the company? "We wanted to make sure we could control the spots and not get pushed around, so we bought them outright."
It's clear that both Jean and Locke want to help, and are helping. And Yele Haiti's questionable past expenditures aside, the foundation's work is real and has an impact. It's just a question of whether Yele Haiti's skills are the ones that are most immediately needed right now.