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Jul 082010
 

by Kayla Fioravanti, reprinted with permission.

With every stand that you take there are those that will stand with you, those that will digest the information and think about it and others who will take a stand against you.  I know that is a risk that I took when I chose to publicly stand against the Environmental Working Group (EWG) and their Skin Deep Database.

Cash

I debated posting what I found after I followed the money trail, since just my mention on social media that I was doing the research lost me a customer.  I’d prefer to remain neutral, but I fear that neutrality would result in continued damage to small businesses around the country by an organization that sadly lacks the science to back up their claims.  Being outspoken against the EWG may continue to cost me some customers, but I believe education is the key to fact based decisions and safe cosmetics.

In the past few months I have been terribly disturbed to see the Environmental Working Group send repeated emails requesting just another $10 donation.  Each letter sounds more dire than the next as if the world would literally end if the EWG didn’t meet their budget. 

This inspired me to do a little digging to see just what Mr. Cook himself makes annually since he was making the earth shattering pleas for donations.  The only 990 I could get a hold of for the EWG was 2008

According to BA Carrington with Empowerment Enterprises, LTD, "They (EWG) have not filed a tax return on the 501 c 3 since 2008, according to the 990 database Exempt World, which is a subscription service to track 990’s.  Even though EWG is categorized as a charitable organization, it is still required to file a return under IRS codes and submit their “list of activities” to the IRS on an annual basis, even if they file an extension."  It could be that they have filed an extension and the deadline for the information has not yet passed based on their calendar fiscal year.  For more details on this possibility click here

The EWG has stepped up it’s fundraising to now include promoting the purchase of the very same sunscreens that they claim are bad for you through Amazon to raise money for the EWG.  Read more about that topic click here.

According to 2008 IRS Tax Filings

In 2008 Ken Cook was paid $219.401.00 plus another $21,295.00 estimated amount of other compensation from organization and related organizations. 

Richard Wiles $179,218.00 plus $20,998.00 estimated amount of other compensation from the organization and related organizations. 

Jane Houlihan $150,226.00 plus $19,448.00 estimated amount of other compensation from the organization and related organizations. 

William Walker made $136,448.00 plus 19,743.00 estimated amount of other compensation from the organization and related organizations.

Susan Comfort $115,752.00 plus $7932.00 estimated amount of other compensation from the organization and related organizations.

Sandra Schubert $127,229.00 plus $4884.00 estimated amount of other compensation from the organization and related organizations.

Alexander Formuzis $120.592.00 plus $10,920.00.  Christopher Campbell $136,909.00 plus $11,988.00 estimated amount of other compensation from the organization and related organizations.

Breaking it all Down

In case you got sick of reading the pay that is a total of $1,185,775.00 being paid to the top 8 employees of the Environmental Working Group just in 2008.  The total estimated amount of other compensation from the organization or related organizations for the top 8 at EWG was $117,248.00.  The total reported 2008 salaries for EWG was $3,203,747.00 in 2008.  The 2008 total revenue at EWG was $6,242,570.00.  Over half of their total revenue went into paying the employees of EWG. 

I am not opposed to making a profit.  I believe in Capitalism.  I also appreciate that it takes time, money and resources to pursue any public policy position. But still, more than half of the operating budget is a lot.  I am troubled when a non-profit that asks for $10 via email and $5 most of the time you click on their Skin Deep website as if they are on the verge of going out of business is spending so much of your money on their executives. 

In 2006 Ken Cook was reported to have been paid $192,000.00.  If Ken Cook continued at the same rate of pay increase over the past two years as he did from 2006 to 2008 he may be making as much as $245,000.00 (only an estimate based on the pay rate of increase from 2006 to 2008).

No wonder I get so many requests for another $5 or $10 donation from the EWG. At 2008 pay rates they need at least 118,578 people to donate $10 just to cover their top 8 executives pay…who knows how much is needed to cover it in 2009 and 2010?!

You have to wonder if the EWG is really hurting for money or if they just like to keep their budget at a certain number.  In 2008 the net assets or fund balances were $5,171,374.00 at the end of the year.  They were given gifts, grants, contributions and memberships fees in 2004 of $4,975,899.00, 2005 of $3,539,214.00, 2006 of $3,478,044.00, 2007 of $4,004,846.00 and 2008 another $5,963,800.00. 

A very revealing, carefully documented and thoroughly research of the history of and who is behind the EWG can be found on the Personal Care Truth website (click here to read.)

The EWG, Skin Deep and the Campaign for Safe Cosmetics have made many claims that cosmetic companies are financially driven to claim that ingredients are safe, I am simply wondering if EWG has a financial interest in saying that they are not safe.  I don’t know many small business cosmetic owners who are making as much money as the top 8 at EWG. 

I’m just saying…in this economy do they really need your $10?  What do you think?  Does knowing the money trail color your impression of the EWG as a non-profit?

Kayla Fioravanti and her husband Dennis own and operate Essential Wholesale

Ed. note: After reading Kayla’s excellent report and the comprehensive history at Personal Care Truth, as well as examination of available information  on the EWG website and other sources, several red flags wave.  These include, but may not be limited to, proportional ratio of administrative salaries vs. actual program funding; lack of transparency of donors as well as staffing and operations; unclear financial and staffing relationship between EWG and EWG Action Fund.  In 2002 an IRS complaint was filed against EWG asking for an investigation and revocation of their nonprofit status.  Further research is needed to establish the determination of that action.

 Posted by at 9:06 pm

  8 Responses to “The Revealing Truth of the Money Trail of EWG”

  1. Thanks for helping spread the word! You raise a very good question about the staffing relationship between the EWG and EWG Action Fund.

  2. Fascinating stuff. I will pass this link on to anyone I can get to read it.

  3. Interesting… Personally I am not shocked by the salary amts, maybe I’;m jaded but those don’t sound excessive for the top employees of an organization. But I suppose I don’t know much about what non-profit salary schemes tend to be like, and maybe those numbers are out of line.

    It is alarming if EWG is being dodgy with their money, and does bring up questions about their ethics in other areas… but this also doesn’t necessarily mean they’re wrong about their claims regarding cosmetic products. You have planted a seed, though, and I’ll keep an eye out for more info on the EWG.

  4. Over half of an operating budget for staffing of a supposed non-profit is unacceptable unless it has highly specialized staffing requirements (like museums and art/theatre/sports programs that benefit society in general). I have read many of the “studies” by the EWG (actually, they’re mostly literature reviews, not clinical or scientific studies), and I can say that their staff is not specialized enough (i.e. you’re right- they don’t have the scientific background) to be making these claims or the amount of money that they make. I can certainly say some very highly regarded chemists in the cosmetics industry don’t make even a portion of what these people make. It seems like the EWG is in the business of keeping itself in business, duping the public at the same time!

  5. @ Marcy, I totally agree that the shady finances do not mean that the EWG are wrong about their claims for the dangers of cosmetics. However, when you consider that their favourite weapon against anyone who disagrees with them publicly is “vested interest”, whether this actually be true or not, as an attempt to undermine the credibility of the challenge to their “authority”, it is pertinent to realise the depth of the vested interest of the top employees. Alex Formuzis ($120k) has been particularly fond of this tactic in discussions on the aforementioned Personal Care Truth site. When challenged about his own vested interest, he avoided the subject – another favourite EWG/CFSC tactic.

    If you do feel that the EWG may have a point, may I suggest that you check out the PCT site, and specifically, my two posts:

    Skin Deep – Scratching Below The Surface
    The Truth, The Whole Truth, or Anything But The Truth

    These cover different aspects of the EWG and CFSC – and I don’t have any vested interest!

  6. Here’s a link to the site hosting Dene’s blog posts. You’ll find other thoughtful information there surrounding this issue, as well.
    http://personalcaretruth.com/

    Marcia

  7. I would like to see more transparency in EWG and CFSC!
    Kayla, I too worry about loss of customers. We can only hope that while loosing some we will gain more. Thanks for taking risks.

  8. […] Links: 3 Reasons the EWG is a Dubious Resource Truth of the Money Trail The Tides Center Who is the Environmental Working Group? Environmental Working Group Small […]

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