Dionne Warwick's foundation faces financial perils -- Three-year-old AIDS education group demonstrates the difficulties in getting established

Celebrity involvement in a charity is no guarantee of financial success, as the Warwick Foundation has amply demonstrated. The three-year-old AIDS education group, created by singer Dionne Warwick, is clearly in financial distress. Although the foundation has raised about $2 million, it showed a loss of $20,029 in its first year and $203,687 in its second, according to public tax records. (Figures for the fiscal year ending Sept. 30, 1990 are not yet available.) The foundation is unable to pay all its bills. And when it tried to register with New York State’s charities regulator in January, its $25 check bounced.

Critics say some Warwick Foundation activities have suffered from poor planning, mismanagement, and overspending. The group’s defenders counter that the charity’s crusade on behalf of minorities, women, and children with AIDS has been successful, pointing to its educational comic books, videos, and seminars. They maintain that the money woes are largely typical start-up problems compounded by inadequate corporate support and lack of attention from the media. ”I’m extremely impressed by what they’ve done,” says Ella S. McDonald, executive director of the Richard Allen Center on Life, a New York-based foster care and adoption service. Adds Warwick: ”We are accomplishing our [education and advocacy] mission.”

Others are disappointed. ”It’s just horrible that a foundation concerned about minorities and AIDS does such a lousy job of handling its money,” says a person involved in the group’s L.A. gala fund-raisers last summer. (The benefits ranged from a black-tie dinner to an all-star concert featuring Kenny Rogers and Stevie Wonder.) According to L.A.’s Social Service Department, the foundation raised $801,505 from the benefits but spent a full $608,848, including $84,874 on salaries and commissions. That translates into an expense ratio of 75.9 percent, far above the 1990 L.A. benefit average of 36 percent, and means that less than 25 percent of the money could have been used for charity. Guy Draper, the concert’s producer, disputes such accounting, saying that some expense money paid for workshops, and adds that every event was educational in some way, including the concert.

Even critics acknowledge that Warwick is sincere about her foundation. But the singer has apparently recognized that her charity needs to make some operational changes. ”She is moving the foundation’s primary offices from Washington, D.C., to Los Angeles so she can be more hands-on,” says her administrative assistant.