The Philly Fighting COVID controversy risks trust in other nonprofits, say these pros

Philly Fighting COVID (PFC) has been at the center of controversy this week after WHYY reported that it had accumulated doses of the COVID-19 vaccine to administer to the community only to hoard them for personal use, among other allegations. But it was its move from a 501(c)3 nonprofit to 501(c)4 social welfare group designation that has raised suspicion that profit, not social good, was PFC’s goal all along.

The organization is the brainchild of Andrei Doroshin, a 22-year-old Drexel University graduate student, who founded PFC to use 3D printing for PPE and later pitched it to the City of Philadelphia as perfectly suited to run mass vaccination sites. On Thursday, Doroshin admitted to taking doses of the COVID-19 vaccine that were supposed to be distributed, and administering them to his friends.

South Philly-based nonprofit fundraiser and comms professional Dena Driscoll first heard about Philly Fighting COVID in spring 2020. With more than 10 years of experience in the nonprofit sector, she was immediately curious when the group announced itself as a nonprofit — something she says is not easy to establish within days or weeks. Driscoll assumed it had a fiscal sponsor to support its work, and since she found that people were pleased with the work PFC did at the time, she didn’t give the fledgling organization more thought.

When news broke in January 2021 about PFC’s questionable activities, the doubts she’d originally had about the organization returned.

“I went to their donation page,” she said. “I wanted to see who their donors were, how they were processing donations and how they were listing if a donation was tax deductible. That was the first time I noticed that they were listed as a 501(c)4.”

Screen captures from website, archived on the Wayback Machine, show that PFC described itself as  a 501(c)3 not-for-profit at least until November of 2020. According to the Jan. 8, 2021 archived version of the website, the designation had changed and the organization was listed as a 501(c)4 organization.

The designation as a 501(c)4 matters.

Under IRS rules, a 501(c)3 designation indicates that the organization is a charitable, religious or educational nonprofit, whose lobbying and political activities are very limited and its donors disclosed. Donations to these organizations are tax-deductible. A donation to a 501(c)4, on the other hand, is not deductible because these social welfare organizations can engage in lobbying, and receive unlimited money without having to disclose all donors — leading to what Driscoll and others call “dark money PACs.”

Generocity columnist and longtime nonprofit pro Tivoni Devor said the organization’s quick start with no contract was a glaring red flag.

“Most City contracts are reimbursement-based, especially nonprofit,” he said. “You have to front the money, show work and receipts and get reimbursed. You have to have the cash flow to float for the 30 to 90 days.”

By choosing the for-profit route, Devor believes PFC attempted to circumvent the need to access a line of credit from a bank to supplement its lack of funds. (Keep in mind that, no, it’s not unheard of for the City to contract with for-profit entities.)

Shifting its designation from a 501(c)3 to a 501(c)4 allowed the organization to change its profit model and also hide who donates to their organization and in what amount.

Driscoll agreed that PFC changing its 501(c)3 designation over such a short period of time is troubling.

“It was baffling from a nonprofit perspective to see them use the terms interchangeably on their website,” she said. “There seemed like there was nothing about their employee ID number or anything on the internet.”

Driscoll added that the change in designation could also have consequences for the people that donated to the organization. Nonprofits typically give their donors letters affirming their donations for tax purposes. With the organization under heavy scrutiny, Driscoll suggests that Philly Fights COVID donors may want to consult with a tax professional about including the donation when filing taxes.

Driscoll said that while there are 501(c)4s that do great work, she is concerned that PFC’s controversy could affect the public’s trust in nonprofits, especially at such a precarious time for so many of them.

“What I find really disturbing, as someone who fundraises for nonprofits, is that they’re eroding the trust,” she said. “People are taking it at face value that they are a nonprofit. That’s a word we hear a lot. Is it unheard of for there to be a nonprofit and for-profit arm of organizations? No. I wasn’t completely baffled by the idea. But they have to explain [it].”

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Members of the PFC executive team in the photo at the top of this post: Top row, l to r: Andrei Doroshin, CEO; Dr. Karol Osipowicz, chief science officer; Carson Elias, CTO. Middle row, l to r: Victoria Milano, head of COVID testing; Dante Terracciano, head of testing staff; Jennifer Martinez, head of testing marketing. Bottom row, l to r: Johnathan Lawless, head of systems; Jim DelCioppo, chief content officer; Esty DelCioppo, strategic advisor.