- 22 -
1992, W&H changed its name to Direct Response Consulting
Services; herein we continue to refer to it as W&H.)
W&H is engaged in the direct mail and fundraising services
business and has had up to about 20 to 22 employees. Its clients
primarily have been nonprofit organizations. Over the years, W&H
began to specialize in offering direct mail fundraising services
to nonprofit health organizations. In 1984, W&H had one or two
clients in addition to petitioner which were nonprofit health
organizations. Over the years, more and more of W&H’s clients
were in health-related areas. In 1987, W&H received 65 percent
of its income from three major clients and petitioner accounted
for 26 percent of W&H’s gross income for that year. In 1987, W&H
had a total of 12 clients.
American Institute For Cancer Research (hereinafter
sometimes referred to as AICR), which has been recognized by
respondent as tax-exempt under section 501(c)(3) since its
incorporation in September 1981, was one of W&H’s first nonprofit
health clients. Watson and Hughey are the two sole “founding
members” of AICR. AICR’s articles of incorporation provide that
only its founding members have the right to vote. The articles
also provide that no changes may be made with respect to the
founding members who were designated at AICR’s initial board
meeting and that no other founding members may be added, unless
all the founding members are dead.
AICR and W&H entered into successive fundraising contracts
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011