Is the Flying Colors Foundation a scam? — An Investigation

Now before I begin I want to set out the reasons for making this article and why it is necessary, as I feel with the content of what is going to be discussed and the arguments that will me made here, a clear stance is needed from the beginning.

My reasons for wanting to discuss this, to compile everything I have discussed in a long twitter thread on my own twitter account in to this article here, is because of the worrying situation surrounding the Flying Colors Foundation (hereafter FCF) that I feel would be wrong not to discuss in detail. At best, the group is mismanaged, disorganised and misguided, and at worst, the group are a scam, and one that in some ways could be acting in potentially illegal ways. Due to the fact that what I am discussing is serious in manner any points made against FCF are backed up by official documentation and statements made by themselves, or is information relating to the people working at FCF.

With this made clear, it’s time to discuss the issues with FCF.

UPDATE (25th March 2018): Following the publication of this article, I have been provided with a statement from Flying Colors Foundation themselves, that can be found here. Following from this, further discussions will be held between myself and the organisation, and a further article will be published by myself in the near future.

Before we start, however, it would be best to clarify who FCF are. FCF are a non-profit situated within the United States. The company is an officially registered 501(c)(3) group based in La Crescenta, California. They were officially founded in November 2017, and received non-profit status in January of 2018. Details of the companies registration can be found here, noting the 16th November as the first operational day for the company, and the details here and on the IRS website that the company is a fully registered non-profit, EIN 82–3194255, their registration noting them to be a PC, or public charity.

The aims of the group, according to their website, are to ‘Let your voice be heard’. To use their exact words here, they want ‘To inspire change through dialogue’. The group wants to engage with the anime community worldwide to collect data from anime fans who participate in surveys, following which the data will be sent to Japan to individuals within the industry, which can then be used to inform decisions on how they work. The data could also be used, in their words, to help improve the situation for studios and animators within the industry.

So far, so good, right? The group’s a non-profit, and their goals seem noble. That, however, is where the situation gets more complicated, and it’s here where I need to tackle the issues with FCF. Let’s tackle this in stages.

Who’s running the Flying Colors Foundation?

Getting this information was a lot more difficult than it perhaps should have been, especially for a non-profit, though it is thankfully easier to access as of the 22nd March following the information later released by the organisation following some backlash. We have:

  • Brian Li — Creative Director
  • Francisco Lee — Strategy and Insights
  • Patrick Stanley — Research Director
  • Daniel Lee — Analytics Director
  • Daniel Suh — Finance and Operations
  • Sydney Poniewaz — Public Relations Director

https://cdn-images-1.medium.com/max/2000/1*2zV5n4tmRRE3SlbbDLaIQA.png

Initial issues surrounding the foundation that had been a noted problem for months was the apparent anonymity for who exactly was running the company. There had been no information on the site, and even now, it’s hidden in the Press Kit, not publicly listed like other charities (you can learn about the entire senior leadership in detail on the website for Medecins sans Frontieres/Doctors Without Borders), so knowing who was behind the group was a problem.

However, it becomes a larger issue following further research. Before discussing the actual people behind the company, it should first be noted that this may not be the entire set of employees, and that senior management positions may not be entirely detailed publicly even in the press release. I note this due to the mention of a quote from academic Ian Condry, who has wrote various books about anime such as ‘The Soul of Anime: Collaborative Creativity and Japan’s Media Success Story’. He is listed in the press release as an adviser and board director… yet his name is not mentioned alongside the other staff mentioned above when discussing who is running the company, nor is he given a brief description on any material linking to the company regarding his profession as an academic, except this passing mention. the quote itself is actually taken from the aforementioned book he has wrote, and isn’t a quote attributed directly to the organisation at hand, but is one that the press release is using to exemplify what they stand for, it seems. The thing is, what does this mean for who is ACTUALLY behind the group. Are there more people that we aren’t fully aware of?

This is an important question when considering their connections to the industry and their role in other work. Now before fully discussing this I’ll note that as part of two separate full disclosure tweet threads on their official twitter account FCF did attempt to clarify the situation regarding the roles of the people working behind the group with the following:

3. The FCF team has a member that FORMERLY worked for LootCrate. He quit his job last month to do full-time FCF. We do not have any financial relationships or ties to any for-profit companies. (4/8)

@FlyingColorsFdn

4. All members of the FCF staff have voluntarily given up ownership or interest in any projects that pose a conflict of interest with FCF. Our team is 100% FCF and is divested of any involvement with any other business. (5/8)

@FlyingColorsFdn

This, however, does not fully resolve the issues here.

To reference the first tweet, that is referring to Francisco Lee, and was discovered by twitter user Jakiba a week ago

Their role at Loot Anime was, through things such as surveys of fans and other market research, to discover what fans were interested in to help create Lootcrates that would be enticing to fans of those franchises and encourage them to purchase them. A role of researching fans to gain data on a product that sounds very similar to the role of FCF with their 2018 Anime Census to collect information regarding fan interest in the industry and various anime.

To discuss the other members of FCF, Patrick Stanley acts as a Research Manager, Daniel Lee acts as a Senior Analyst, Brian Li is a Sales and Marketing Solutions Coordinator, while Daniel Suh is a Senior Consultant. Sydney Poniewaz is a voice actor.

I’m using current tense instead of past tense despite the assurances of FCF from their embedded tweet linked above as they are unclear on the current roles and how they are acting within FCF. Only Francisco Lee is specifically cited as someone who quit Lootcrate to work full time on FCF, while the others are noted to be ‘100% in’ to FCF, which suggests similar but is vague. While it is possible to not be fully up to date, only Francisco has it noted on their LinkedIn profile that they are volunteers for FCF and have quit their jobs. None of the others have it noted that they are helping FCF and none of the others are noted to have left their current professions for FCF, except for Francisco Lee.

The roles of multiple of these members, however, could benefit their current profession using the information provided to FCF. While this is likely not going to happen with Lootcrate due to the seeming resignation of Francisco, the data collected could be of relevance, say, at a multi-platform media company at Awesomeness, especially if you happened to work in marketing. While FCF do note any clashes of interest have been divested from, there is only really an example seen in Francisco’s case.

More to question however, is this tweet, and how it factors in to things, which links to the final point I want to make regarding the employees at FCF.

1. FCF is a non-profit, and therefore, does not keep, nor benefit from, any profits. Our team DOES NOT GET PAID for their services and involvement. Everything we do is purely voluntary. (2/8)

@FlyingColorsFdn

According to FCF’s own words, ‘Our team DOES NOT GET PAID for their services and involvement’. But in that case, what about Francisco, who has quit his job to work full time at FCF? Has he quit an assumingly-well-paid job to work for free for an anime surveying company? Something about the idea of this is personally a bit hard to swallow, though I would not be able to say for certain it is false, as to quit for a small charity without pay would seem an unwise move.

There is an insinuation that they claim being a non profit means that they can’t be paid for their work. And this leads in to this tweet and the next point I want to make

2. Influencers DO NOT GET PAID. Since we do not keep profits, nobody can take any. Influencers are not offered any financial incentives for their collaboration. Their support and involvement with FCF is purely voluntary. (3/8)

@FlyingColorsFdn

The Influencers

This tweet on a basic level seems to at the very minimum suggest a lack of understanding on how the company would run. Paying an influencer, in the circumstance being referred to here, would be possible, as it could be factored in as an operational cost of the non-profit, and would even be tax-deductible due to that. Yet their suggestion here is that it would come out of profits, and that there are no financial incentives for influencers to help them.

But is there?

There are 6 Youtubers involved in FCF:

  • The Anime Man
  • Akidearest
  • Gigguk
  • Mother’s Basement
  • Glass Reflection
  • Digibro

Now first of all it’ll be worth bringing up Anime Man’s involvement. Recently he released the following video on his YouTube channel

This is a video promoting the Anime Census from FCF, and immediately uses the emotional connection he personally has with fans to get them to take part in the survey. From the start he frames it as something he’s asking fans to do for him, it’s ‘very, very important’ and should be done ‘if you truly do care’ which, being an anime channel, they likely do care about anime.

They go and discuss within it that the group helped them with a previous top 100 anime poll that he had conducted through his channel and that the group had ‘just launched a pretty cool website’ containing this survey which the Anime Census is contained within. They promote it as a community thing that helps everyone. They say it’ll help the Japanese ‘finally understand’ the international audience and ‘what we want’.

Now I personally have an issue with the fact the video doesn’t address some of the concerns people had before the video was published and uses quite manipulative language to encourage engagement but that’s not what I really want to discuss. As I mentioned, I want to discuss monetary incentives, that FCF claim to not have.

TheCanipaEffect is another Youtuber who claims to have been approached by FCF to become an influencer, but they decided not to involve themselves. They noted in a tweet made on the day the survey was released the following:

Now, it should be noted that it is likely this contact occurred a while prior to this poll, but I’m not certain when, and that FCF have later clarified some changes to how they were going to structure themselves in future tweets in recent months, which may or may not have been after Canipa was contacted, and that, as previously stated, FCF claim to have divested from any for-profit linked ventures, which assumingly would include this.

But at the same time, it should be noted YouTubers were courted for the program using money incentives, at least at first. It is also easily possible to imagine the use of companies such as Otaku Pin Club in the future to raise funds as donations for the company. They are a non-profit who claim to rely on donations (more on that later) and, especially with influencers on board who can foster a sense of community that emboldens FCF’s message, could produce pins with a likeness of them or some symbol representative of their channel for the purpose of raising funds for the non-profit. At that point, paying a YouTuber who is linked to them for the likeness would be reasonable.

In fact, this is something that has already happened

As noted in the tweets following this one from Canipa, they bring attention to Otaku Pin Club and the pins made in collaboration with FCF partner Gigguk (mentioned in this video) and note that the collaboration came because of their FCF partnership. The documents of filing show both companies as being registered in 2017 by the same person (I have to thank Kastel with their brilliant article here for bringing this to my attention)

Even without this, though, there’s monetary motivation for this for the Youtubers involved, for the simple reason being that they can monetise their own videos promoting FCF. Using the example of Anime Man’s video above, there is a pre-video ad, as well as 4 yellow notches noted on the video player, suggesting 4 ads throughout the 18 minute runtime of the video. Watching and engaging with these ads could monetise the video for him, which he can profit on, and all he has to do is speak positively with the group he’s affiliated with. While this is not direct financial incentives provided by FCF, it would be wrong to suggest there’s no monetisation opportunity provided by FCF, and therefore no financial incentive.

So we now have established that the influencers have monetary reasons to help, and that the people involved can be brought in to question in regards to actually how many are involved and whether there is any possibility of the data having uses outside of the work being performed by FCF, we may as well move on to the survey itself. Surely the survey itself can’t be that bad, right?

The Survey is That Bad

https://cdn-images-1.medium.com/max/2000/1*XA4Dpza7GFdgvOVrXx2Tfw.png

The survey has a lot of issues, from the range of data being asked to the uses of their data. Before tackling the ethical issues with the questions, let’s simply talk logistics. The survey has no chance of being used in a way that could benefit the industry like it claims.

First of all, it’s completely voluntary. It’s not focus-grouped, or compulsory, but simply done through the channel of discovery, engagement, and the personal choice of involving yourself in the survey. There’s no way to get truly accurate data no matter how many responses you get, because the data is completely subjective. All influencers are Youtubers, and with the very small reach of FCF themselves (they have 1442 twitter followers, 50 less than I myself have), it’s very likely all the people who take part in the survey will be coming from the Youtubers doing what they’re partnered for and using their influence, not from their own attempts to engage people. This means you’re getting a specific subset of anime fan, a fan who may engage in analysis, or may just like to watch videos about anime such as reviews. This is not every single person who watches anime internationally. Personally, while I watch some anime YouTube channels, I don’t watch any of the channels mentioned as influencers, meaning if i wasn’t someone who engaged a lot of the medium anyhow, I’d be clueless.

What if you’re an anime fan who doesn’t watch YouTube? You’d likely not ave a clue about it. Even if 100% of people who watch these channels filled in the survey, you’d be surveying 100% of a subset of anime fans not representative of all fans, making it meaningless.

But let’s move on to the more serious issues: the questions. There are a lot of questions that ask for detailed information about things such as spending habits, income, among other things. Some questions such as age and nationality are quite personal, but these would be asked in any survey and are necessary to get an idea of how different groups vote, so there’s little issue here. The issue comes in with questions such as the ones regarding mental health. There’s a significant section of the survey dedicated to asking about mental health issues, whether you personally suffer from mental health issues and whether watching anime helps you. This is incredibly personal, and, for their own personal goals, unnecessary.

As for data sharing, they claim to want to keep data anonymous while also request an email address to prove legitimacy, while also asking whether you want to be included in mailing lists, requiring the retention of this data by FCF to repeatedly contact you regarding future ventures.

This is also all coming at the same time when there’s been reports in the news regarding Cambridge Analytica and many other groups on Facebook collecting lots of unwarranted data through things such as surveys, and the deservedly large backlash due to this news, a reaction against the collection of massive amounts of data on an individual that this survey is asking for.

They admit this data will be given to partners if you choose for it to be, which allows for the monetisation of the data. Also, this data could then be used by other companies thanks to that.

There’s one big omission here as well: the currently-established anime companies. And it’s this that makes the purpose of this poll even more unnecessary and useless. Currently, there are multiple massive anime companies working in the international markets. We have Funimation and Crunchyroll and Sentai Filmworks, people like All The Anime and MangaUK in the UK, Madman in Australia, and alongside that we have big players coming in to the industry with the resources to catch up such as Netflix. They have something that FCF don’t that’s way more valuable to the Japanese industry and that they can already access, and that’s viewing numbers. Crunchyroll have over 1million paid subscribers on their own, with more people who use the site’s free service, all of whom watch anime and, in turn provide Crunchyroll with info on what people watch, and what they don’t. They license a large majority of the anime in any given season, so there’s a range of data available as well.

1million is also much larger than the expected total engagement with this survey, and the data that they can collect is actual viewership which is more valuable. Through Crunchyroll partners can see how many people view a show, and where from. That sort of data, in comparison, is invaluable when working out what you should produce as an anime if you want to engage international audiences.

A selective poll like this just, in reality, isn’t all that useful. There’s a reason politicians don’t decide public policy based on polls on news websites, it’s opt in and not representative of a population. Similar circumstances could be seen here

So the survey asks for way too much personal information unrelated to both their aims and the topic of anime, and isn’t as useful as already established alternatives, it has issues. But hey, they’re a non-profit, so surely there’s no issue there… well you know where this is going.

There is an Issue With FCF Being a Non-Profit

There’s so many contradictions on how they will actually be running. They claim to be a non profit who accept donations, but nowhere in the survey, on their website, on their twitter account, anywhere, do they ever ask for a single donation. So far as well, with only online operational costs, apparently no wages, there’s an almost-zero operational cost too. So there’s little need to receive donations.

What they’re planning to do with the donations is the reason I mentioned potential legality issues, however. They’ve noted any profits would be redistributed to 3 different groups. These groups are the Animator Dormitory Project, a group who provide subsidised accommodation for a select set of new animators in the industry, Hyun’s Dojo, a website where many publish online animations, with multiple people who have published there going on to work in the industry, and Anime for Humanity, a mental health charity who focus on anime fans. This final one could be used as a justification for the mental health questions in the survey, but being anonymous and not related to the organisation’s specific goal, isn’t a reason to ask such questions.

Now after having someone note the potential illegality of this plan, I felt the need to do some research on this, and found interesting results.

To register as a tax-exempt organisation such as a charity, which FCF fall under, funds have to be used for the non-profit’s purpose. This does allow donations to other organisations but with some caveats. Firstly, there’ll be issues if the people on the other organisation’s board are also members of your own organisation, or vice versa, or there’s a family member linked to the organisation. There can be justifications in these circumstances, but it is something to be careful of. Secondly, it could be problematic if the donations that are being made by the group don’t further the organisation’s goals, which in FCF’s case is ‘to provide the anime community new opportunities to let their voices be heard’ by being shared with people in the industry and around the world.

This brings legal question to the organisations that FCF want to donate excess funds to. Using these legal arguments, there’d be little issue donating to the Anime Dormitory Project, and would wholeheartedly support that with it being a great cause. With the other ones it becomes legally questionable as the arguments have to be made on how it benefits the message of the non-profit. In the case of Anime for Humanity there would be question marks on whether it would be relevant but with their clarification on speaking around the world as well as to Japan, as well as relating to anime itself. Hyun’s Dojo, however, has a lot of legal questions regarding any money being sent their way. They’re a for-profit site, not a non-profit, and though people have later gone to work in the industry from there, it’s a very tenuous link to then suggest it to be worthy of donation because it furthers the cause of FCF. Also, there’s the question whether it breaks regulation on private benefit and inurement (page 4) by donating to a for-profit private site for such reasons. In these cases, it could land FCF in hot water with the IRS.

So Is It a Scam?

There are other points I could mention such as how there was actions taken under the name of Flying Colors before their foundation in November, such as the top 100 anime poll also conducted with Anime Man’s help, but it is possible to conduct business for a few months before official foundation of the company, even if it does ring to question why so much active business was conducted by the foundation without being officially registered as a company especially since they claimed to have meetings with industry insiders and provided a Powerpoint of what was discussed with them at the meeting in September.

Our original idea was to help the anime community by having studios, influencers, and non-profits earning revenue together. Here is our very first attempt to summarize the issues and the idea that we thought would work: https://t.co/HwaLAGKRTQ This was back in Sept 2017. (2/8)

@FlyingColorsFdn

There can also be questions brought up as to why, even though at this time their plans were different to how they are where they looked at the possibility of funding anime, and working more financially with the anime industry, in discussions held with Miles from Crunchyroll using the foundation’s twitter account they seemed unaware of how budgets for anime changed over time, even though the information is known publicly.

@MilesExpress999 @CanipaShow We don’t know if the budget per project has increased as well.

@FlyingColorsFdn

This is despite claiming to be industry insiders as well.

Which leads to one final question, and that is whether FCF are a scam? And in my view, it’s either that or they are, to be frank, not very good at doing their stated and intended goals as a non-profit. There’s a lot of unanswered questions even after claiming to have fully disclosed everything, and these questions need to be addressed directly

So, Flying Colors Foundation, I have the following questions for you:

  • What are the ties between your employees and for-profit companies that could benefit both directly and indirectly from the information from such a survey?
  • How many people are actually involved with your operation? Is it the 6 you claim, 7 with the academic, more that we are unaware of?
  • What is the role of the influencer within FCF? There seems to have at least been historic links between the founder of FCF with a for-profit company they ran in Otaku Pin Club and one of the influencers during the time that they were involved with FCF, with suggestions the profitable venture between the two was because of links with FCF. What is the connection?
  • How do you plan to raise money without a way to donate, and what operational costs would donations be used on before remaining profits were donated?
  • As noted, there are legal implications to some of the planned donations the group wants to do, how will these be alleviated?
  • How does the group plan to achieve their goal beyond just this survey, and how exactly will this survey benefit the industry when information from services such as Crunchyroll would be more useful, in theory? While there is an argument to be made this doesn’t include pirate sites for anime, many of these are not paying for anime or contributing to the industry due to watching on such sites, so their responses would already be less important than that of those who did contribute to the industry?
  • There’s issues with the survey, and what the data will be used for, especially since you mention the sharing of it with partners. Who are these partners, and what data would be shared?
  • You claim that your goal is to aid the anime industry but then, in those circumstances, where do questions such as the fan’s mental health fit in to this? Now in some ways I see it as admirable to care about such a topic, but without specific relevance, there are questions with privacy to sharing information such as this, alongside a lot of the other issues with the amount of data being handed over, especially in the wake of things such as the incidents with Cambridge Analytica. Why are some of these questions necessary?

Even with these questions, however, a lot has to be asked regarding the role of FCF in actually doing what they claim they want to do. Personally I see no place for them, and with the amount of personal information and the potential to share it with partners, alongside the other links noted above, I see at least the potentials of a scam. At best, there’s been a severe lack of judgement on what is necessary, how things are being handled, and even what their goals are. And a lot of that has to be reconsidered at first, as a minimum, before they should be taken seriously.

Currently, they’re exploiting the vague notion of ‘improving anime’ for their own gain with no visible sign of reward, using influencers as poster childs for this. And whether you use exploitative, disorganised or scam, none of those names reflect kindly on FCF.


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3 thoughts on “Is the Flying Colors Foundation a scam? — An Investigation

  1. Other questions..how does it comply with european privacy laws?
    How is data stored, how encrypted,(is it even?)
    how is it made sure that a set cant be traced to an user?
    How is it defended against abuse, break in, etc?
    How is the ethicality of questionnaires verified?
    Which use will specific data have, seeing that their goal is like, all over the place?

    Like

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