LOS ANGELES — By day, Henry Graciani oversees a 54-bed treatment center for alcoholics and drug addicts who come to him broke and hopeless. After work, he makes a quick drive to the $1.3-million Santa Monica, Calif., home he shares with his wife and three children.

Graciani is not a high-paid executive returning to a beach retreat. He and his wife, Dina, are career Salvation Army officers who bring home $25,000 per year – combined. They are among the charity’s officers who are paid modest salaries but given rent-free housing – some in high-priced areas such as Southern California.

Best known for its red-kettle holiday bell ringers, the Salvation Army is one of the nation’s largest charities. It serves more than 69 million meals a year to the needy, houses thousands of the nation’s homeless and provides ready response to worldwide disasters – most recently in Haiti.

It’s also a real estate powerhouse.

In Los Angeles and Orange counties alone, the charity owns 87 homes and condominiums worth about $52 million. Nationwide, it valued its real estate holdings, including commercial real estate, at about $4 billion in 2008 – one-third of its total assets.

For more than a century, the Salvation Army has provided a vast social-service safety net throughout the world, offering food for the homeless, shelter for the abused and relief for disaster victims. Founded in 1865 in London, the Salvation Army has an unusual, quasi-military structure and a highly religious mission.

It is led by officers who dress in uniform and carry ranks ranging from cadet – an officer in training – to a single general: Shaw Clifton, the group’s London-based worldwide leader. Officers are allowed to marry, so long as their spouses agree to become officers as well. The Salvation Army has been boycotted by gay rights groups because it considers homosexuality to be immoral.

Aspiring officers are trained at four Salvation Army colleges in the United States. Officers practice Christianity by running programs to aid the needy. They are paid small salaries and provided houses that the Salvation Army owns across the country.

Salvation Army officials say the real estate program makes sound business sense because it enables them to pay low salaries and transfer officers throughout the country without the burden and delay that typically accompany executive moves. It’s a policy similar to that of churches that provide housing to their ministers, said Victor A. Leslie, a lieutenant colonel who oversees the Army’s Southern California operations.

Graciani’s two-story home is made of terra-cotta stucco and has a Spanish-tile roof and an enormous backyard with a trampoline for his children.

“The house is a nice benefit. It’s not why I do what I do,” Graciani said during an interview in his home’s second-floor master bedroom, a ceiling fan whirling overhead. “I do what I do because of my commitment to God to serve people through the Salvation Army.”

Some charity analysts said these homes conflict with the image of sacrifice and service that the Salvation Army markets to donors. The organization reported receiving $1.7 billion in support from the public in 2008.

“It creates an appearance issue, because John Public thinks, ‘I give the Salvation Army my hard-earned 50 bucks, and it’s going to go to this fancy home I can’t afford to live in,’ ” said Daniel Borochoff, president of the American Institute of Philanthropy.

The Salvation Army has long been one of the largest and most recognizable charities in the world. It spent more than $3 billion on services in the U.S. in 2008, according to its annual report.

The charity has a reputation as a wise steward of its donors’ money. It spends more than 80 percent of donor money directly on services, with the rest going to overhead, analysts said.

In 1997, the late management guru Peter Drucker told Forbes magazine that the Salvation Army was “by far the most effective organization in the U.S. No one even comes close to it in respect to clarity of mission, ability to innovate, measurable results, dedication and putting money to maximum use.”

That reputation makes the charity’s real estate holdings a surprise to some observers. In California, the group owns three Santa Monica houses worth $1.1 million to $1.6 million each and eight properties in wealthy Rancho Palos Verdes – all used by officers.

The Salvation Army bought two of the Rancho Palos Verdes homes in 2007 for $940,000 each. The two houses are within a few blocks of neighboring San Pedro, where similar properties sell for considerably less.

Gunilla Windon, a real estate agent on the Palos Verdes Peninsula, said she was surprised several years ago when she discovered that the Salvation Army was the owner of a property a client was buying. She later learned about the charity’s vast holdings in Southern California.

“I just have a problem with them standing out there with their kettles at Christmastime and people putting their hard-earned money in there when they own millions and millions and millions of dollars of real estate,” said Windon, who has not donated to the charity since learning about its real estate holdings. “It just doesn’t look right. I don’t like it.”

Salvation Army officers are ordained Christian ministers who provide faith-based public service throughout the world. In the U.S., officers transfer about once every four years; with each new assignment comes a different furnished house. When they retire, officers are given one-time allowances to use as down payments on homes.

Graciani, 47, a cancer survivor who beams when he talks about the people who have turned their lives around at his Santa Monica treatment center, said the Salvation Army saved his life when he was an adolescent.

A self-described “delinquent” as a teen in San Francisco, Graciani sought refuge at a Salvation Army youth center, where he played arcade games and shot pool instead of running with gang members. He spent so much time at the center that he eventually nabbed a job cleaning up the place.

Graciani worked as a counselor at the youth center, then went to a Salvation Army officer college to be trained as a minister. He graduated and worked assignments in Modesto, Monterey, Anaheim and Missoula, Mont., before the organization assigned him to Santa Monica supervising its adult rehabilitation center.

“There’s nothing like getting a guy who has lost all hope and in six months seeing the transformation, seeing in him the hope again. There’s no greater pay,” Graciani said. “What’s it worth when a man comes to you and says, ‘Thanks for giving me my son back’?”

The majority of the Salvation Army’s residential real estate in Southern California is in middle-class communities, records show.

Factoring in the market value of the free housing – and free cars they are issued – officers’ total compensation packages amount to about $60,000 per couple, Salvation Army officials said.

“Nobody is becoming a millionaire,” said William Harfoot, a colonel who oversees the organization’s operations in 13 Western states.


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