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Old 15th December 2009, 07:11
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[This post is under construction! It will explain the background to ORG-IES Rating. The text below has not yet been edited.]

ORG-IES is an ORGanization's Integrity and Equality Scale rating.

Feasting on luxuries when fellow beings can't afford the essentials for life or can't afford an education--I call indulging in orgies.

Monitary Orgies can be defined as excessive, uncontrolled self-indulgence in money in disregard of the needs of fellow beings even amidst humanitarian crisis.

Close your eyes and imagine someone you love is terminally ill.

Now imagine there is a drug that can cure her. Now imagine that you cannot afford to buy that drug. Now imagine what you would be feeling about the pharmaceutical industry while watching her die. Would you be thinking that the high price is justified because the drug companies must recoup their research and development (R&D) costs which are a drop in their profit ocean? Would you be nodding your head in agreement when the CEO, who takes home $75 million annually and over $76 million in unexercised stock options,[actual remuneration package in 2001 of former chair and CEO of Bristol-Myers Squibb, C.A. Heimbald, Jr] says the prices are necessary to develop new drugs which will also help the poor? This, when you know most will only benefit the wealthy. Would you feel good that his company, together with the four other largest pharmaceutical companies, have a market capitalization that surpasses that of the economy of India, and twice the GNP of sub-Saharan Africa? Chances are, 'not'. Chances are, as you watched your loved one's intolerable suffering, you'd want to take up arms and storm the next shareholders' board meeting. (Usdin, S. 2007, p.p. 51-52)

Close Your eyes and imagine someone you love wants a good education.

Now imagine there are universities that can give her an education. Now imagine that you and your daughter cannot afford the tuition fees, books, etc. Would you be thinking that the high tuition fees are justified because the university must recoup their costs? Would you be nodding your head in agreement that the Chancellor of the university you can't afford to enter, takes home $1.5 million annually and has spent an additional $700,000 on parties and a personal chef at his university mansion... which has been renovated to the tune of $6 million for the 6 years he has been Chancellor because he is a successful fundraiser? Chances are, 'not'. Chances are, as you watched your loved loose out on her education, you'd ... [add Source]

Here is what this Chancellor has to say about universities:
Nothing short of a revolution will stop what has become a crisis of conscience and integrity for colleges and universities in this country. Gordon Gee
Here is what this institution, Vanderbilt, prides itself for. Since the first classes began at Vanderbilt, the Honor System has served to strengthen the academic integrity of the university. Its principles were outlined in a famous quote by long-time Dean of Students Madison Sarratt:
Today I am going to give you two examinations, one in trigonometry and one in honesty. I hope you will pass them both, but if you must fail one, let it be trigonometry, for there are many good men in this world today who cannot pass an examination in trigonometry, but there are no good men in the world who cannot pass an examination in honesty. http://en.wikipedia.org/wiki/Vanderbilt_University]

Close your eyes and imagine the child you love is dying because he does not have access to the essentials for life, food and drinking water.

Now image there are people, strangers who are willing to help by making financial donations to supply food and water. Would you be nodding your head in agreement when the CEO of World Vision sates:
We have struggeled to keep up with rapidly rising costs without reducing the services and benefits we provide to the children under our care. Cutting back is something we just dont want to do.
Cutting back his salary or his staff's salary is something else he didnt want to do. This statement came from an executive whose pay package is approximately $400,000 per year. [add source]

Here are some other CEO Compensations:

CategoryCEO CompensationCharity Name
Education$2,377,100University of Delaware
Health$2,027,891Salk Institute for Biological Studies
Human Services$1,577,600Boy Scouts of America

Other Rating Systems

American Institute of Philanthropy
From Wikipedia, the free encyclopedia

The American Institute of Philanthropy (AIP) is a 501(c)(3) nonprofit organization, created in the United States by Daniel Borochoff in 1992[1] to provide information about charities' financial efficiency, accountability, governance, and fundraising. Charity financial reporting can be inconsistent, unclear, and occasionally unethical or fraudulent.


AIP analyzes charity financial documents to identify charities that are financially efficient, and ones that are not, and publishes its findings.[2] AIP encourages donors to give to charities that will allocate most of their contributions to program services that benefit the people and to causes that donors wish to support. AIP also promotes charity accountability and transparency through its research on the rapidly changing nonprofit field.[3]

AIP publishes the Charity Rating Guide & Watchdog Report, containing ratings of the financial efficiency of over 500 United States charities. The ratings are grades ranging from A+ (best) to F (worst) and are based on analysis of charities' financial documents.[4] The ratings include the percentage of a charity's budget that is spent on program services, how much it costs a charity to raise $100, an accountability measure, and the salaries of the charity's three highest-paid employees. The Guide also features articles about problems in the nonprofit field and tips to help donors make wise giving decisions and avoid charity scams.[5] AIP posts its top-rated charities on its website.[6]

AIP also investigates ethical issues surrounding charity spending, including salaries and payouts, financial reporting, telemarketing and direct-mail solicitation campaigns, and governance. AIP shares the results of its research with the media and government agencies and works closely with these parties to educate the public about informed giving. AIP President Daniel Borochoff has testified before Congress about veterans charities,[7][8][9] the aftermath of Hurricanes Katrina and Rita,[10] and the philanthropic response to the 9/11 attacks.[11]
[edit] Exposure

AIP’s ratings have received wide exposure from Congress and the media; particularly AIP’s appearance on the front page of The Washington Post,[12] on editorial pages of The New York Times,[13] and on ABC[8] and CBS News[14] programs. This has resulted in loud complaints about AIP’s rating system from a number of organizations.[15]

The average American believes 22.4% is a reasonable amount for a charity to spend on overhead and that a typical charity spends 36.3% of donations on overhead, according to a February 2008 study by Ellison Research, a marketing company.[16]

The major criticism from low rated charities is the claim that AIP’s rating system does not follow Generally Accepted Accounting Principles (GAAP) or rules for reporting financial information on the IRS tax Form 990. These groups posit that if AIP took the figures as reported in these financial documents, their ratings would be outstanding.[15] While GAAP reporting rules provide guidelines for a charity to report its financial activities, these reporting rules do not measure or claim to measure how efficiently an organization is raising and spending donated dollars.[17][18]

Charities have wide latitude in how they choose to report activities even within IRS and GAAP standards.[17][18][19] In addition, a charity can spend as little as 1% of its budget on its programs and still be in compliance with GAAP and IRS reporting requirements.[20] Direct mail and telemarketing solicitations that contain educational messages and other income-generating activities that accounting rules allow charities to report as program costs,[21] are not considered to be program services by many donors.[22] For these reasons AIP analyzes and makes adjustments to the audits and tax forms of some charities for consistency and to better reflect the goals of many donors who want their donations to be spent on bona fide programs.[23]

Charities poorly rated by AIP for financial efficiency often cite favorable reviews or ratios from other sources of charity information.[15] These other sources typically do not perform AIP’s in depth level of financial analysis and may accept a charity’s own reporting without question.[24] A study by the National Council of Nonprofit Associations, titled Rating the Raters: An Assessment of Organizations and Publications That Rate/Rank Charitable Nonprofit Organizations,[25] states of AIP's ratings, "Rigorous and fair analysis of objective criteria. Does not simply repeat self-reported analysis from [nonprofit organization]."

Another criticism is that AIP does not rate the quality of their programs.[15] AIP encourages donors to consider a charity’s program accomplishments in relationship to the resources it receives.[23]
[edit] Criticism

Studies of charity watchdogs' methods have raised concerns about the validity of their ratings, and suggest they may not be reliable source for charity ratings. AIP reviews only 500 charities, where Charity Navigator reviews over 5,400, and it is undetermined how AIP selects the charities it reviews. One group that AIP is critical of claims that AIP rates a large number of liberal groups, as compared to conservative groups, and only a small number of pro-military groups.[26] However, on its website, AIP posts the names of all the charities it rates; the list indicates that of the charities that have a political bias, the charities cover a wide spectrum of political beliefs.[27]

Charity rating organizations have been criticized by philanthropy experts for the validity of their evaluation methods and their conclusions. A study reported in the Stanford Social Innovation Review—an award-winning magazine covering successful strategies of nonprofits, foundations and socially responsible businesses—found that watchdog groups:

* Rely too heavily on simple analyses and ratios derived from poor-quality financial data;
* Overemphasize financial efficiency while ignoring program effectiveness; and
* Do a poor job of conducting analyses in important qualitative areas, such as management strength, governance quality and organizational transparency.

Specifically, this study found that a "gotcha" mentality and lack of transparency were AIP's biggest shortcomings, saying it was "difficult to understand what specific adjustments AIP made to a given nonprofit's ratings and why."[28] This study's authors concluded that, as donors make important decisions using potentially misleading data and analyses, the potential of watchdog agencies to do harm may outweigh their ability to inform.[29] They suggested:

A more effective nonprofit rating system should have at least four main components: improved financial data that is reviewed over three to five years and put in the context of narrowly defined peer cohorts; qualitative evaluation of the organization's intangibles in areas like brand, management quality, governance, and transparency; some review of the organization's program effectiveness, including both qualitative critique by objective experts in the field, and, where appropriate, "customer" feedback from either the donor or the aid recipient's perspective; and an opportunity for comment or response by the organization being rated.[30]

A second study, Rating the Raters: An Assessment of Organizations and Publications that Rank/Rate Charitable Nonprofit Organizations,[25] provides a separate assessment of AIP, Charity Navigator, Better Business Bureau Wise Giving Alliance, and other charity information services. The major findings are:

* Approaches and criteria are not the same. The methodologies and criteria used vary significantly among the various rating and ranking organizations.
* Evaluation criteria may not be readily apparent. Not all nonprofit rating and ranking groups make it easy for the donor to determine the evaluation method and criteria used.
* Evaluators may use criteria that are overly simplistic. Simple financial ratios and/or measurements that apply in some circumstances may not apply in others.
* Evaluators focus on financial measurements and overlook program effectiveness. Financial "efficiency" is assessed by most third-party ratings groups as a percentage of contributions received. This tends to be their primary focus.
* Competence of the evaluator is critical and difficult to determine. It is virtually impossible for donors to determine the relevant credentials, expertise and experience of the rating organization's staff.
* Evaluators often derive revenue as a result of their rating reports, creating a potential conflict of interest and questioning whether these groups are motivated by the desire to inform potential donors or by the media attention that improves their revenue stream. AIP, for instance, charges a fee for a sample copy and requires membership as a condition for receiving its annual rating reports.

Some groups criticized by AIP, such as Paralyzed Veterans of America, have pointed out that they meet "all 20 criteria that the Better Business Bureau Wise Giving Alliance establishes for charities, including that a charity's fundraising costs not exceed 35 percent of contributions, a common standard."[31] The Better Business Bureau Wise Giving Alliance charges charities to use its seal of approval.[32] Vietnam Veterans Memorial Fund asserts that the criticisms leveled here against charity watchdogs all apply to AIP.[26]

How to tell good charities from bad

By Liz Pulliam Weston

Unfortunately, there are often are no easy ways to tell the good guys from the bad guys.

Even nonprofits that aren't outright frauds may go to great lengths to conceal how they spend their money. And the watchdogs that are supposed to help us decide typically have vastly different ideas of what's an acceptable practice and what's not.

We'll get to some practical solutions to the problems, but here are just some of thorniest issues you face:

Most charities pretend they don't fundraise. You want the bulk of your donation to go to a charity's programs, not its administrators or fundraisers. To that end, the better-giving guides typically suggest you ask for the charity's Form 990, the Internal Revenue Service form that is supposed to detail how contributions are spent. Yet 64% of the 990s in a 2002 General Accounting Office study (.pdf file) listed no fundraising expenses at all.

Borochoff has reviewed thousands of these forms, and he says many charities misreport their fundraising as "program development," "public education" and other misnomers. As the public becomes more sophisticated about the need for low fundraising costs, the charities get craftier about hiding them.

"It continues to be a problem with groups not counting as fundraising things that really are," Borochoff said.

Regulation is perilously thin. The IRS has redesigned Form 990 to ask more questions about fundraising, executive compensation and other hot-button issues. Charities will start using the new form next year, but the IRS pretty much depends on the organizations to be honest. The tax agency doesn't audit many nonprofits, and the agency staff responsible for handling the Form 990 filings has shrunk even as the number of reports has grown, according to the GAO's report. State regulation is a patchwork quilt, and there are few restrictions on how charities spend their money.

In fact, the Supreme Court recently decided that for-profit fundraisers can legally keep almost all the donations they get in a charity's name, provided they don't actively lie about how much is actually going to the nonprofit.

Even the good guys screw up. Charities that have reasonable fundraising and administrative expenses still manage to blow it now and then. Critics excoriated the American Red Cross when the charity revealed plans to divert money from its Sept. 11 fund to other causes; the charity ended up changing its policy so the money would benefit only victims and their families. The United Way also has had its high-profile embarrassments, including a CEO convicted of defrauding the charity in the early 1990s and a finance officer who pleaded guilty to embezzling $1.9 million to pay for quarter horses.

Sometimes the watchdogs don't agree. The Better Business Bureau's Wise Giving Alliance says the Shriners Hospitals for Children met its standards, but Borochoff's philanthropy institute gave the charity a failing grade for continuing to raise funds while sitting on enough cash to pay for years' worth of programs. The BBB alliance thinks it's OK for a charity to maintain such an endowment to smooth out unpredictable swings in giving; Borochoff doesn't think a nonprofit should hit you up for money before spending what it's got.

Charity monitors also disagree about how much fundraising should cost. The philanthropy institute won't give a high grade to charities that spend more than 25% on raising money, but the BBB alliance thinks 35%, and sometimes more, is reasonable.

Do these difficulties mean that you get to sit on your wallet this holiday season? Hardly. Legitimate charities need your money, and most of us feel some obligation to give back a little of our good fortune each year.

If you have the time and inclination, there are plenty of ways to check out a charity, and I'll give you some suggestions below. If you're in a hurry, though, here's a down-and-dirty giving guide that will all but ensure you don't give money to the wrong folks:

Hang up on telemarketers. It may seem convenient to give over the phone, but it's a bad idea in so many ways. Not only can you be easily scammed giving your credit card number to a stranger, but any charity that pays telemarketers is probably spending too much on fundraising.

Ignore pleas to help cops and firefighters. Scams abound in this corner of the fundraising world. As Borochoff points out, it's not the old days when the widows and children of these public servants were routinely left penniless. These days, their benefit packages are typically some of the best around.

If you really have your heart set on helping your local firefighters or cops, be proactive: Take the time to call the department, find out if it has an official foundation or benevolent fund, and send your money there. If you want to deduct your donation, make sure you're not sending money to a union lobbying group or a fund that benefits specific people.

Continued: Bogus charities for veterans

Be wary of pleas for veterans. The bad guys know that sympathy is high for those fighting our wars and are more than willing to turn that against us by making heart-rending appeals for bogus causes. If you want to benefit veterans, consider donating to one of the charities that rates an "A" from the philanthropy institute:

* Armed Services YMCA of the USA.

* Fisher House Foundation.

* Homes for Our Troops.

* Intrepid Fallen Heroes Fund.

* National Military Family Association.

Avoid car donation charities. This is another really awful idea for virtually everyone except the for-profit junkyards and auction houses that process the cars -- and that benefit handsomely from your donation. The charities receive as little as $100 per car, and the IRS has significantly tightened the rules on how much you can deduct (you're usually limited to whatever the car sells for at auction, which may not be much).

Of course, you may not get a write-off at all; only people who itemize their deductions can take a tax break from donating their cars. That means most taxpayers aren't eligible, since they take the standard deduction.

Pick from the philanthropy institute's "top-rated" list. The institute is probably the hardest to please of the charity watchdogs. You can find its list of top-rated charities online.

Still reading? If you've hung around this long, you may have the tenacity needed to thoroughly investigate a charity on your own. But don't expect the process to be simple.
How you can investigate on your own
Your first step is to make sure you know the charity's exact name and the address of its headquarters. It's easy to get confused by sound-alike names.

For years, I thought Save the Children was the sponsorship charity that flunked watchdog standards, when, in reality, it's Feed the Children that ran afoul of the philanthropy institute. You wouldn't want to confuse the Cancer Fund of America, which recently settled a deceptive marketing case with the state of Georgia, and the Cancer Research Institute, which gets high marks from charity monitors.

A genuine charity or law-abiding fundraiser should be willing to send you the information you request, and most will send you their latest IRS Form 990 filings on demand. If a charity balks, you can pretty much strike it from your list of potential beneficiaries.

"A legitimate charity will be happy" to provide information about itself, said Bennett Weiner, the chief operating officer for the BBB alliance. "The questionable ones won't. They just go on to the next caller."

How to get charity data quickly and cheaply
Charities are allowed to charge a nominal fee to copy their 990s. If you want a cheaper or faster look, here are a few places to try:

* GuideStar has data on more than 850,000 IRS-recognized nonprofits and posts 990s for many. Access to 990s is available with free registration.

* The California Attorney General's Office has online records for many charities and commercial fundraisers.

* The IRS doesn't have 990s available online, but you can write to the agency's Ogden, Utah, service center and request them, Weiner said. While you're waiting for the report to arrive, you can check Publication 78 to make sure the charity is properly registered as a tax-exempt entity.

Here are 3 ways to make sure your donations aren't squandered.

As I've noted, you may not get the straight scoop about fundraising from a Form 990, but you should be able to see in general how a charity says it is spending its money -- and how much it pays its top five officers.

Borochoff also recommended asking the charity for a copy of an audited financial statement. These, he contends, are tougher to fudge than a 990, although they also may be tougher for a layperson to decipher.

What if you decide you could use some help? Here are some possible sources:

* The American Institute of Philanthropy's Charity Rating Guide gives letter grades (A through F) to 500 of the better-known nonprofits and is available for $3. Send a check to the organization at P.O. Box 578460, Chicago, IL 60657.

* The BBB's Wise Giving Alliance has reports for more than 600 charities on its Web site. As I said, the BBB standards are often looser than philanthropy institute's, and there are no letter grades. Charities either meet the BBB standards or they don't.

* GuideStar offers financial summaries and other data to help consumers investigate and compare charities, but it is not a charity watchdog. GuideStar's position is that donors can use its databases to decide for themselves.

Published Dec. 11, 2008

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By all accounts, Americans are extraordinarily generous when it comes to helping people in need and causes worthy of support. Individuals, corporations and foundations in the United States donate billions of dollars each year to charity, but some charities have more value than others. And there are also some outright frauds. At the end of this year, which saw so many give so much for the relief of earthquake, tsunami and hurricane victims, seems a good time to talk to the American Institute of Philanthropy, which publishes quarterly ratings of how well and honestly charities spend the money they receive. Daniel Borochoff is the president, and he joins us from our studios in Chicago.

Thanks very much for being with us.

Mr. DANIEL BOROCHOFF (President, American Institute of Philanthropy): Yes, my pleasure to be here.

SIMON: And how do you rate a charity from A to F?

Mr. BOROCHOFF: We do an evaluation of the financial performance and accountability. We don't just pass along whatever the charity says because the charity, when their hand out asking you for their money, they're going to make themselves look as good as they can. So we actually tell you how they're spending your money. And a lot of times what they say is a program isn't at all what you think is a program. So we will sort out all that and give you a letter grade rating, A plus and F, just like in school.

SIMON: Recognizing that this might make a difference to people this year, just arbitrarily, could you spotlight some of the groups that earned an A?

Mr. BOROCHOFF: Alaskan Conservation Foundation, the Epilepsy Foundation, Juvenile Diabetes Research Foundation, Human Rights First.

SIMON: American Red Cross gets an A?

Mr. BOROCHOFF: They received an A minus. They get about 90 percent of programs the cost to raise a hundred dollars is about 22 dollars. It should be better with what they raise for Katrina and Rita. And it's quite a bit. It's 65 percent of the 3 billion raised, so they're coming in at getting around $2 billion.

SIMON: YMCAs and YWCAs also earn an A.

Mr. BOROCHOFF: They manage to get most of their money towards program services and not spend too much money on their fund-raising costs. This is the national office. You would want to look at each local place differently. They don't combine all of their local Ys that are independently operated. So the national office, the national headquarters are run efficiently.

SIMON: All of the regions of the Salvation Army, we'll note, receive A to A minuses. I have to ask you, though, the Christopher Reed Paralysis Foundation, a name that's so important to people, gets a C minus. Why is that?

Mr. BOROCHOFF: Well, they have not been doing quite as well as they could with raising money. You would think that something as popular as that cause would be able to do better, but, you know, they're just not being as efficient as they really could be. Hopefully, they'll improve and, you know, now that their founder has passed, they've got some, you know, reorganizing and they're going to have to be, you know, doing things a little differently now.

SIMON: All right. I want to mention some of the F's, and one of the first things that strikes you is that a lot of the F's have very appealing, compelling names, like the International Children's Fund or Feed the Children. I mean, who wouldn't want to give money to a group called Feed the Children.

Mr. BOROCHOFF: Certainly, but they only spend 18 percent of the cash you give them on program services; 60 percent of the money goes for mailings and infomercials on television. It's not a financially efficient organization. There's more articles on charitywatch.org about that particular group. Be careful. Anytime you see the world children, cancer, veterans, police--there's look-alikes. It's easy to get confused, too, so make sure you know the program.

SIMON: Feed the Children could easily be confused by...

Mr. BOROCHOFF: Save the Children, for instance.

SIMON: Exactly, yeah. Save the Children is a very different group.

Mr. BOROCHOFF: Right. Save the Children receives an A grade. They're an incredibly important international relief and development organization, child sponsorship organization that's played a major role in a number of these big disasters that, you know, we've had recently in the past year.

SIMON: Native American Heritage Association and the Native American Rights Fund both get an F in your rankings.

Mr. BOROCHOFF: They spend too much money raising money. They hire outside professional fund-raisers. There's a lot of 90-10 contracts out there. which means the fund-raiser gets to keep 90 percent of the money. So when you're asked to give money, ask who's doing the asking. If its a professional solicitor, on average, only a third of the money is going to make its way to the charity.

SIMON: Forgive me for--I knew there were professional fund-raisers who take a slice of what they raise, but 90 percent is practically the whole pie.

Mr. BOROCHOFF: Well, not only that, some of these groups--they control the mailing list so the charity has no chance of improving because they can't switch fund-raising companies. And also, you can be sure that they don't have that much loyalty to protecting your privacy and your name and they're going to want to trade and sell it to every other charity and business that they can think of or that they have as a client.

SIMON: Is there any way for someone who's sitting at home opening up envelopes or watching late-night appeals on TV with soulful-eyed children in want as to what some of the tell-tale signs would be of a responsible organization and one that's just interested in picking their pockets?

Mr. BOROCHOFF: Be careful because I've heard some stories of them staging operations, finding cute kids with big eyes. I mean, you have to be careful. If it's too emotional, they don't want you to think it through. They're looking for a knee-jerk reaction. So let that inspire you. Let that motivate you, but then ask for some accountability. Look at their Web site, you know, call them up, get an annual report. Find out what they're actually accomplishing in relation to the money they're spending.

SIMON: There's a growing concern among some Americans now that they not donate money to a charity that winds up assisting a terrorist organization.

Mr. BOROCHOFF: Right. The Treasury Department has a lot of new rules now and lists to check before giving. That's why it is easier to go through an American-based non-profit that's following the Treasury Department rules and checking all of the lists. It is risky for yourself to send money right over to an international group or something you see on the Internet because you could be funding a terrorist, so you want to try to avoid that unless you have personal connections, you know, internationally, you really must go through an American group that knows what they're doing.

SIMON: When Americans were donating literally billions of dollars for relief after Hurricane Katrina and Rita, there were people in the field that said, `Look, this is very nice, but we really also have to concentrate on raising money after the emergency is perceived to have passed in long-range sustaining efforts in that region of the country. That's important, too, and often donor interest falls off after the story's out of the headlines. If people want to contribute to those long-range, sustaining efforts, where can their money best be directed?

Mr. BOROCHOFF: Depending on the disaster, but for instance, in the Katrina/Rita disaster, the Red Cross uses the money very quickly for emergency aid and people automatically give to them, but people need to think about the many other great groups out there, and the Salvation Army, for instance, raised $300 million, but they've only spent 100 million because they're going to use the $200 million for longer-term efforts. And actually, with the tsunami, the Red Cross actually only spent about a third of the money they've raised for the tsunami so far. I think they raised more than they would ordinarily do, but people need to look at groups that give some for the emergency needs, but also think about the longer-term needs to get people back up on their feet, because too often we have a big disaster and the Red Cross and some groups swish in and help people with emergency needs and then they're gone and the people are still struggling. And so we gotta think about groups that help in the longer term, and at charitywatch.org for all these disasters we've listed many groups that are helping in many different ways, including scholarship job retraining, relocation of people, so there's a lot of good things you can support.

SIMON: So if I wanted to go into the charity business, would it be best for me to go into the charity business under the name Save Orphan Children or Veterans with Cancer?

Mr. BOROCHOFF: (Laughs) Yeah, you'd probably rake it in. I don't want to encourage anybody, but I cert--the Register of Philanthropy(ph) would definitely be on your back with that one.

SIMON: Well, I thought of it first, OK? Let's get that copyrighted. Daniel Borochoff, president of the American Institute of Philanthropy, speaking with us in Chicago. Thanks very much.

Mr. BOROCHOFF: My pleasure.

SIMON: And to find out how you can visit the AIP Web site and review charities for yourself, you can come to npr.org.

And you're listening to WEEKEND EDITION from NPR News.

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Nongovernmental organizations (NGOs) mirror the wide variations in governance among the countries of the developing world. The best and the worst examples of NGOs can be found. Throughout much of Africa, for example, strong NGOs have been on the frontline of the battle for civic freedom and better environmental governance, while in other parts of the region they are weak, insecure, and vulnerable to repression.

Yet, even in places where formal government structures are in disarray, such as in parts of the Great Lakes region, or Somalia, community organizations and NGOs have managed to address social and environmental concerns-against great odds. During the Rwanda genocide crisis in 1994, for example, local organizations worked in the communities that hosted refugee camps, helping people find alternative energy sources in order to reduce the destruction of local forests for fuelwood.1

In spite of the positive changes that NGOs have catalyzed throughout the continent, the overall reputation of nongovernmental organizations remains negative:

ForeignAID Rating's East Africa Director, Francis Njoga, talks about the perception of NGOs in Kenya:

"The perception of NGO’s in Kenya is negative. They are viewed as vehicles for exploiting the ignorance of donor agencies. Most people perceive NGO’s as easy get rich quick schemes where the founders and managers can earn high salaries, steal money without the fear if prosecution. All this without the need of adhering to strict performance measures.

Despite this, there are genuine NGO’s who strive to exceed expectations of all the stakeholders involved and have indeed achieved stellar returns. Unfortunately, there is no independent source of distinction between the two types of NGO’s in Kenya."

The ForeignAID.com Global Catalog for Philanthropy Online features 50 of the world's high-impact NGOs working directly to alleviate poverty. Please see the next slide to learn more about how we chose the 50 NGOs featured in this catalog.

1 Excerpted from the 2003 World Resources 2002-2004: Decisions for the Earth: Balance, voice, and power. United Nations Development Programme, United Nations Environment Programme, World Bank, World Resources Institute.

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Updated ratings for charities mentioned in AIP's archived articles can be found in the current Charity Rating Guide & Watchdog Report.


From the May 2008 Watchdog Report
Veterans Charities Protest Their F's

AIP’s ratings have recently received wide exposure from Congress and the media; particularly AIP’s appearance on the front page of The Washington Post, on editorial pages of The New York Times and on ABC and CBS News programs. This has resulted in loud complaints about AIP’s rating system from a number of veterans organizations. Three of the most vocal critics have been from the following AIP F rated groups: AMVETS National Service Foundation, Paralyzed Veterans of America, and Military Order of the Purple Heart Service Foundation.

The average American believes 22.4% is a reasonable amount for a charity to spend on overhead and that a typical charity spends 36.3% of donations on overhead, according to a February 2008 study by Ellison Research, a marketing company. Therefore, it is easy to understand why F rated charities do not like it when AIP points out that they are spending 65% or more on overhead.

The major criticism from low rated veterans charities is the claim that AIP’s rating system does not follow generally accepted accounting principles (GAAP) or rules for reporting financial information on the IRS tax Form 990. These groups posit that if AIP took the figures as reported in these financial documents, their ratings would be outstanding. While GAAP and IRS reporting rules provide guidelines for a charity to report its financial activities, these reporting rules do not measure or claim to measure how efficiently an organization is raising and spending donated dollars.

Charities have wide latitude in how they choose to report activities even within IRS and GAAP standards. In addition, a charity can spend as little as 1% of its budget on its programs and still be in compliance with GAAP and IRS reporting requirements. Direct mail and telemarketing solicitations that contain educational messages and other income-generating activities that accounting rules allow charities to report as program costs, are not considered to be program services by many donors. For these reasons we analyze and make adjustments to the audits and tax forms of some charities for consistency and to better reflect the goals of many donors who want their donations to be spent on bona fide programs.

Charities poorly rated by AIP for financial efficiency often cite favorable reviews or ratios from other sources of charity information. These other sources typically do not perform AIP’s in depth level of financial analysis and may accept a charity’s own reporting without question.

Another criticism by low rated charities is that AIP does not rate the quality of their programs. While this is true, it does not negate the value of knowing how efficiently a charity is spending its dollars. If a charity is spending 75% of its donors’ dollars on fundraising expenses, there is very little left over to dedicate to programs, regardless of their quality. AIP encourages donors to consider a charity’s program accomplishments in relationship to the resources it receives. Neither AIP nor any other charity watchdog organization has the resources and expertise to conduct program evaluations of thousands of diverse nonprofits. This is something that charities need to be doing themselves, or if needed, with the assistance of outside consultants who have a very specific expertise in the charity’s program field.

AMVETS National Service Foundation (ANSF) sent out a press release in November 2007 after ABC News reported that it and other major veteran charities received an F grade from AIP. The release said that its tax form stated that it spent 77.2% of contributions on programs that directly benefit veterans—a big difference from the 29% of fiscal 2005 non-solicitation program expenses that AIP was reporting for ANSF.

ANSF’s tax form and audit reported its second largest program to be “Thrift Stores Operations.” This item was reported as a fundraising expense in its fiscal 1999 audit. During a December 2007 conference call AIP asked ANSF’s executive director Joe Piening why its thrift shop is now being counted as a program service. Piening offered no reason to count the thrift shop operation as a program other than to say, if there is a job opening and a hiring decision is made between two potential employees with qualifications being “pretty much” equal between them, ANSF will choose to hire the vet. Piening admitted that this is the same policy as the government’s. AIP asked if there was anything else special that the thrifts did for veterans and he had no response. This is a good example of why it is important for donors to see and understand the individual items that a charity classifies as a program in its financial statements and to not blindly accept the program ratios reported by a charity or other information sources that do not scrutinize the numbers.

ANSF allocates over $2.5 million or 71% of its joint cost direct mail solicitations to program services. AIP asked ANSF to explain why so much of its solicitations were counted as program services. Piening said it was because of his letter and a decal included in the mailing. Another person in the conference call said that there was information included in mailings about ANSF having service officers that can be contacted by veterans and their families for assistance. Also participating in the December 2007 conference call was Robert Gujral, ANSF Finance Manager and husband of the president of the firm, Media Response, which has a $170,000 contract as the exclusive mailing list manager and broker for ANSF, according to its fiscal 2007 tax form. Gujral said that the proper accounting rule is followed and that some letters request that recipients write their Congressman. AIP asked what portion of ANSF’s mailing list was veterans and Piening said 20%. AIP asked if the program portion of the solicitation was ever sent out without a request for funds and Piening said no.

Jay Agg, AMVETS National Communications Director criticized AIP, including calling our rating system “bogus” in a December 2007 posting on the organization’s web site. After reviewing the finances of AMVETS, we found that it earned the same F rating as ANSF. AMVETS’ poor rating is largely due to a contract with Xentel, a fundraising company that receives 87% of the funds raised, according to AMVETS fiscal 2007 audit. AIP’s analysis shows that ANSF as well as AMVETS are both devoting only 33% of their budgets in fiscal 2007 to programs that are not part of their fundraising pitches. This is interesting because Piening admitted to AIP that ANSF, unlike AMVETS, does not use a professional fundraising company because it would not be possible to meet the 65% to program guideline that watchdogs call for.

Paralyzed Veterans of America (PVA) claims that it “invests 73 percent of all donations received in our veterans.” Under nonprofit accounting rules, charities are allowed to include large portions of the costs related to their direct mail and telemarketing appeals in this program percentage. Once you subtract out programs that include direct mail marketing or other fundraising appeals (over $29 million in 2006), donated advertisements and other non-cash items (over $17 million in 2006), PVA spent only 34% of its budget on bona fide programs to help veterans.

One reason PVA may have such high fundraising costs is that it has locked itself into an arrangement with two direct mail and marketing firms that requires it to purchase $150 million in products and services from 2004 through 2011, according to its fiscal 2006 audit. PVA sold these two for-profit firms for $6.3 million in 2004 and as part of the sale agreed to make purchases from them of nearly 24 times this sales amount during the next seven years, according to PVA’s audits. In response to AIP’s criticism of this agreement, PVA’s chief financial officer John D. Ring told The Washington Post in a February 2008 article that it “would have to spend that money anyway and preferred to do business with the companies it knew.”

Military Order of the Purple Heart Service Foundation (PHSF) also utilizes the fundraising company, Xentel. It has filed with Colorado’s Secretary of State a report on its contract with Xentel that allows this company to retain 84% of the money raised from 2006-2011. An official from PHSF defended its hiring of a professional fundraising business in a letter to ABC News by saying “we believe…donations are best utilized by providing needed assistance to our veteran community and not in developing at our cost…an internal volunteer fundraising program.” PHSF also said in its letter that it tries to minimize fundraising costs and maximize returns.

PHSF raises and controls funds for the Military Order of the Purple Heart (PH). PHSF, which reports having over $27 million in unrestricted fund balances in its fiscal 2007 tax form, asked PH’s national commander, Henry Cook, to reduce the budget for his veterans service program by at least $250,000, while PHSF was holding a $40,000 black-tie dinner for a retiring official, according to an ABC News story. The story also reported that PHSF officials were given access to a luxury suite at a Washington Redskins game for buying commercials during the football broadcast and showed Cook saying that he was told by PHSF that he could not bring wounded veterans to the suite and instead was given two tickets in the stands for them. The complete video, which includes comments by AIP’s president, is posted at charitywatch.org in the "Hot Topics" section.

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WRI receives top marks from WORTH MAGAZINE and two prominent NGO rating groups

For the second year in a row, Worth Magazine named WRI as one of America's top 100 charities. The magazine cites WRI's work on transportation (see EMBARQ: WRI's Center for Transportation and the Environment) and green power (see Green Power Market Development Group). For more information, see http://www.worth.com/content_articles/display/articles.cfm?id=%298%2F%2A%21GJ%5F%26%22D%3F%26%0A&tid="

WRI receives an "A-" rating from the American Institute of Philanthropy (AIP). (AIP) is a nonprofit charity watchdog and information service which seeks to maximize the effectiveness of every dollar contributed to charity by providing donors with the information they need to make more informed giving decisions. For more information, see http://www.charitywatch.org/toprated.html#enviro.

WRI also receives a "4-star" rating from Charity Navigator. Charity Navigator provides information on more than seventeen hundred charities and by evaluates the financial health of each of these charities. For more information, see http://www.charitynavigator.org/inde...orgid/4766.htm.

World Resources Institute (WRI) welcomes companies to join our efforts by becoming members of WRI's Corporate Council. Council members receive WRI assistance in identifying environmental trends relevant to their industry, discussions on current issues, and cutting-edge information on business ideas. Members also receive WRI publications and briefings; access to WRI staff; consultation on issues of sustainable business; access to Pathways, our knowledge base on sustainable business; and complimentary registrations to the annual Sustainable Enterprises Summit. Corporate Council leadership members receive invitations to the corporate leadership dinner with WRI's president and access to WRI staff for speaking engagements.

World Resources Institute | 10 G Street, NE (Suite 800) | Washington, DC 20002
phone: +1 202 729-7600 | fax: +1 202 729-7610 | email: jaym@wri.org

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As Jimmy always said:Try to be good.

Last edited by Danny; 16th January 2010 at 03:19.

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