Does the mere size of the infrastructure in large foundations create an issue in itself?

April 13, 2015, 10:04 am

Here is an issue I’ve not seen before: Is the size of the infrastructure at humongous foundations a problematic issue just by itself?

David Callahan, writing at Inside Philanthropy on April 10, stretches my brain:  Ford Sinks Over $1 Billion a Decade Into Overhead. Is That Money Well Spent? – First, adjust that decade cost figure to annual.  That would be $100M a year.

In 2013, the Ford Foundation spent $146M on G&A out of $685M total expenses, according to the article.  That is 21.3%, which would usually be considered respectable.

The issue, according to the author, is their overall approach of making programmatic grants. That means the foundation chooses this study, that new effort, and another ongoing project. Which in turn means they drive the programs of their grant recipients. That heavy control approach requires a lot of staff.

Therein lies the rub, according to the author. With that approach, foundations gather power and authority unto themselves. At that scale, the agendas of the grant officers are driving the funding of lots of charities.

The author’s perspective: Read the rest of this entry »

More good stuff on looking at overhead or impact

March 9, 2015, 8:35 am

Here are a few more articles in the ongoing conversation of how to assess charities: overhead or impact.

2/25 – Christianity Today – Welcome to the Golden Age of Global Charity – Review emphasizes portion of book that describes the growing levels of accountability for effectiveness.

Read the rest of this entry »

More discussion on how to analyze a charity’s financial statements. Red Cross as an illustration.

January 19, 2015, 9:14 am

There is some dialogue in the nonprofit world on how to characterize the ‘overhead’ of American Red Cross. Here’s a few articles.

1/9 – ProPublica – Senator Demands Answers on Red Cross’ Finances – Sen. Grassley is asking the American Red Cross to explain the math behind their widely repeated public comments that 91% of donations go to their services. Article says their audited financial statements reportedly show that 26% of expenses are for fundraising.

01/2015 – Charity Watch – Don’t Be Misled by Deceptive Charity Efficiency Claims – Do you see a big difference between these two statements?

Read the rest of this entry »

An illustration why interpreting functional allocation information is difficult: the Wounded Warrior Project financials

October 24, 2014, 8:33 am

Apparently there is conflict going around on how to interpret the functional expense allocation information for Wounded Warrior Project.

All their info is laid out in their audited financial statements, which you can find here. Their annual report, audited financial statements, and 990s for the last eight years are all available on their website. Good on them for making all that info readily available. That is an example for all charities to follow.

How can three different calculations all be correct?

Read the rest of this entry »

More good stuff on overhead ratios and impact 8/5

August 5, 2014, 7:11 am

Here are a few more articles in the ongoing conversation of overhead and the “worst charities.”

Good discussions are developing on the Alliance for Charitable Trust Linked-In group. That’s where I found two of the following articles.

3/24 – Skoll world forum – Reimagining the ‘overhead’ debate– Article provides an example of full costing instead of ‘overhead’ ratios. The organization calculated the grand total of cost for their program in Malawi is $885,767. They then provided three paragraphs explaining what that $886K accomplished. Great illustration of outputs with several outcomes included in the narrative instead of a supporting services ratio. Donors can make their own decision whether that program deserves their support. Read the rest of this entry »

It’s complicated. Evaluating charities and doing business in China version. Part 2

July 22, 2014, 6:59 am

First post in this series looked at another illustration of the complexity of doing business or ministry in China.

This blog has looked several times at the issue of how complicated life is.

This post ponders complexity in terms of how to evaluate and compare charities that have vastly different operating circumstances.

Complexity of evaluating charities

Read the rest of this entry »

More good stuff on overhead ratios and “worst charities.” 7/16

July 16, 2014, 8:14 am

Here are a few more articles in the ongoing conversation of overhead and the “worst charities.”

“Overhead ratio”

7/11 – Chronicle of Philanthropy – Wounded Warrior CEO Rips Rating Systems as ‘Ineffective and Misinformed’ – CEO says Wounded Warrior could have modified their operations to manage the overhead ratio, but they choose instead to focus on long-term service to their community, which involved upfront costs and other efforts that affected ratios. They disagree with the attitude that overhead is bad and fundraising is either a sign of inefficiency or fraud. In the tell me how you really feel category, the CEO says this of the rating agencies:

“Essentially what these groups are doing is passing judgment on decisions that were made by charity boards and staff on how to best fulfill their missions, meet the needs of their constituencies, and sustain their organizations over the long term,” he said.

He also mentions what few others will discuss: not all charities are completely honest in their functional allocations.

7/15 – Huffington Post – Measuring Charity Effectiveness: Manage Your Mission, Not Your Rating Steve Nardizzi, CEO of Wounded Warrior Project goes in-depth on why the overhead ratios and rating agency methodology is out of line. This is a must read if you have been following the overhead debate. Several quotes:

The two main issues with ratings agencies (sentence diagrammed by me for emphasis): Read the rest of this entry »


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