More good stuff on overhead ratios and “worst charities.” – 2–14

Some more articles that are worth attention but I don’t have enough time to respond in a full post. Here are the headlines, with links and a brief comment below: Super Bowl t-shirts, costs to raise funds, and an art museum gets ready to close its doors.

Impact

Some smarty-pants comments showed up in the twitterverse about World Vision shipping game champ Bronco t-shirts around the world.  Recap at Nonprofit Times on 2-3 – World Vision Gets Ready To Ship Broncos Gear.

(For future reference, the score was so lopsided that the joke going around was that maybe the Broncos would show up in the second half or they were stuck in a bus somewhere – they didn’t win.)

An oldie-but-goodie for background – 3/16/2011 – Aid Watch – World Vision Super Bowl Shirts: the Final Chapter – After considering the request for a while and searching some documents, World Vision provides what is asserted to be a needs assessment to support sending Super Bowl t-shirts overseas. Writer’s analysis finds no support in the needs assessment for clothes, let alone Super Bowl t-shirts. Cost of $0.58 per t-shirt is huge portion of likely value at destination of $0.20 to $1.20.  Completely apart from the cost as percentage of value, that leaves a residual value at destination of somewhere between negative $0.38 and positive $0.62 per shirt.

 “Overhead ratio”

1-31 – Orange County Register – Commercial fundraisers swallow millions meant for charity– Aggregated date from the California AG indicates for-profit fundraisers collected $300M in aggregate on behalf of charities in the state during 2012. Amount forwarded to the charities was about $108M, per the article. That means costs to collect were about $198M in aggregate, or about 63% of the funds raised.

2-21 – Orange County Register – Are you donating your car to charity, or for-profit middlemen? – Article discusses one of the largest companies that handles donated cars for charities.  Data from the AG indicates the company had revenues of $6.37M from the donated cars in 2012 and $714K went to the charities, or 11.2%.

On the other hand….

While 11% seems like a very low percentage, keep in mind that a lot of the cars have to be towed and repaired before they can be sold. Don’t forget advertising and paying a sales staff. Those costs come out of the proceeds. 

From my limited observation over the last 20 years of cars, boats, computers, jewelry, and other such items given to NPOs, these donated items tended to be things that couldn’t be sold for much more than the tax value of a donation (yes, there is deeper meaning to that sentence and a full article’s worth of discussion). If the question comes up, I advise my clients to steer clear of such donations.

I would be very curious to pull a statistical sample of the cars making up $6M of sale proceeds and look at photos and descriptions of the cars involved. My wild guess is you would be surprised at the poor condition and high mileage and old age of the vehicles. I wouldn’t be surprised. 

Board governance

I’ll sneak this in here since I don’t have another good place to post this tidbit of more good stuff…

2/20 – Wall Street Journal – Clueless at the Corcoran – I’ve not been following the issues at the Corcoran. The article says the board is about ready to sign a deal that gives their building and art school to George Washington University. Their art work will go to the National Gallery of Art. 

Wild guess at valuation mentioned in the article?  $2 billion.  Real value? Priceless and irreplaceable. What are Church, Bierstadt, and Remington pieces worth?

Apparently there has been a long string of expensive, false starts to revive the organization. The article’s author lays blame for the end of the art gallery on poor governance. Board members need to know their organizations, its values, and have the vision & drive to keep it alive. I’m sure there are other ways to look at the Corcoran’s demise, but the article gives you ideas on how to not lead your charity.

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