Major report out on “America’s Worst Charities” – Parts 2 and 3 are on the way

The title of the series is “America’s Worst Charities.”  This is a collaborative effort from the Tampa Bay Times, the Center for Investigative Reporting, and CNN.

Don’t know how many words are in the first report, but it took fifteen clicks to page down the article on my monitor.

The report accumulates a list of what is labeled the 50 worst charities in the U.S.

If you ever check in with my blog, you will definitely want to read the Tampa Bay Times reports in detail.

Here’s some links for you: (more…)

Jim Ulvog

Outcome measures – On the other hand…

Moving to outcome measures won’t make things perfect in terms of evaluating charities.

There are some downsides to consider, as mentioned by Nonprofit Quarterly – Want Charities to be Evaluated Based on Impact? Be Careful What You Wish For.

The article raises three concerns, all of which we need to think about very carefully. I will mention the three issues and comment on each.

First, (more…)

Jim Ulvog

Here is an outcome measure you would love to have. Would this be better than a low overhead ratio?

How would you like to share this with potential donors instead of describing your low overhead ratio?

Let’s say you are a child sponsorship organization.

Here’s your message:

Children sponsored in our program are

27 to 40 percent more likely to complete secondary school, and 50 to 80 percent more likely to complete a university education

than children in their village who were not in the sponsorship program.

Furthermore, when children sponsored in our program grow up, they are (more…)

Jim Ulvog

Guest post – Unintended consequence: the pressure for ‘good’ overhead ratios creates pressure to get GIK

The following guest post was submitted to me by a reader. As with other guest posts, this is his/her opinion and does not represent the opinion or experiences of his/her employer. It also does not represent my opinion.

I wrote the headline. I hope it captures the tone of the post.

For your consideration:

The more and more that I hear about the “controversy” over pharma values, the more and more it shows the completely unnecessary overreliance on overhead rates as a mean of valuing charities. Think about some of the issues that arise from the use of overhead rates:

  1. Charities feel pressure to increase revenue (Charity Navigator expects 10% a year growth in addition to low overhead and high net assets)
  2. Charities may get into a donation that can quickly boost revenue without adding fundraising cost (like GIK, or dewormers)
  3. Charities forgo donations when they no longer provide high enough revenue (charities now are using far less dewormers because they no longer have high revenue value)

What does this mean?

(more…)

Jim Ulvog

Internal control, 5th century version

(cross-post from my other blog, Attestation Update.)

Here is an illustration of internal control, a specific mention of “checks and balance”, and the goal of internal control from the 5th century:

From the Fourth Ecumenical Council in 449 A.D.: “As we have learned, in some churches, the bishops administer the material goods of the church without a treasurer; it has seemed right and proper that every church with a bishop should also have a treasurer taken from the clergy who will administer the church’s goods with advice of his own bishop. In this way the administration of the church will not be without checks and balances, the goods of the church will not be dissipated, and the priesthood will be free from all suspicion.”

The quote was listed at LinkedIn by a former colleague, Jennifer Perez, CPA.

That’s too good of an explanation of internal control to let pass without quoting it and making some comments.

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Jim Ulvog

Mebendazole: red herring or presenting problem?

Is 500mg mebendazole a red herring or a way to focus discussion on many issues surrounding GIK valuation?

GIK Valuation: The issues not being discussed is a guest post on this blog. The author starts his/her post by saying the discussion of 500 mg mebendazole is distracting us from the real issues, which are much more serious.

From Dictionary.com

Red Herring: something intended to divert attention from the real problem or matter at hand; a misleading clue.

The author and I disagree on the role of 500mb mebendazole.

I think the author’s point is that focusing on mebendazole distracts us from other issues.

I believe it is this specific med that is generating a disproportionate amount of GIK revenue. I perceive a very material portion of GIK revenue in the sector went away when this one med was revalued at the time SFAS 157 went into effect.  My guess is that a material portion of the remaining GIK revenue in the sector would go away if that one med were valued at something similar to the price on the international market.

I also think that talking about just one medicine allows us to see a host of other issues. If the NPO community can resolve the issue arising from a discussion of mebendazole, I think that most of the other issues regarding GIK valuation would fall into place.

Once we get beyond whether mebendazole is a red herring or a presenting problem, the author and I are in agreement on quite a few issues.

Issues for discussion

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Jim Ulvog

Guest post – GIK Valuation: The issues not being discussed

The following is a guest post submitted to me from a reader. As I read the article, it became obvious that the author is familiar with the issues of the relief and development organizations.  Whether the author is an outside auditor, accountant inside an NPO, or even a medical vendor does not matter. Obviously the comments reflect the author’s opinion and not those of his/her employer.  This also does not reflect my opinion.

Agree or disagree as you wish, here are ideas deserving your careful consideration:

GIK Valuation:  The issues not being discussed

While there are many, if not dozens, of misconceptions and false information floating around pharmaceutical values, GIK values, and NPOs supposed conspiracy to inflate revenues to improve their Charity Navigator rating, I thought I would point out a few things to try to bring the conversation around to the big picture rather than focusing on the quite narrow discussion around non-FDA approved, 500mg mebendazole.

500mg mebendazole is a red herring

(more…)

Jim Ulvog

“If We Want Our Funding to Change the World…”

Great video explaining it takes more than the fun, visible program costs to change the world. If We Want Our Funding to Change the World…

[youtube=http://www.youtube.com/watch?v=z_w3v6TxJZQ]

I’ll mention just two sentences from the video by Donors Forum:

The true list of what it takes to run a nonprofit’s mission and not just their program is long. If you want success you must pay what it costs to succeed.

Check out their suggested reading list. There are links to lots of good stuff.

Jim Ulvog

Food for the Hungry financial statements and 990 are available for 2012

The audited financials are available on the finance page of their website here. Their 990 is not yet available on their website but is available at the North Carolina Secretary of State’s website here.

I think the financials were posted in the last few days. The N.C. material has a date stamp of 5/17/13. 

Just a few brief tidbits from the reports. (more…)

Jim Ulvog

Conversation underway on previous guest post

The guest post from Friday is generating some good discussion. If you haven’t looked at that post since it was published, you might enjoy the conversation. Several different people have joined in.

Here is the post:  Guest post – Determining FMV is difficult. Let’s keep in mind the good that is accomplished by donated meds.

Anyone have more thoughts on what’s been said?

Jim Ulvog

Overhead ratios are the wrong way to look at charities

Dan Pallotta has a superb TED Talk explaining the fallacies of using overhead as a measure for charities: The way we think about charities is dead wrong.

[ted id=1688]

Just a few highlights to share along with my observations (comments in italics are my paraphrase of his points):

We have created different rules for the for-profit world and the charity world. There are five areas of discrimination: (more…)

Jim Ulvog

Thank you

It is the VETERAN, not the preacher,

who has given us freedom of religion.

It is the VETERAN, not the reporter,

who has given us freedom of the press.

It is the VETERAN, not the poet,

who has given us freedom of speech.

It is the VETERAN, not the campus organizer,

who has given us freedom to assemble.

It is the VETERAN, not the lawyer,

who has given us the right to a fair trial.

It is the VETERAN, not the politician,

Who has given us the right to vote.

Source unknown

Jim Ulvog

Guest post – Determining FMV is difficult. Let’s keep in mind the good that is accomplished by donated meds.

The following is a guest post submitted anonymously. The writer raises some good points and good questions. I’ll post it verbatim except for breaking two large paragraphs into smaller ones for easier reading. I hope the title of the post, written by me, fairly summarizes the ideas. 

One of the cool things about blogging is the ability to provide links to cited sources – if the author would like to forward links for the two quoted sources, I will add them.

Thanks to the author for taking the time to write. Here are his or her thoughts:

(Update 5-31: In case it wasn’t obvious, this post reflects the author’s opinion and not that of his/her employer. It does not reflect my opinion.)

Thank you for providing a space for this conversation. I have studied this specific aspect of researching fair market value (FMV) of donated items in depth. As with any discussion we must ensure that we start with the same definition of fair market value.

Accounting guidelines state that FMV is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To bring it into simpler terms, if I am selling apples and you are looking to buy apples, what price can we agree upon?

There are three points that I would make to start the conversation on the valuation of donated goods.

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Jim Ulvog

Another unsettling thing I’ve learned while blogging – the definition of poverty p0rn

If you want to stretch your brain farther than you thought possible, start blogging.

You can stop laughing now. As a cautious, restrained, introverted CPA, it is usually a half-inch journey to travel the entire distance of my comfort zone.

Starting my own business stretched that zone. Blogging shredded it.

One of the opened frontiers for me was looking at fundraising and international aid in a completely new way. A while back I saw some materials from one of the international aid NGOs. With my new vision I could see the manipulative story and oddities in the video. Evoking pity was the goal throughout.

Having already been stretched, I was able to see things differently. Like noticing every helping face in a brochure was white. Like realizing every needy face was brown or black. Further reflection revealed the only happy black face was next to a newly painted hut (which was probably provided by an aid organization and the cause of the smile).

I now know the name for that:

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Jim Ulvog