overhead ratios – Page 3 – Nonprofit update.

Financial info for the 4 charities the California AG accuses of overvaluing donated medicine

For future reference, here is some select financial information on the charities that have been accused of overvaluing donated medicine.

In March 2018, the Attorney General of California filed cease and desist orders against three charities and a complaint against one.

The complaint was resolved with a stipulated judgment the same day the complaint was filed. Resolution? The National Cancer Coalition agreed to dissolve.

Listed in this post is some data from the most recent set of financial statements available at the charities’ web sites along with the 2015 info, which is the latest year cited in the cease-and-desist orders.

Since the cease-and-desist orders allege material misrepresentation in the audited financial statements, the auditor is also listed. Therefore this is an audit issue as well as an accounting issue.

I will make an educated guess that the 2017 financial statements for MAP and FffP will not be available until after the impact of the AG’s cease and desist action is assessed. Looking in from the outside, it seems to me like this issue would constitute a material subsequent event.

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March 14, 2018, 11:00 amNovember 17, 2018, 7:59 amJim Ulvog

California A.G. files complaint against a charity for overvaluation of donated medicine. That charity agrees to dissolve itself. Three other charities issued cease-and-desist order.

“The Evolution of Law; Bas Relief, Los Angeles Superior Court” by JoeInSouthernCA is licensed under CC BY-ND 2.0

(update: headline modified)

The conflict over donated pharmaceuticals has heated up again.

The California Attorney General has filed cease and desist orders against three large charities who received between 89% and 98% of their revenue from ~~medical~~ GIK.

Update: Those percentages appear to include all GIK, not just medicines. For example, in 2015 Food for the Poor had $1,159M total income with $1,033M of donated goods, according to their audited financial statements. According to their 990 for 2015, of the total GIK $818.7M was drugs and medical supplies, $110.8M was clothing and household goods, with $103M of other GIK. For 2015 donated drugs and medical supplies are 70.6% of total support and revenue.

Update: For MAP in 2015, total drugs and medical supplies from Schedule M of the 990 ties to the donated inventory on the audited financial statements. The only other GIK listed on Schedule M are securities, which amount ties to the financial statements. For 2015, donated drugs and medical supplies are 97.8% of total revenue and support. Likewise for CMMB, the drugs and medical supplies listed on Schedule M ties to the line donated pharmaceuticals, equipment and supplies on the audited financial statements. For 2015, donated drugs and medical supplies are 90% of total support and revenue.

A complaint was filed against another charity, National Cancer Coalition, for overvaluation of GIK. The charity conceded the state’s claims and agreed to terminate the charity’s existence.

The three large charities are Food for the Poor, MAP International, and Catholic Medical Mission Board.

The cease and desist orders can be found at the AG’s web site:

Actions regarding the charity closing its doors:

This post will describe the complaint against NCC and the stipulated judgment.

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March 14, 2018, 8:51 amMarch 14, 2018, 9:52 pmJim Ulvog

Podcast on turmoil involving Wounded Warrior Project

If you’ve been following the media turmoil surrounding Wounded Warrior Project, you will want to check out a podcast from The Contributing Factor (that is Bill O’Reilly’s website): Podcast: Ousted Wounded Warrior Project Executives Speak Out.

There are interviews with the two departed senior executives.

That page also has written responses from the board denying the specifics in the Doug White report.

The board asserts that giving dropped as soon as the media reports surfaced. Mr. Nardizzi asserts that he was watching the giving until the day he was released and noticed the giving was only 1.7% below the projected income.

Check out the podcast. I’ll try to have more comments later.

October 1, 2016, 11:44 amJim Ulvog

A completely different perspective on the crisis surrounding Wounded Warrior Project.

Here are a few articles which will give you a different way of looking at the recent publicity surrounding Wounded Warrior Project. I’ve been swamped by several major projects so haven’t had much time to write recently. Those projects are still not done so I won’t be able to spend as much time on this post as I would like, yet I want to get some comments online for those who have been following the story.

The biggest article is The First Casualty: A report addressing the allegations made against the Wounded Warrior Project in January 2016 by Doug White, published September 6, 2016.

There is a lot of information about the entire story which has received minuscule coverage. Here is my quick recap of his major points:

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September 26, 2016, 9:53 amSeptember 26, 2016, 9:58 amJim Ulvog

Restructuring underway at Wounded Warrior Project

Some of the recent news regarding WWP. Much more to say, not enough time today.

Wounded Warrior Project released their financial statements for fiscal year ending September 30, 2015. One sentence summary is they have continued the accounting practices in place for 2014, which have drawn lots of criticism. At first glance, looks to me like functional allocation of expense methodology is unchanged from 2014. Much more discussion is needed on the issue.

Tim Sandoval describes the issue on 8/17 at Chronicle of Philanthropy (behind paywall): Wounded Warrior Sticks With Accounting Rules That Drew Fire.

Layoffs and restructuring have begun:

8/30 – News 4 Jax – I-Team: Executives laid off, reassigned at Wounded Warrior Project – Article says several executive vice presidents have been let go or reassigned. More changes at the EVP level are expected.

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August 31, 2016, 9:14 amJim Ulvog

Initial reactions to Sen. Grassley’s letter to Wounded Warrior Project

Here are a few of the first reactions I’ve seen to the letter that was released to the media by the Senator’s staff on Monday.

Professor Brian Mittendorf describes what he sees as The Fundamental Issue in the Wounded Warrior Project Inquiry. The underlying issue in the letter from Senator Grassley to WWP is just a different way to look at the core issues in the discussion. The issue: (more…)

May 18, 2016, 8:52 amMay 18, 2016, 8:55 amJim Ulvog

GuideStar begins major effort to let charities report their outcomes

GuideStar Premium is a new feature allowing charities to describe their goals and what progress they’re making. This provides NPOs the opportunity to quantify their outcomes and impacts.

This is a big step. It is a wonderful experiment.

GuideStar Platinum: Measuring Nonprofit Performance at Scale provides an overview of the new platform. This page provides more detail on the service.

Charities are allowed to self define the measures used. Organizations self measure their progress.

This will create wide variety in the measurement tools. I believe that is a wonderful thing. Self defining outcomes will allow a measure that is very carefully tailored to a particular organization. Over time I am guessing there will be some sort of comparability between charities within a specific sector which will allow some vague level of comparison within sectors.

The important point is that the outcomes for a rescue mission are radically different from an at-risk youth mentoring program, which in turn are radically different from a civil rights group or public issue advocacy group. Each organization needs a metric that specifically addresses what that organization is trying to accomplish.

There are somewhere in the range of 250 charities listed at Platinum Early Adopters. Congrats to these organizations taking the first struggling steps to publicly declare their quantitative progress against their outcome goals.

I took a look at the results for about a dozen of those early adopters. Here’s what I learned from my nonrandom sample.

Traditional input measurement

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May 13, 2016, 8:54 amMay 13, 2016, 1:50 pmJim Ulvog

Lots of news about Wounded Warrior Project controversy in last few days – 4/1

Lots of things in the news this week. Here are a few things that caught my eye, including Steve Nardizzi and Al Giordano starting to speak out on public platforms.

Public service announcement ads – You can find the Youtube feed of the WWP PSAs here. Brian Mittendorf asked to see the PSAs and WWP provided the link.

Ponder ads in light of ASC 958-720-45 requirements. There is huge room for discussion here. As a tip for enterprising reporters, here are my two tweets:

wwp joint cost alloc

References:

ASC 958-720-45-35 – call to action
-48 – audience
-50 – content (oops, I mentioned -48 in the tweet)

Former CEO and COO speak up – Mr. Nardizzi and Mr. Giordano started a twitter account: TheWoundedTruth, @WoundedTruth. If you have a twitter account and have been reading my articles, you might want to follow @WoundedTruth.

They also started a blog: The Wounded Truth. If you are interested enough to still be reading, you might want to add the blog to your RSS feed.

3/30 – Stars and Stripes – Feud erupts at Wounded Warrior Project between board and founder – WWP founder John Melia has publicly called for the resignation of WWP board chair Anthony Odierno. Reason for the call for resignation is that a meeting which had been scheduled on April 4 between the board and Mr. Melia was cancelled by the board. (more…)

April 1, 2016, 9:10 amJim Ulvog

News reports in the last week about Wounded Warrior Project – 3/30

Here are a few articles I found interesting about WWP in the last week, including an interview with the departed CEO and COO.

3/28 – News 4 Jax – Wounded Warrior Project names interim COO – The WWP board appointed retired Major General Charlie Fletcher as interim COO beginning April 11. He has 30 years experience on active duty. He currently is one of the people on the advisory board.

3/28 –Board Source – Wounded Warrior Project-A Classic Case Study – Author is paying close attention to the WWP story. Real, current situations are wonderful teaching tools. Responses to Sen. Grassley’s inquiry letter will provide lots of insight.

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March 30, 2016, 9:10 amJim Ulvog

More Wounded Warrior coverage – 3/24

Here are a few articles in the last few days that caught my eye which follow-up on the media firestorm surrounding Wounded Warrior Project.

3/21 – Charity Defense Council – Letter to Senator Grassley – The letter from the Charity Defense Council (CDC) to Senator Grassley is in response to the senator’s information request to WWP. The Senator asked for an explanation of the relationship between CDC and WWP along with an explanation of how a donation to CDC furthers WWP’s mission.

The letter provides CDC’s explanation.

Let me try to boil it down to a few sentences …

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March 24, 2016, 7:49 amJim Ulvog

Wounded Warrior Project fiasco moves into the political realm. Other comments over the weekend.

Stars and Stripes has a good article summarizing the current story and looking forward a few steps. Senator Grassley pulls the WWP story into the political realm.

3/18 – Stars and Stripes – New project for Wounded Warrior charity: Regain trust. Article discusses the dangers facing WWP in terms of public perception and the impact on donations.

Article summarizes a number of recent articles, which makes this a good survey to catch up on what’s happened lately.

I recommend the article for you because of the great way it brings together a number of different threads of the story.

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March 21, 2016, 6:59 amJim Ulvog

More coverage of Wounded Warrior Project – 3/16

I’ve seen a few more articles of substance in the last two days on the WWP board firing their CEO and COO. Will discuss three articles to see what we can learn about this fiasco and how to deal with a crisis.

Balancing act

The board is in a delicate balancing act.

The media and likely some major donors want the juicy details on why the two execs were let go. I’m interested, too.

The board needs to be careful on how much information they release because of legal exposures, HR issues, and the possibility of causing additional harm to the organization and constituents.

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March 16, 2016, 8:59 amMarch 20, 2016, 7:14 amJim Ulvog

First day coverage of WWP firing its CEO and COO

Major news yesterday was the CEO and COO of Wounded Warrior Project getting fired by the board of directors. Here are a few articles on the story. Also, my rant on the long-running pattern of media articles that focus on trivialities.

3/10 – CBS News – Wounded Warrior Project execs fired – CBS is reporting that on 3/10 WWP fired Steven Nardizzi, CEO, and Al Diordano, COO. CBS reports preliminary results from a financial audit have been received and reviewed by the board.

3/10 – Chronicle of Philanthropy – Wounded Warrior Project Fires Top Officials After Query Into Spending Practices – Article points to CBS coverage above. The board initiated a financial and policy audit.

In the hour since CBS broke the story, I saw several dozen articles hit the ‘net that report the story with merely a rewrite of the CBS coverage.

3/10 – Wounded Warrior Project – Board of Directors of Wounded Warrior Project Addresses Independent Review – Very tactful press release says the CEO and COO are no longer with the organization.

The independent review refuted the headline accusations against the organization and tactfully found room for improvement.

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March 11, 2016, 8:30 amMarch 18, 2016, 10:57 amJim Ulvog

Three areas where accountants could help with analyzing charities

Professor Brian Mittendorf has outlined his ideas on how the accounting community could pitch in on industry-wide efforts to assess the effectiveness of charities.

1/25 – Counting on Charity – Three Pressing Issues in the Nonprofit Sector that Need Accounting Input – He introduced three areas of nonprofit accounting where accountants could help:

Accounting for impact investments
Follow the money trail through multiple organizations
The development of alternative metrics of performance

Expanded discussions:

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February 16, 2016, 7:34 amFebruary 16, 2016, 1:13 pmJim Ulvog