World Vision withdraws opposition to AB 1181. Other changes in list of those opposed.

August 22, 2019, 6:00 pm

Image courtesy of Adobe Stock.

World Vision is now neutral on AB 1181.

Three of the five analyses prepared for AB 1181 contain a list of the organizations supporting and opposing the legislation. A comparison of the lists shows key changes.

Two items that jump out at me: first, growth and change in composition of charities opposed; second, the number of accounting groups opposed.

Charities in opposition

Forty-eight charities opposed the bill according to the 6/28/19 analysis (posted 7/8/19) prepared for the Senate Judiciary Committee.

On the 8/19/19 analysis (posted 8/21/19) prepared for the Senate floor vote, the count of opposed charities was again 48.

New to the list is Habitat for Humanity.

Dropped from the list in opposition is World Vision.

Of particular note is that a representative of World Vision had previously testified in opposition to the bill.

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After reading about the mess World Vision is in, ask yourself what you are doing to prevent a similar disaster from disrupting your programs.

August 10, 2016, 7:00 am
Question this manager is pondering: Do we have good enough controls to prevent this from happening in our field programs? Image courtesy of Adobe Stock.

Question this manager is pondering: Are our controls good enough to prevent something like this from happening in our field programs?
Image courtesy of Adobe Stock.

A few articles to follow up on the accusations a World Vision manager allegedly routed aid money to a terrorist organization.

  • Looks like the situation with the Gaza branch of World Vision could turn into an accounting argument.
  • Response from World Vision.
  • Other aid workers charged.
  • Finally, more questions for managers and finance teams to ponder.

A number of public comments on twitter are claiming the total budget for the Gaza branch is only $2.2M a year.

Some people making this comment usually continue the discussion by calling into question the entire set of accusations from the Israeli government because the current claim is the manager diverted approximately $7 million a year.

This position implies that accusations of diverting $7M a year when the budget is only $2.2M means the accusations are untrue.

8/8 – AP, The Big Story – World Vision: Israeli charges based on “huge gap” in numbers – Article points out the intelligence agency accuses the program manager of diverting food, agricultural equipment, and medical supplies in addition to currency. That means there was in-kind material as well as heavy equipment.

The accounting argument appears towards the end of the article. A Foreign Ministry representative is guessing that the stated budget does not include in-in-kind donations.

A World Vision representative in Germany says the budget of $22.2M for the Gaza office over the last decade does include in-kind materials.

So, we may wind up with this being an accounting issue in addition to a loaded political issue on top of an alleged defalcation issue carrying over into alleged terrorism funding issue.

8/9 – Al Jazeera – Christian charity ‘top of Israel’s target list’ – It will help you filter news you hear about the manager of the Gaza office if you keep in mind the visible political agenda you will see in much reporting.

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Initial reaction to alleged diversion of World Vision funds

August 8, 2016, 7:00 am
Image courtesy of Adobe Stock.

How can you tell who is really behind the mask, and what is he doing inside your organization? Image courtesy of Adobe Stock.

Last week, the Israeli intelligence service accused a World Vision manager of diverting resources to Hamas. The allegation is he diverted about 60% of the annual funds flowing through the Gaza office, with the amount diverted allegedly around $7M a year.

Some initial reactions are surfacing from donors. Also, some context for magnitude of the alleged amount. Finally, some questions to ponder for leaders of charities and those of us who audit NPOs.

8/4 – World Vision – Statement on World Vision Staff Arrest – Full statement from World Vision. Doesn’t say a lot because they don’t yet know a lot. I’m sure there will be more comments as the situation develops.

8/5 – Reuters at Business Insider – Australia suspends World Vision funding over allegations its Gaza representative funneled millions to Hamas – The Australian government has provided about $4.4 million over the last three years to World Vision for use in helping people living in Gaza and West Bank. The aid has been suspended over the allegations.

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How do you keep one person from diverting funds and causing a front-page fiasco for your charity? World Vision illustration.

August 5, 2016, 5:35 pm
Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

How do you keep one person from creating a public relations fiasco or, even worse, damaging the reputation of your entire organization? How do you keep a manager from illegally diverting a huge amount of resources?

What controls and procedures do you have in place to prevent something like this in your organization?

Let’s start with a FBI agent who pled guilty to charges of passing sensitive and classified information to a Chinese government official and businesses in China.

8/1 – ABC News – FBI Employee Arrested for Allegedly Acting as Secret Chinese Agent – According to the story, we can drop the word ‘allegedly.’ This week he entered a guilty plea to one felony charge. The government claims he was gathering sensitive and classified material based on instructions from his handler.

He was born in China and was naturalized in 1985 at age 16.

So, the FBI with all its investigative powers and intentional counter-intelligence operations was not able to prevent this man from being an agent of the Chinese government.

So what chance does a nonprofit charity have of filtering out people who want to do bad stuff? That is something to consider as we grieve the following story.

This week the story broke that a manager of the Gaza office of World Vision allegedly diverted a lot of money to Hamas for use in terrorist activities. At this point the story consists of allegations, but allegations from the Israeli security service after a few weeks of interrogation are extremely serious.

8/4 – Hareetz – Top Official in Christian Aid Group Charged With Funneling Funds to Hamas – The security service, Shin Bet, arrested the director of the Gaza branch office on June 16. He was indicted Thursday.

Shin Bet accuses the manager of joining an armed wing of Hamas in 2004 and being sent to infiltrate a western aid organization a year later.

In 2005 he was hired by World Vision and in 2010 was promoted to director of the Gaza branch.

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Something missing from the Journal of Accountancy article on GIK

October 7, 2013, 11:13 am

William Barrett points out there was some missing disclosure in the JofA article on GIK in his post Seattle-area charity scores P.R. coup from lack of disclosure.

I discussed the JofA article here.

The missing information is that World Vision is one of the biggest players in the GIK valuation issue getting so much attention today.

The JofA article contains no mention that World Vision has been criticized heavily for their accounting of GIK.

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Article on GIK valuation in Journal of Accountancy

July 31, 2013, 9:00 am

Gifts-in-kind: What are they worth? How to avoid pitfalls of GIK valuation discusses the difficulties in valuing GIKs. The article is available online from the Journal of Accountancy.

The author is Jennifer Brenner, CPA, who is the associate director for financial accounting and operations for World Vision.

I heartily recommend the article to you.

I’ll wait a few days before posting my comments.


World Vision posts pro forma adjustment which drops combined total revenue for 2008 and 2009 by 11.5% and cuts combined GIK revenue by 34.6%

February 16, 2013, 1:10 pm

World Vision has posted their 2012 financial information. You can find the information on this page. The audited financial statements are here.

Included on that page is another document, Charity Navigator Disclosures. This contains their pro forma disclosure of what changes World Vision believes would have been made to the 2008 and 2009 financial statements if the requirements for SFAS 157 had been applied for those years.

We will leave aside for the moment the opinion of some, including me, that implementing SFAS 157 should have had no impact on the valuation of 500 mg mebendazole, since it is illegal to distribute that medicine in the United States both before and after SFAS 157 went into effect.

The pro forma calculation reduces GIK revenue by $143M in 2008 and $126M in 2009. World vision disclosed in their 2010 CFO’s letter that the 2010 revenue would have been $140M higher using the valuation amounts in place earlier. That amount for 2010 is repeated in the disclosure memo.

The pro forma calculation reduces GIK revenue by 30.5% in 2009 and 39.1% in 2008. Total contributions drop by 10.3% in 2009 and 12.9% in 2008.

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Guidance on valuing medical GIKs in the 2011 NPO Audit Risk Alert

June 4, 2012, 8:44 am

The issue of determining fair value of donated pharmaceuticals has been quiet for a little while. I’ve not seen much discussion of mebendazole on the ‘net lately.  Perhaps it is safe to venture back into the waters.

I’d like to mention some of the accounting guidance that is around and provide a few comments.

The AICPA’s 2011 Not-for-Profit Entities Industry Developments Audit Risk Alert contains a two-page discussion of valuing gifts-in-kind (GIK).  SOme key paragraphs are quoted below along with my comments.

This is not an exhaustive discussion of the issue and is not a position paper.

This is intended to further the conversation on valuing GIKs, especially for people who don’t keep copies of the audit risk alerts on their nightstand for leisure reading. (You may now roll your eyes in pity for those of us who enjoy reading such things.)

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Impact on GIK values form change in accounting rules – Part 4 – A few final observations

January 30, 2012, 9:27 am

Previously I’ve discussed the impact of new accounting rules on valuing of deworming medicine.  Have been looking at Feed the Children financial statements to quantify the impact.

I am not picking on Feed the Children.

I’m using their 2010 financial statements because they have the best disclosures in their financial statements that I’ve seen for the impact, plus there is public information on what per-pill valuation amounts they have been using.  It is to their credit that they have this amount of background available in their financial statements.

It is my guess, just a guess, that the same underlying valuation issues and impact on supporting services ratio that I have described previously here and here, would also be present in the financial information for other organizations that have large volumes of deworming medicine.  If I can find good info, I’ll do some calculations on other sets of financials.

I have a few more observations and then one more set of calculations.

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Unintended consequences – – how much harm can doing good cause?

December 30, 2011, 8:52 am

What in the world is Swedow?

In writing about GIK and deworming meds, I’ve learned some fancy words, like Albendazole, Mebendazole and Swedow.  I’ve also started reading discussions in places I usually don’t go.

For example, Good Intentions are not enough is a great blog written by Saundra Schimmelpfennig.  She has lots of posts about the complexities of doing foreign aid well.

While visiting that site, I read a guest post by Juanita Rilling:  Compassion on Sale

She has a sobering discussion of the unintended waste of sending drinking water as part of humanitarian relief. Read the rest of this entry »


Impact of changing rules for determining fair value (SFAS 157) on GIK of NPOs

December 28, 2011, 10:29 am

Wow. When I started blogging about GIK valuations, I knew there was a major issue, but didn’t quite grasp how big it really is.

The beginning point of my discussion was a Forbes article, by William P. Barrett: Donated Pills Make Some Charities Look Too Good on Paper. In this post I will look at the impact of a change in accounting rules on the valuation of GIKs.

Additional background

Several articles by Caroline Preston in The Chronicle of Philanthropy outline the issues.  One deworming medicine, Mebendazole, seems to be the biggest issue. In her article Aid Charities’ Accounting Practices Draw Criticism, she quantifies the significance of that one med: Read the rest of this entry »


Gamesmanship in GIK valuations? Part 1

December 16, 2011, 8:31 am

Forbes magazine dives into the nonprofit community’s GIK valuation issue in an article by William P. Barrett, Donated Pills Make Some Charities Look Too Good On Paper. (In print the article had a cooler title – Magic Pill, Magical Accounting)

GIK valuation is difficult and messy.  Before anyone gets mad at me for airing dirty laundry from the NPO community, keep in mind that Forbes has a circulation that is somewhere in the range of, say, one gazillion times larger than this little blog.  The article appears in Forbes magazine guys, and on their website.  Don’t get mad at me.

My point in writing these posts?  The issues we are struggling with in the religious NPO world are getting attention from secular media.  It would be wise for NPOs and auditors to deal with this on our own. Quickly.

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