Who Gets The Money? — 17th annual edition

From ANIMAL PEOPLE, December 2006:
Starting on page 15 is our 17th annual report on the budgets,
assets, and salaries paid by the major U.S. animal-related
charities, plus miscellaneous local activist groups, humane
societies, and some prominent organizations abroad. We offer their
data for comparative purposes. Foreign data is stated in U.S.
dollars at representative exchange rates.
Most charities are identified in the second column by what
they do and stand for: A for advocacy, C for conservation of
habitat via acquisition, E for education, H for support of hunting,
I for supporting the eradication of “invasive” feral or non-native
species, L for litigation, P for publication, S for
shelter/sanctuary maintenance or sterilization project, U for
favoring either “sustainable” or aboriginal lethal use of wildlife,
and V for focus on vivisection.
As most listed charities do some advocacy and education, the
A and E designations are used with others only if advocacy and
education use more of the charities’ time and budget than other roles
for which they may be better known. Charities of obvious purpose may
not have a letter. While many charities pursue multiple activities,
space limits us to offering no more than three identifying letters.
Most of the financial data we cite for U.S. charities comes
from IRS Form 990 filings, usually covering fiscal year 2005. Form
990s from most U.S. charities are available– free–at
<www.guidestar.com>.

Canadian data comes from the online data base maintained by
the Revenue Canada Charities Directorate.
The data for many British charities is an estimate based on
comparisons of data posted by the British Charities Commission and
the evaluation service Charities Direct. Neither offers as much data
as Form 990, but between them they furnish the essentials.
The data for other foreign charities, and for some U.S.
charities, comes from a balance sheet furnished by the organization,
if a balance sheet appears to be the most current, detailed, and
accessible data source.

Ethical standards

There are almost as many ways to evaluate charities as there
are donors. We do not give simple thumbs-up or thumbs-down
judgements because each donor will have different priorities.
However, we have issued detailed 10-point sets of standards
expressing our own beliefs about how ethical animal charities and
animal charity fundraisers should operate.
Our standards are accessible at
<www.animalpeoplenews.orgIMPORT-ANT_MATS/whatisanethicalcharity.html>,
or can be e-mailed on request, and appear as part of the preface to
the 2006 ANIMAL PEOPLE Watchdog Report on 125 Animal Protection
Charities, $25 from ANIMAL PEOPLE, POB 960, Clinton, WA 98236.
The Watchdog Report annually reviews selected animal and habitat
charities in greater depth than “Who gets the money?” allows.
A more extensive discussion of nonprofit ethics appears in
our handbook Fund-raising & Accountability for Animal Charities,
free for downloading at
<www.animalpeoplenews.org/IMPORTANT_MATS/fundraisingforAsia.pdf>.
Receipts vs. program
The yardstick most used by charity heads is the balance of
donations plus program service revenue and unrelated business income
(such as receipts from running a thrift store or selling t-shirts)
with program expense.
The ideal is that the program budget should equal the funds
raised or earned within the year, while interest on reserves should
cover the cost of raising the money. Capital-intensive special
projects, e.g. building a shelter, should be funded by grants and
bequests.
If donations plus program service receipts fall short of
program cost, the program may be uninspired or poorly promoted.
If donations plus program service receipts far exceed program
cost, the program budget for the next year should be larger–but
some charities hoard rather than use a surplus, to have more
interest available to use to raise funds.
This yardstick favors charities which are old enough to
attract large bequests. If younger charities try to build reserves
big enough to pay interest equal to their fundraising expense, they
run a high risk of becoming direct mail mills, perpetually trying to
raise more, to invest more, to bring investment income closer to
their ever-climbing cost of attracting donors. Program service may
become a seeming afterthought, and the main accomplishment of the
charity may be enriching direct mail contractors–especially if the
initial fundraising investment was borrowed from a direct mail firm,
as often occurs, with rising debt keeping the charity in bondage.

Program vs. overhead

We assess the balance of program versus overhead spending by
using a standard borrowed from the Wise Giving Alliance, formed by a
merger of the Philanthropic Advisory Service of the Council of Better
Business Bureaus with the National Charities Information Bureau:
charities should spend at least 65% of their budgets on programs,
excluding direct mail appeals.
This standard is stricter–and more indicative of
priorities– than IRS rules, which allow charities to call some
direct mail costs “program service” under the heading of “public
education.”
The % column in our tables states each charity’s overhead and
fundraising costs as declared to the IRS.
The ADJ (for “Adjusted”) column states those costs as they
appear to be, if we ask of each mailing, “Would this have been
sent if postal rules forbade the inclusion of a donor card and a
return envelope?” If the answer is no, the mailing should properly
be considered “fundraising,” not “program.”
Differences between the declared and adjusted balance of
program and fundraising/overhead spending appear in boldface.
Groups which collect interest on large endowments tend to
have lower overhead because they can do less fundraising.
Shelters, sanctuaries, and activist groups which use mostly
volunteer labor and donated supplies by contrast may have “high”
overhead, as much of their program work does not appear in cash
accounting.
The practice of ascribing direct mail to program service
instead of fundraising reflects the common but erroneous belief that
“good” charities have the lowest fundraising costs relative to
program service.
Unfortunately, calling appeal mailings “program service” in
the name of humane education has devalued the concept of humane
education so much that fundraising for real humane education and
outreach has become a very hard sell.

Budget vs. assets

Italics, in the asset columns, indicate a deficit.
Shelters and sanctuaries tend to have more tangible assets (property
and equipment) due to the nature of their work.
Often total assets add up to less than the sum of tangible
assets plus cash because of declared liabilities.
Compare the Budget and Funds/ Investmt columns. Says the
Wise Giving Alliance, “Usually, the organization’s net assets
available for the following fiscal year should not be more than twice
the higher of the current year’s expenses or the next year’s budget.”
Substantial fiscal assets are often “locked up” in restricted
endowments. Yet an endowment balance may be used as collateral on
investment in expanded program service– if a charity opts to do so.