I’m not on anyone’s do-not-call list because those unsolicited pitches sometimes provide grist for my New To Seattle mill. Last week, I received a telephone call from a computer masquerading as a human on behalf of an outfit going by the name of United States Armed Forces Association. I called the computer Joe. After the call was over, I rustled up some documents. By my reckoning, only 25% of the money raised for anything I would call charitable. Some 75% went for fundraising and overhead.
Last night, I got another call asking for money. At least this time it was from a real human being. I’ll call her Jane. She was soliciting on behalf of something called the Kids Wish Network, out of Holiday, Fla. Jane explained the organization provides aid to children with life-threatening conditions.
I listened. Then I asked how much of the money raised went to fundraising as opposed to the kids. Jane said she could read me a statement about that–from 1998! Hey, I said, how about something a little more recent, like this century or even this decade? Jane said that’s all she had. I didn’t need data dating back to the Clinton administration, so the call soon ended.
Fortunately, I know how to find out this stuff myself. My source here is the KWN audited financial statement for the year ending May 31, 2011, that I located on the website of the New York State Attorney General. (The official Washington State charities website, run by Secretary of State Sam Reed, is not very informative and can be quite misleading.)
What I saw for KWN is not pretty.
In round numbers KWN raised $22 million in contributions and spent about the same amount. Again by my reckoning, less than $5 million–only 22 cents of each dollar raised or spent–went toward what I would call the charitable mission. This is also known as program support, program services or charitable commitment.
More than three times that amount–$16 million, or 74 cents of each dollar raised–was spent on fundraising and “call to action” solicitation. The other 4 cents went to overhead. So by my figuring that’s a total of 78% going to something other than the mission, a worst showing than even the United States Armed Forces Association, which is saying something!
The Better Business Bureau Wise Giving Alliance, a leading charity watchdog group, says fundraising and overhead expenses for a reputable charity should be no more than 35% of total expenses (or, put another way, charitable commitment should be 65% or higher). The KWN, by the way, won’t allow the BBB to evaluate it. It’s not hard to imagine why.
Sam Reed’s website in Olympia puts KWN’s charitable commitment at 44%. That’s pretty lousy right there but double the 22% I figured above. The reason seems to be inclusion of nearly $5 million for that “call to action” solicitation that I consider fundraising–and “fundraising” actually is what the sum is labeled in the KWN financial statement. KWN’s auditors apparently think this expenditure has an informational or educational value aside from asking for money and calls it part of the charitable mission. Okay.
To gain its approval, the BBB also requires a charity’s fundraising efficiency–the percentage of contributions received after subtracting the cost of their solicitation–to be no less than 65%. I calculate KWN’s fundraising efficiency at just 28%–and a mere 17% if you exclude from the calculation $3 million of donated goods that usually come in at minimal fundraising expense and are often wildly overvalued.
Accepting KWN’s accounting on its face (which I don’t), the fundraising efficiency ratio is 53%. That still doesn’t pass muster– unless, of course, you are a paid fundraiser, in which case this is a charity you really want to hook up with. Maybe its name should be changed to Fundraisers Wish Network.
There’s other funny stuff going on. According to a recent report aired by a Florida TV station, KWN left off its original financial filings the fact that it had paid a lot of fundraising fees to a co-founder, Mark Breiner, who left to become–a fundraiser. Amended statements were filed, but only after an internal whistleblower, Meanda Dubay, sounded the alarm. KWN blamed clerical errors but fired the whistleblower.
Clearly, KWN is hoping the people contacted on the telephone won’t check it out. By that metric I’m probably not a good person to call.
As always, I welcome anybody with a view on these matters to post comments below. Even Jane.