The other night I got a telephone call from a pleasant fellow who said he was raising money for something called the Washington American Veterans Service Foundation. Washington AmVets for short, he said. The caller was a little light on specifics about the good works that would be done with contributions. But he was still hopeful I would commit to a specific sum so he could mail me a pledge card to return with my check. I politely declined.
Those of you who visit this space know that pitches like this are grist for my New To Seattle mill. I immediately went to the charities section of the Washington Secretary of State’s office website in Olympia, the state capital. The closest match I could get was something named AmVets Service Foundation–Department of Washington. I am assuming this is on whose behalf I was called. To my astonishment, the entry said that its charitable commitment–the percentage of total expenses spent in furtherance of program services–was 100%. To underscore the importance of the calculation, the figure was in boldface.
As ordinarily understood, program services do not include fundraising costs and certain overhead. So if program services was 100%, then why was I getting a call from a fundraiser–presumably paid–who wanted to send me fundraising mail, requiring expensive printing and postage?
To me, the answer is that someone in Olympia was sent a bowl of mush, doesn’t know how to read or can’t work a calculator. I took a look at Washington AmVets’ filed-under-penalty-of-perjury tax return sent to the Internal Revenue Service–which you can’t get on the Olympia website but which can be downloaded elsewhere. I’d say the charitable commitment ratio was more like 22%. The Better Business Bureau’s Wise Giving Alliance, a major charity watchdog, thinks anything under 65% is unacceptable.
As I read the return, Washington AmVets spent about $3.35 in fundraising costs for every $1 spent on charity.
This is not the first time I have found the Olympia website lacking in accuracy, analysis or simple accountability. The result is that a Seattleite like me solicited by Washington AmVets who doesn’t ask a lot of questions or look around might be fooled into thinking the charity is super-efficient when in reality it is anything but.
Even though I found Washington AmVets’ tax return for 2011 (as noted above, somewhere else), the Olympia site still used data from 2010. The differences between the two years aren’t material, so I’ll also use the 2010 information.
It’s not a pretty picture.
The 2010 return was a IRS Form 990-EZ, which is used by smaller charities and calls for less information. According to the return, Washington AmVets raised $95,358 from the public in contributions, plus earning another $546 in investment income. The charity handed out a mere $21,200 in donations–to whom, it didn’t specify, except to say “various veterans organizations with in [sic] the state of Washington.” A whopping $70,860 was spent in fundraising costs–more than triple the $21,200 described as going to charity. Another $2,754 was spent in what I would regard as overhead–travel, insurance, office expense and supplies. The result: a modest surplus for the year of $1,080.
My calculation of a 22% charitable commitment ratio comes from dividing $21,200–the stated amount of charity funded–by stated total expenses of $94,814.
Another standard statistic used in evaluating charities is fundraising efficiency, the percent of donated funds remaining after subtracting the cost of raising them. The Olympia site could but doesn’t calculate this figure. However, I can and do. For Washington AmVets, the fundraising efficiency was 26%. Again, the Better Business Bureau frowns on anything under 65%.
Answering my questions, the nice fellow who called on behalf of Washington AmVets told me he worked for Jadent Inc., a paid charitable fundraiser. In Washington State, fundraising pros also have to file with Olympia. Jadent, which is based in Salem, Ore., said that for 2011 (the year after the one I analyzed), it raised money in Washington State for eight other charities besides Washington AmVets. All told, it brought in $578,299 but handed over to its clients just $143,742. That’s a fundraising efficiency of 24.86%, which rounds to 25%. Because Jadent is a profit-making business and not a charity, a charitable commitment ratio can’t be calculated.
(In case you wondered, Jadent said the other operations it raised money for–retaining three-quarters of the take–included charities with confusingly similar names to established national nonprofits, such as Cancer Federation, Multiple Sclerosis Foundation, Defeat Diabetes Foundation and Childhood Leukemia Foundation.)
Now, how did Olympia turn a dismal 22% charitable commitment ratio into a sterling 100% rate? I don’t know what specific forms Washington AmVets turned in, but the tax return used what I regard as a ploy. Instead of listing the paid professional fundraiser fees on the first page of the tax return on the line for “professional fees and other payments to independent contractors,” Washington AmVets included this relatively huge cost in a laundry list of “other expenses” on the last page of the tax return. Olympia apparently accepted “other expenses” as “program services.”
In the world of charitable fundraising, the numbers of Washington AmVets are really small beer (United Way of King County, the nation’s largest United Way unit, raises more than $100 million every year, although it, too, exaggerates its efficiency). So if you live around Seattle, there’s a pretty good chance you won’t be called by Washington AmVets. The tax return and the Olympia website list an address in the Tacoma suburb of University Place that, using Google Maps, looks like someone’s home. Which might be why, when I called the number listed on the website, I got what sounded like a family’s answering machine.
Getting the straight scoop about the AmVets operation isn’t easy. As I noted above, the names don’t always exactly match up. Overall, AmVets seems to be a loose confederation of independent veterans organizations with similar names, a shared logo and a national headquarters in Lanham, Md. The Better Business Bureau has a pretty low opinion of something in Lanham called the AmVets National Service Foundation, flunking it on five of the BBB’s 20 good-governance standards.
Trolling the Internet, I found a website headed “AmVets Department of Washington”–yet another variation– listing a Tacoma address and phone number, as well as contact information for about 20 AmVets “posts” around the state (none in University Place). But the person answering the phone when I called said I had reached AmVets Post No. 1 in Tacoma and not the office of AmVets Service Foundation Department of Washington. She said she didn’t even know where or what that was.
As always, I invite the posting below of comments from any interested party or reader. I sure could use some help sorting this out. And so could the Washington State Secretary of State’s Office in Olympia, whose duty is to give the donating public accurate information.
Hello there! I could have sworn I’ve been to this site before but after reading through some of the post I realized it’s new to me.
Nonetheless, I’m definitely glad I found it and I’ll be book-marking and checking back frequently!
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Exactly which AmVets unit solicited you?
Just recieved my “Contribuion envelope” from the Vanvouver, WA Amvets Service Foundation and am pleased to come across Mr. Barrett’s blog. Am now rethinking my contribution. 12/27/12
Your post outlines the process that anyone could use to gather information on a charity and analyze it. The Secretary of State where you live has some filings. GuideStar has 990s.
This post outlines a couple of calculations that can be used to analyze the numbers and explains how you use them.
Any readers curious how to start looking at numbers deeper than just the ‘overhead ratio’ offered by a charity can use this as a template to get started.