Wednesday, April 2, 2014

What Happened to the Promise Keepers?

Remember The Promise Keepers? The organization was a religious, cultural, and even political phenomenon in the late 1990s and early 2000s. Now, as it launches another major endeavor, the organization seems to have lost its hold on the public zeitgeist. Though financial statements cannot tell the entire story of an organization and its trajectory, they are often informative. And, as they like to say, a few pictures are worth a few thousands words. With this in mind, below are presented four financial indicators for the organization since 2001, along with trendlines ...

(Amounts reflect gifts, grants, and contributions received from the Form 990 Support Schedule)
(Amounts reflect total assets from the Form 990 Balance Sheet)
(Amounts reflect compensation from trustees, officers, or key employees from the Form 990 list)
(Amounts reflect Other Salaries and Wages from the Form 990 Statement of Functional Expenses)

Monday, March 24, 2014

Lady Gaga's Charity Finances - It's Complicated

Media reports have swirled in recent weeks, skewering Lady Gaga's Born this Way Foundation for spending millions while only devoting "$5,000 to charity." Though it makes for a shocking headline, it turns out to be more complicated than that. Here are a few observations from a brief review the foundation's 2012 financial statements.
  • The claim that only $5,000 went to charity comes from the fact that the organization only provided grants of $5,000 to other organizations/individuals. However, the foundation never claimed to be in the business of providing grants, so this is surely an unfair benchmark. (What does the organization do, you ask? They are focused on developing youth programs and outreach to promote bravery, self-acceptance, and inclusiveness.)
  • The salacious media claims are bolstered by the fact that a large portion of their expenses were for legal fees ($406,552), consulting ($300,000), and web development/social media ($50,000). Seeing as how 2012 was the first full year of the organization, however, substantial startup and development costs shouldn't be too surprising. I'm not saying the money was well spent (I can't assess that), but it's possible.
  • Media coverage implies that the organization is wasting the funds donated by the general public, but it has been noted elsewhere that Lady Gaga herself provided much of the startup funding.
  • To the extent that the financial filings contain red flags, I would say it has more to do with management practices than any particular dollar amounts. As of the end of 2012, the organization listed 5 directors, 2 of which were considered "independent." A review of the directors reveals that 3 are relatives of Lady Gaga, while the two independent directors were the CEO and COO of Lady Gaga's management company. This hardly instills confidence that the organization is being run efficiently and independently.

Does all of this mean that the organization has been given a bad rap and is doing nothing wrong? Not necessarily, but if there is financial mismanagement, it is certainly not as extreme as the reports make it sound. That said, the organization would probably be wise to put in more independent oversight in its board to to give more assurances to a now-skeptical public.

Wednesday, March 19, 2014

Financial Trends of the Creation Museum

Answers in Genesis, the nonprofit that runs the well-known and highly-controversial Creation Museum, has seen its share of the spotlight in recent months, with a highly-publicized debate between Bill Nye and its CEO (Ken Ham) followed soon after by an announcement that construction of its new project, a Noah's ark-themed amusement park, would soon begin. Interestingly, much of the discussion of the organization and its efforts have centered around its finances, in particular its ability to generate sufficient funds for its latest endeavor.

I will not speculate about whether the organization has the financial ability to build and sustain its new project. Quite simply, too little information about that project's funding has been made available to say much of anything. However, all the publicity about the organization and its growth have led me to wonder about its broader financial picture. As the following figure shows, the trends don't quite match the media hype.

Answers in Genesis Annual Financial Performance
(Note: the data comes from the annual IRS Form 990 filings for Answers in Genesis from the inception of the Creation Museum until the most year made publicly available)

In short, no matter what benchmark one uses for revenues and/or profitability, the organization's finances exhibit a remarkably consistent (though not precipitous) decline. What, if anything, this portends for the new theme park I don't know for certain, but it's fair to say the finances don't alone demonstrate a mandate for the organization to expand.

Tuesday, March 11, 2014

The (Unfair) Demonization of PGA Tournament Charities

Many of the tournaments on the PGA tour are organized as 501(c)(3) charities. Both the PGA and the tournaments themselves have faced substantial criticism in recent months for the apparent lack of charity from these tournaments. This criticism has surfaced in a variety of arenas but reached a peak when covered by ESPN/ABC as part of their "Outside the Lines" series. To summarize the concern, ESPN and the nonprofit rating agency Charity Navigator noted that the PGA tournament charities have, on average, only given 16% of their expenses to charitable causes, far below the level of 65% recommended by Charity Navigator. Due to such low percentages, Charity Navigator rated every PGA tournament as receiving zero stars, its lowest rating.  Ken Berger, president of Charity Navigator summarized the outrage: "The lion's share of the money is going to big prizes, cash prizes for athletes and all the promotion around it, so it's really pathetic, actually...[e]very single taxpayer in this country ultimately is bearing the burden of having to pay the taxes for this wildly inefficient organization that's giving so little to charity." My question: is it really as bad as they say?

Tuesday, February 11, 2014

The Do-not-call List and Charity Telemarketing

As I have discussed here before, the national do-not-call registry exempts charities (and those who call on their behalf). This exemption may keep doors open for nonprofits seeking to raise money, but it has also opened the door for substantial criticism of the sector as a whole due to the inefficient telemarketing practices of a few. In this post, I'll step away from the efficacy of the nonprofit exemption to look more broadly on the effect the do-not-call list has had on nonprofit fundraising.

Tuesday, February 4, 2014

Should the Nonprofit Sector be Asking out of its Do-Not-Call Registry Exemption?

I realize nonprofits are reluctant to cut off avenues for fundraising, but do the powers-that-be in the sector ever consider that...

Perhaps the nonprofit sector should be asking out of its exemption to the do-not-call registry. Sure, it may mean some funds are missed out on, but it may also mean that the sector is better protected against telemarketing practices that can undermine its reputation.

Monday, January 27, 2014

Five Myths about the NFL's Nonprofit Status

As the Super Bowl approaches, the National Football League (NFL) finds itself in the spotlight. Inevitably, this spotlight leads to various rumors and outrage about the NFL's nonprofit status. Here I will discuss five key myths that are helping to spark the outrage (see the most recent Form 990 of the NFL here for more). In doing so, I should state that I am not trying to defend the nonprofit status of the NFL but merely to point out that perhaps it is more innocuous than it may first sound.