Thursday, November 20, 2014

The Clinton Foundation's 2013 Financial Statments

The Bill, Hillary & Chelsea Clinton Foundation (the Clinton Foundation) has now released its 2013 financial reports to the public.  Given the substantial public interest in all things Clinton, I thought I would discuss a few observations from these financials.

Tuesday, October 21, 2014

Do Donor Advised Funds Create a Double-Counting Problem?

Consider these headlines from the past week:

What do these headlines and the many more like them have in common? Yes, they show an important donation to a critical need. Beyond that, though, they also are technically incorrect. Why do I say this? What some (but not all) of the articles mention in the details is that the gift is not exactly from Zuckerberg and Chan, but rather from their donor-advised fund at the Silicon Valley Community Foundation. Seeing as how all of these news outlets also publicized their initial gifts to the donor-advised fund in the first place, this seems to me like double-counting (or in this case, double-publicizing) of donations. I say this not as a criticism of Zuckerberg and Chan (they deserve any publicity they get for their generosity, which is by any measure extreme) nor as a critique of journalists covering this news. Rather, I say it to highlight the inherent contradictions of donor-advised funds (DAFs).

Wednesday, October 8, 2014

Reconciling Views of Spending by the Wounded Warrior Project

As its popularity and size have grown, the Wounded Warrior Project (WWP) has seen added scrutiny, particularly of its finances. In response to accusations that it does not spend enough of its funds on helping wounded veterans, WWP has consistently stressed that in 2013 "80 percent of total expenditures went to provide services and programs for wounded service members and their families". At the same time, other outlets like ProPublica and the National Center for Charitable Statistics report data indicating the number is closer to 75 percent, whereas Charity Navigator and the Center for Investigative Reporting put the figure at around 55 percent.

In this post, my goal is not to consider whether WWP is spending its money appropriately or even which figure is the one that you should use. Rather, the goal is more modest – to provide a reconciliation of these figures so people can at least get a feel for what they represent.

Wednesday, September 10, 2014

Livestrong's 2013 Financial Statements

Though much of the media spotlight on Livestrong has faded since the ignominious departure of Lance Armstrong, it remains an important charity focused on improving the lives of those with cancer. Since its rise was largely precipitated by positive publicity, however, many (including myself) have wondered what its future will hold. With the release of the organization's 2013 financial statements this week, we finally get a first real glimpse of how the Lance Armstrong scandals have affected the organization. Here are a few noteworthy items:

1. Livestrong's revenues dropped substantially after Lance Armstrong's January 2013 public confession, with total revenues down by 40.5% in 2013
  • Total contributions were down 25.8% (despite an over $6 million gift from Movember)
  • Royalties & licensing fees were down 58.9%
  • Special events (net) revenues were down 77.8%
  • Program merchandise and services sales (net) were down 84.7%
2. Livestrong's expenses were also curtailed but to a lesser degree, with total expenses reduced by 20.1%.
  • Salaries, wages, & benefits were down 6.4%
  • Legal and professional fees were down 18.9%
  • Advertising was down 2.8%
  • Grants were down 32.9%
  • Public awareness expenses were down 58.3%
  • Other expenses were down 15.4%
3. Despite the net loss of $6.9 million in 2013, the organization still maintained a net asset balance at the beginning of 2014 equal to $99.7 million, $64.7 million of which was unrestricted and undesignated. This suggests the organization could continue such losses for some time without running out of unrestricted funds. With the recent announcement that Livestrong has pledged $50 million to the University of Texas, however, something has to give.  That news portends a very thin financial cushion remaining – time will tell whether that pledge signaled a new financial strength for the organization or an effort to unwind its net assets and scale down continuing operations.

Wednesday, September 3, 2014

After the Ice Bucket Challenge: What to Look for in the ALS Association Financials

As the viral fundraising success of the Ice Bucket Challenge winds down, many have shifted their focus to inquire about how the ALS Association will make use of the windfall. For an organization that began the year with $20 million in net assets, the infusion of $100+ million of unrestricted cash represents a serious opportunity. Though there will be much speculation in the interim, I suspect our first real glimpse of their chosen strategy will come with the release of their next financial statements (year ended 1/31/15). Here I briefly describe what to look for.

Monday, August 18, 2014

Thoughts on the Criticisms of the Ice Bucket Challenge

The Ice Bucket Challenge, a grassroots social media effort to raise funds and awareness for ALS, has spread beyond anyone's expectations. And with popularity comes criticism. I have heard and read the criticism and, to be honest, find it largely unconvincing. Below I will discuss each of the primary critiques.

1. Dumping ice over one's head has nothing to do with ALS.
This critique takes many forms, but the gist is that we don't learn anything from watching people dump ice over their heads. The thing is that more traditional ways of getting people to learn about ALS are expensive, in part because ALS is not (or at least was not) at the center of the public view -- last year, attempts to educate the public about ALS consumed 32% of the ALS Association's expenses. True, you don't learn about ALS from the exercise, but it has led people to seek out information about ALS. As Adweek notes, searches about ALS are up since the challenge started (and more so than searches for the Ice Bucket Challenge itself). A look at Google Trends reveals a similar feature: public curiosity about ALS is way up and more prevalent than curiosity about the Ice Bucket Challenge.

2. The Ice Bucket Challenge is Slacktivism and Doesn't Help the Cause.
This was an early critique, that most people were just posting videos and not actually doing anything to help. It is exemplified by this Huffington Post article. Data has already debunked this one. Sure, not everyone is donating, but a lot of people are.  As of August 18, the ALS Association had raised $15.6 million in donations from 307,598 new donors since the Ice Bucket Challenge began, and both figures are sure to rise. For some context, note that unrestricted contributions to the ALS Association from the general public accounted for $5.8 million for the entire fiscal year 2013.

3. The Ice Bucket Challenge is Taking Funds from other Organizations.
In contrast to the previous one, this complaint is basically that the Ice Bucket Challenge is raising too much money.  The concern, as expressed by William MacAskill in Quartz, is a bit more subtle in that it argues that people giving as a result of the challenge are less motivated to give elsewhere. Rooted in the notion of "moral licensing", the idea is that people feel good about their gift to the cause and thus feel less of a need to do other good things. Besides presenting a rather depressing "zero-sum" view of kindness and charity, it also is applying an experimental result in one setting with the presumption it works in this one. I, for one, know that my giving to other organizations has not been affected by my giving in the Ice Bucket Challenge, and I suspect others feel the same. Even if it is true, it is worth noting that ALS is not a disease that typically lends itself to an enthusiastic public response and for which fundraising is otherwise very hard. So, if it is taking some from other, more visible, causes who will surely return to the center of public view, perhaps that's an acceptable tradeoff.

4. The Ice Bucket Challenge Wastes Water.
Yes, some have even complained that it is a waste of water. Sure, I guess that water is not being used for drinking, but we do plenty of things with water that are not necessary. I would find this view convincing only if those espousing it were protesting water parks and swimming pools too.

In short, I know the persistent ice bucket videos filling your newsfeed can be annoying. However, they are resulting in positive things in the fight against ALS. And, not to worry, in a couple of weeks your newsfeed will return to being filled with arguments about politics and quizzes about which Game of Thrones character you are.

Tuesday, July 29, 2014

Financing of the Noah's Ark Theme Park

For some time, Answers in Genesis (AiG), the group behind the Creation Museum, has had its sights set on establishing a theme park focused around a replica of Noah's Ark.  Originally viewed as a $172.5 million project, the park's plans have been revamped to entail a $73 million initial phase due to slower than expected funding. It is this first phase that has recently been submitted for approval of tourism sales tax rebates from the state of Kentucky. Given this background, I thought I would share a few thoughts about the project's finances, thoughts that are admittedly limited due to the paucity of publicly-available information. I have no interest in speaking about the underlying religious and scientific debates or whether tourism tax rebates are appropriate, but instead will stick to the accounting as it pertains to the project's funding...