Last week, The Oregonian printed a story on Senate Bill 40 that was accompanied by a textbox reporting the ratings given to many of Oregon’s notable charities by Charity Navigator, a self-appointed, charity watchdog organization. Many well-known and respected Oregon charities, including Special Olympics Oregon, were given a low rating. Sadly, this article dramatically misled The Oregonian’s readers.
The potential donor, like thousands of others who support the 60 organizations listed by Charity Navigator in this article, was a victim of incomplete and, therefore, flawed information. Charity Navigator claims to help donors “find a charity you can trust.” Yet each report includes this caveat (buried in the website): “…we do not recommend using our ratings as the only factor in deciding whether to support a particular organization.” Unfortunately, most donors would accept Charity Navigator’s report as complete and authoritative. This does a profound disservice to both donor and charity.
The source of the problem? The one-dimensional 990 upon which Charity Navigator bases its evaluations. Form 990 is an annual reporting return that most federally tax-exempt organizations must file with the IRS. The 990 essentially provides a snapshot, based on limited data, of an organization’s general financials. However, it does not review an organization’s audited financial report, nor assess scope or quality of service. It simply presumes that, if an organization’s spending is up, services are growing. GuideStar – a much larger charity watchdog than Charity Navigator– says: “[Form 990s] tell us nothing about the ultimate or relative effectiveness of an organization with respect to meeting its objectives.”
The 990 is a particularly misleading evaluation tool for organizations like ours that rely on in-kind products and volunteer support, and organizations that receive endowment or restricted monies. Significantly, it does not account for in-kind support of human services (volunteers), even if it represents direct budget relief. (GAAP properly includes this support in our audited financial report.) Ironically, for Special Olympics Oregon to receive a higher Charity Navigator rating, we would need to pay cash for the $2 million in program support we receive at no cost! Although in-kind services comprise nearly half our program expenses, the 990/Charity Navigator process punishes rather than rewards us for this efficiency.
The 990 only tracks service growth in terms of bankable dollars. Special Olympics could double the number of individuals served in a year, but if we’re not spending a lot more to do so, our Charity Navigator ranking remains low. For this reason and others, I suspect these ratings and the 990 will continue to be controversial. Just consider a few things they don’t tell you about Special Olympics Oregon:
* 73 percent of our dollars in 2010 went to program services; 19 percent to fundraising; and 8 percent to administration.
* Program services for the largest disability population in Oregon grew by17 percent last year.
* Revenue increased by 25% over the last two years.
* Our in-kind support by 18% over the last three years.
* We received accreditation from the Better Business Bureau’s Wise Giving Alliance.
I earnestly encourage all who give so generously to our organization and other Oregon charities to go directly to the audited financials of an organization you wish to support. There, you will find an accurate and transparent, picture of a charity’s financial health, efficiency, and sustainability.
Thank you.
Margaret H. Hunt, CEO
Special Olympics Oregon
