Six relevant sites are listed below, after some introductory remarks.

The basic financial breakdown considered in various analyses is as follows: (IF + IO) - (EP + EA + EF) = Change in reserves where:   IF = income from fundraising   IO = income from other sources (sometimes broken down further)   EP = program expenses   EA = administrative expenses   EF = fundraising expenses

Ratios of particular interest are: (1) the proportion of expenditures going to programs (E_P/[E_P+E_A+E_F]); and (2) fundraising costs in relation to income due to fundraising (E_F/I_F).

Often, a single recent fiscal year is examined. But multi-year analyses are particularly useful for conservation NGOs as their expenditures and incomes can vary year-to-year due to unusual challenges and opportunities.

Problems:

• How do you draw the line between administrative and program spending? There doesn't seem to be an explicit standard method for doing this, and there is no readily available data (including in the U.S. government IRS Form 990) to examine how an organization allocates staff time. One head of an NGO told me that his decision on how much of his time to allocate to management/administration versus program work was highly arbitrary.

• The commonly held view is that the lower the administrative costs in relation to program spending, the better. But green NGOs differ widely in kind of work they do, so that comparisons among them are as between apples and oranges. Some NGOs receive or purchase valuable gifts of land which they sell or give to a third party for long-term management, resulting in a large cash-flow from an activity that entails relatively low administrative costs. Another organization may work with local people to develop sustainable land uses, which is labour-intensive work that entails greater management/administration costs in relation to budget size. Furthermore, two organizations might be administered from the United States, but one could have all its program spending in the U.S., while the other could do its work in third world countries where the dollars spent on programs go farther.

• Financial statements in annual reports pool program costs, as does IRS Form 990, even though other less important expense categories are broken down (phone, postage, etc.). So key information on the costs of an NGO's various programs and projects is not readily available. The Canadian Registered Charity Information Return for registered charities does break down program spending into multiple-choice categories such as "public education, other study programs", "nature, habitat-conservation groups", "preservation of species, wildlife protection". But one size doesn't fit all, and better still would be a system in which each organization provided a breakdown that was roughly comparable but specific to the organization.

  With NGOs that operate internationally, financial reports fail to indicate the proportion of the budget spent in different countries. Nor do they break down income by country. This is basic information that would be of interest to donors.

• Organizations often combine fundraising with program-related communications (information updates, solicitations for action) to their supporters. It's then a judgement call as to how much of the costs to allocate to program and to fundraising. This is not handled a uniform manner by various NGOs, thus comparisons between organizations are unreliable.

• Information on revenue often does not distinguish between donations resulting from fundraising and other (unsolicited) donations. Those categories can be difficult to differentiate, but when revenue from fundraising is not identified, it is difficult to assess whether fundraising costs are reasonable.

• Financial statements sometimes pool: (i) individual donations, (ii) corporate donations, (iii) grants from foundations, and (iv) grants from government. The problem is that the fundraising costs can vary greatly among these categories, and actually may mostly pertain to donations from individuals, in which case a pooled value for "fundraising efficiency" masks the lower efficiency for individual donations. Furthermore, even if these categories are separated, the first category may include donations from individuals (especially bequests and large single donations) that don't really result from fundraising efforts although they may coincide with them.

• We have started a draft list of suggested changes to American IRS Form 990 and Canada's Registered Charity Information Return.

Guidestar, "The National Database of Nonprofit Organizations"

This site, produced by Philanthropic Research, Inc., has much information for donors, including a database with info on all American IRS-registered 501(c) nonprofit organizations (numbering more than 850,000) that may accept tax-deductible contributions. It allows a search by income class of organizations in various non-profit sectors. Most helpfully, the site displays an image of each organization's IRS Form 990 (containing detailed financial info), as well as summarizing basic info on each organization. It offers "Analyst Reports" (based on Form 990 data) on organizations, for $59 (PDF) or $69 (printed), or unlimited access to PDF reports for $1000/year.

Canada Customs and Revenue Agency, info on Canadian charities

By doing a Search with the name of a registered charity, you can access its Annual Information Return (Form T3010), which contains financial and other information.

Give.org, the Better Business Bureau Wise Giving Alliance

The BBB Wise Giving Alliance examines U.S.-based charitable organizations, including 13 of those currently listed on greendonor's site. The website clearly presents basic information about each organization, including a description of its programs, information on its governance (including CEO compensation), fundraising methods, and financial results for a recent fiscal year, including a detailed breakdown of income, and the proportion of expenses going to programs, fundraising and administration. The Council of Better Business Bureaus has a set of "Standards for Charitable Solicitations" and the site reports whether the organization is deficient in any of those.

Charity Navigator

This site requires a learning curve to make sense of its complex rating system. It has a rating of "organizational efficiency", which sums ratings based on three interdependent variables (E_P, E_A, and E_F, each divided by total "functional expenses"), and then deducts points from the score if the organization ran a net deficit over a three-year period.

Charity Navigator also has three measures of "organizational capacity": "primary revenue growth", program expenses growth, and "working capital ratio". The first two give points for growth in revenues and expenses, with top points for values exceeding 10% (though an adjustment was made for recent poor economic conditions). The working capacity ratio calculates how long an organization could sustain its spending using only its net liquid assets (i.e. with no income). In most cases, top points are awarded for values greater than one year, but the scale varies (ranging from 2 months to 5 years) for certain charity sectors.

American Institute of Philanthropy

This organization produces 3 printed reports per year, available (USA only) for a minimum donation of US$35 (sample copy available for small fee for printing/mailing). Its website lists its "top-rated" organizations including 16 in the "environment" category, all American.

AIP's rating system is based on the "percent spent on charitable purposes" and the "cost to raise $100" (in which AIP's estimate sometimes differs from the organization's). It then lowers the rating if the organization's assets are more than three times its operating costs, an arbitrary penalty which is unsuitable for conservation organizations.

Worth magazine's "America's Top 100 Charities" article

Published annually. The most recent article (Worth, December 2002) selected 8 "best environmental charities". Their selection is based on (1) interviews with "hundreds of philanthropy experts" to come up with a short list of 200 nonprofits; and (2) information for a 3-year period on allocation of revenue to programs, administration, fundraising, and reserves. The article briefly describes each organization's activities and breaks down spending into program, fundraising, administration and "future reserves". Their 8 picks for 2002 are: The Conservation Fund, Conservation International, Earthjustice, Natural Resources Defense Council, The Nature Conservancy, The Ocean Conservancy, World Resources Institute, and World Wildlife Fund.

Home | NGOs | Projects | Forum | Your input | Glossary