As more Americans are bearish about giving, charity is ever more needed. Get the biggest bang for your buck.
We live in a nation of tremendous luxury, yet every three hours, a child is killed by gunfire. Twelve million American kids live in poverty. A third of the women in the United States have been sexually assaulted. Around the world, 37 million people are refugees or have been displaced from their homes.
The facts are alarming. The good news is that we have the power to change them-with our words, with our actions, and, perhaps most important, with our money. That's why Worth, for the second year in a row, set out to identify those charities that are doing the best job, dollar for dollar, of mitigating these problems.
These have not been easy times for charities, however. According to Giving USA 2002, an annual report by the AAFRC Trust for Philanthropy, Americans gave $212 billion to charity in 2001, virtually unchanged from the nearly $211 billion they gave in 2000-but a decline of 2.3 percent in inflation-adjusted terms. More than three-quarters of this money, or $160.7 billion, was donated by individuals, and of that, nearly half came from those with a net worth of $1 million or more.
Essentially, the wealthiest Americans are the ones holding philanthropy together, but that support is getting shakier. A 2002 study by Phoenix Companies found that 69 percent of people with a net worth of at least $1 million feel obligated to give, down from 79 percent in 2001. Clearly, the combination of a two-year-old bear market and a slow economic recovery has made people insecure about their wealth. Corporations are feeling less charitable too: In 2001, they gave 14.5 percent less than in 2000. Donor confidence has also been eroded by scandals involving accountability at some charities.
Change is under way. The U.S. Internal Revenue Service, which audits just 1 percent of tax-exempt groups, has made a commitment to be more stringent. The BBB Wise Giving Alliance, a watchdog group in Arlington, Virginia, recently raised its standards, requiring charities to make budgets available to the public and spend 65 percent of revenue on programs (up from 60 percent). Charities are becoming more transparent about how they use donations, while donors are increasingly restricting gifts to certain programs.
We have made some important modifications to this year's list of the top 100 charities. Last year, we excluded religious organizations because they are not required to make their financial information public. This time, we made exceptions for four crucial faith-based groups, including the Salvation Army and Volunteers of America. We continue to require that charities be national or international in scope, be nonpolitical, and have a track record of at least three years. About half the groups on this list are new. The environment, health, and relief categories have been pared down; the education category reflects a new priority on K-12 public education. Human services is our only expanded category, reflecting an increasing reliance on these basic services. We've also added the arts, but because their impact is typically regional, we focused on five major cultural centers-New York City, Chicago, Los Angeles, San Francisco, and Washington, D.C.
Exclusion from our list is not an indictment. Many more good charities out there are doing good work and deserve your support. But we are confident that the charities on this list will spend your money wisely and will do their best to change some of the grim facts of today's world that we all face.
Choosing among charities is never easy. We interviewed hundreds of philanthropy experts to come up with a preliminary list of some 200 nonprofits. We then asked those groups to provide detailed information on their programs and copies of their last three tax returns. All nonreligious charities with more than $25,000 in revenue are required to file IRSForm 990. In the case of charities whose 990s represented only their national headquarters, we agreed to use audited financial data for the entire organization.
For each charity, we took a three-year average of the percentage of its total revenue that is allocated to programs, administration, fundraising, and reserves for the future, and represented those percentages as dollar amounts per $100 donated. The annual revenue figure listed here is from the most recent year.
Some of the figures, however, can be deceiving. New organizations that are still establishing a donor base, nonprofits that serve less glamorous causes, and groups that get much of their revenue from government grants or that charge for services typically have lower fundraising costs. Groups that appear to be saving at an excessive rate may be forced to do so: Gifts can be restricted by donors, making that money unavailable for spending (sometimes permanently, as with gifts to an endowment).
Industry watchdogs recommend that charities spend at least 50 percent of revenue or 65 percent of expenses on programs and no more than 35 percent on fundraising. While seven nonprofits on our list spent less than half their revenue on programs, five of those had reserves that were at least 50 percent restricted; MoMA's were 45 percent restricted. The conservation groups' ratios are skewed because they are forced to report land acquisitions as a capital cost rather than a program expense. Each of our charities spends at least 65 percent of expenses on programs.
You can always find out more about any charity that interests you. Upon request, a nonprofit must send you its annual report and its three most recent 990s. The 990s for several hundred thousand charities are available at www.guidestar.org. In addition, the BBB Wise Giving Alliance (703-276-0100) and the American Institute of Philanthropy (773-529-2300) publish free guides listing charities that meet their standards. Visit www.worth.com for links to these and other organizations that can assist with your philanthropy.
Conservation Fund works with companies, government agencies, and landowners to create solutions that make economic and environmental sense. In a poor North Carolina county, for example, it is helping residents to develop sustainable forestry and create an ecotourism industry. In Grayslake, Illinois, it worked with a developer to create a residential community that protects the landscape; because the homes are clustered, more than half the development's 678 acres remain open and protected. CF brings together leaders from conservation groups and businesses to discuss ways to work with one another, and it holds training sessions to build the leadership capacity of environmental organizations.
ANNUAL REVENUE $68.3 MILLION
703-525-6300, www.conservationfund.org
Conservation International uses scientific and economic data to convince governments to set aside and protect biologically important lands. CI sometimes offers economic incentives as well and typically provides the money and technical support that governments need to enforce new protections. This year, with CI's support, Cambodia agreed to preserve a million acres that hold most of the country's large mammals and half its birds, reptiles, and amphibians. CI also helps communities develop sources of income that are environmentally friendly and advises companies on how to reduce their ecological footprints and still remain profitable. In 2001, it helped Starbucks devise new coffee-purchasing guidelines whereby suppliers who meet environmental standards are rewarded. The high reserve is due to restricted gifts.
ANNUAL REVENUE $68.9 MILLION
202-912-1000, www.conservation.org
ANNUAL REVENUE $21.5 MILLION
510-550-6700, www.earthjustice.org
Even by environmentalist standards, this is a relentless group of lawyers and scientists. It was the NRDC that finally got a judge to force the Bush administration to turn over controversial documents revealing which energy executives had been invited to help shape national energy policy (the administration has yet to comply). And it was the NRDC that thwarted plans to build an international airport between Everglades and Biscayne National Parks. Farther from home, NRDC's BioGems campaign recently helped save Guatemala's Maya Biosphere Reserve from oil exploration by a Houston company and helped protect Costa Rica's Talamanca coastal region from industrial development.
ANNUAL REVENUE $55.7 MILLION
212-727-2700, www.nrdc.org
The Nature Conservancy identifies areas of land and water where plant and animal species need to be protected. It then buys and/or manages the areas-a total of 94 million acres in 29 countries. In 2001, the Nature Conservancy developed conservation plans with the governments of China and Micronesia. Note: The IRS requires the organization to report land-acquisition and land-management costs as capital allocations, not as program expenses, which appears to dilute the amount that TNC spends on programs.
ANNUAL REVENUE $731.9 MILLION
703-841-5300, www.nature.org
The Ocean Conservancy is working to apply to the oceans the same conservation ethic that has protected special areas of our land. In 2001, it helped the Tortugas secure the status of America's first Ocean Wilderness area. This year, through its annual International Coastal Cleanup program, 800,000 volunteers removed 12.5 million pounds of trash from the world's coastlines.
ANNUAL REVENUE $7.9 MILLION
202-429-5609, www.oceanconservancy.org
If you like your environmental groups less confrontational and more cooperative, World Resources Institute might be for you. WRI builds partnerships with governments, companies, environmental groups, and schools. It's working with the governments of Mexico City and Shanghai to reduce gridlock and air pollution and is helping corporations such as IBM and General Motors to increase their use of green power sources.
ANNUAL REVENUE $15.2 MILLION
202-729-7600, www.wri.org
Out in the field, WWF conducts scientific research and tracks illegal trade in endangered species. At the policy level, it advises governments and international organizations on environmental policies and treaties. It works with corporations and communities to change harmful practices. It recently helped the Chinese government identify scientific substitutes for body parts of endangered species long used in traditional Chinese medicine.
ANNUAL REVENUE $118.1 MILLION
202-293-4800, www.wwfus.org