The Nonprofit FAQ

How can I figure out how our organization should divide its expenses?
On 5/7/2004 someone wrote to Nonprofit (see http://www.rain.org/mailman/listinfo/nonprofit
) with this request:


I need a presentation for the new board outlining the activities of the
organization and was specifically asked for a pie chart showing desireable proportions of expenditures on program services, administration, fundraising, etc.

Don Griesmann, a consultant with community-based and faith-based organizations from Ventnor, NJ, responded on 5/8:

Is the board interested in what is real, what the pie chart ought to look
like, or some sample of the "average" nonprofit?

One standard could be the IRS 990 form selecting the revenue and expense
items from Parts I and II that match the organization's realities. (For information on Form 990, see http://www.nonprofits.org/npofaq/19/06.html.)

As with any
charting, the reader has to know the assumptions and values used to decide the
factors and the background of the figures. No chart stands alone and needs at
least some narrative about goals and accomplishments or lack thereof. You could
assess the organizations by activities, organizationally and administratively
with details for each.

Charity Navigator is one of the "rating" groups that some have labeled
"watchdog." The group does list what it considers to be the important factors a
potential contributor should assess in a nonprofit tax exempt organizations before
giving. Reasonable people could disagree. As the group states -

"We simply aim to provide objective, unbiased analytical information on
America's largest charities so you can determine if donating to
those charities is a sound decision. "

At any rate Charity Navigator's standards include Organizational Efficiency and
Organizational Capacity -

  • Fundraising Efficiency
  • Fundraising Expenses
  • Program Expenses
  • Administrative Expenses
  • Primary Revenue Growth
  • Program Expenses Growth
  • Working Capital Ratio


To review these standards in detail see -

http://www.charitynavigator.org/index.cfm/bay/content.view/catid/2/cpid/48.htm

For health related charities see -

http://www.charitynavigator.org/index.cfm?bay=search.cause&cgid=5&Submit.x=22&Submit.y=6

More generally, you can click on the "Cause" that best meets your organization's mission and see a
number of organizations and their ratings. It seems the standards and the
ratings can be put into a pie chart. You could perform a similar analysis for your
organization.

Take a look at the National Prostate Cancer Coalition rating for an example -

http://www.charitynavigator.org/index.cfm/bay/search.summary/orgid/5926.htm

Notice the Mission statement accompanying the data. Unfortunately the
"Comparison By Cause Chart" linked on the right side is not available.

The Better Business Bureau and Giving.org have also established standards for
measuring nonprofit tax exempt organizations -

See - http://www.give.org/standards/newcbbbstds.asp

The evaluation process is detailed at -
http://www.give.org/charities/producing.asp

  • Annual Report
  • Audited Financial Statements
  • IRS Form 990, Including Schedule A
  • Budget
  • Direct Mail Appeals From the Past Year
  • Scripts of Telephone Appeals
  • Scripts of Public Service Announcements
  • Fund Raising Event Invitations
  • Sample Grant Proposals
  • Cause Related Marketing Promotions
  • Fund Raising Contracts
  • Articles of Incorporation
  • Bylaws
  • Tax Exempt Status Determination Letter
  • Board Roster
  • Conflict of Interest Policy


These materials are thoroughly reviewed in order to determine whether or not
the subject charity meets each of the the voluntary BBB charity standards. A
draft report and detailed letter, outlining any findings, is shared with the
charitable organization prior to publication affording the charity an
opportunity to respond to any noncompliance findings. The Wise Giving Alliance will continue to
produce these comprehensive and current charity evaluations to help you make the
best possible giving decisions.

You may find it informative to review two charities working on cancer (the
National Prostate Cancer Coalition is not listed):

The American Cancer Society (the Pie Chart was not working when I looked) -
http://www.give.org/reports/care_dyn.asp?26

The American Cancer Aid Foundation -
http://www.give.org/reports/nondissql.asp?913

Hopefully these sites will give you issues you can incorporate fairly and
appropriately for your board.




Posted 5/8/04 -- PB