How the Philanthropy 400 Rankings on Contributions Were Compiled

The Philanthropy 400 uses financial data gathered from non-profit organizations

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to determine which charities raised the most in donations from individuals, foundations, and corporations during the fiscal year ending in 1998.

Four organizations did not have complete information for that year, so data from fiscal year 1997 were used instead.

Both cash and in-kind gifts are included.

In most cases, The Chronicle relied on figures from charities’ informational tax returns — Internal Revenue Service Form 990. For some organizations, especially those that have numerous affiliates and do not file consolidated tax forms, the survey takes its data from audited financial statements.

Information is also compiled from a Chronicle survey form and from annual reports.

The Philanthropy 400 rankings are intended to show how well charities do in attracting private support. They do not take into account money provided by governments or fees that charities charge for their services. As a result, non-profit groups with big budgets but relatively little in donations from individuals, foundations, or corporations may not be on the list.

The policies that non-profit organizations use to count donations vary widely. Many follow rules issued by the Financial Accounting Standards Board designed to standardize financial reporting, but some do not. Some follow the board’s rules in their audited financial statements, but not on their federal tax returns.

Contribution figures for most colleges and universities come from an annual survey conducted by the Council for Aid to Education, a New York organization that monitors charitable giving.

Those data are used because public colleges and universities are not required to fill out a Form 990 and, as a result, getting an accurate comparison of public and private institutions can be difficult.

One difference between the council’s data and the information reported on Form 990 involves the counting of pledges. Under accounting standards used by most charities to fill out the Form 990, organizations are supposed to count pledges as revenue received. The council, however, counts only money actually received.

Some public universities choose to report their financial data for the entire state system to the Council for Aid to Education, while others provide information on each campus.

A few colleges and universities do not participate in the council survey, however, and are included in the Philanthropy 400 based on their I.R.S. forms. Those are: Keck Graduate Institute of Applied Life Sciences, and Emory, Marquette, Tulane, and Yeshiva Universities.

Two changes have been made to the data compilation for this year’s Philanthropy 400, and they mainly affect private schools and United Ways.

In prior years, figures from the Council for Aid to Education were also used for private schools; this year the survey relies on their Forms 990.

That change is intended to guarantee that private schools are evaluated on the same basis as most of the other charities on the list. The tax-form figures from such institutions are more comparable than those from higher-education institutions because schools do not receive big research grants.

In addition, The Chronicle has changed the way in which contributions earmarked by donors for specific charities are counted. That change largely affects United Ways.

The Chronicle subtracted any earmarked funds that were included in total private-support figures provided by the organizations.

In so doing, The Chronicle is following an approach used by the Internal Revenue Service and the Financial Accounting Standards Board, which in July clarified its policy on earmarked funds.

The Philanthropy 400 provides information on fund-raising costs and other charity expenditures. The figures are best used to compare a charity’s efficiency from year to year in raising money and converting gifts to programs. Using those figures to compare one charity with another could be misleading if done without knowing more about the organizations, such as their age, programs, management, and accounting methods.

For the most part, the Philanthropy 400 does not include churches, which are not required to make their finances public. Some agreed to fill out the survey form, however, and are included in the list.

While every effort was made to identify all charities that raise enough money to qualify for the Philanthropy 400, the size and diversity of the non-profit world may have led some to be overlooked. Charities that think they should have been included should write to Philanthropy 400, The Chronicle of Philanthropy, 1255 23rd Street, N.W., Washington 20037, or send an e-mail message to editor@philanthropy.com.

The Philanthropy 400 was compiled under the direction of Harvy Lipman, with assistance from Martha Voelz. Debra E. Blum, Marina Dundjerski, Holly Hall, and Domenica Marchetti also contributed.