How The Chronicle Compiled Its Annual Philanthropy 400 Rankings

The Chronicle’s 17th annual Philanthropy 400 ranks nonprofit organizations based on financial

information about money these groups raised last year from individuals, foundations, and corporations.

Donations that count toward the total private support reported in a charity’s Philanthropy 400 listing may include cash and other types of gifts, such as stock, real estate, food, medicine, and art, but do not include money from the government.

The Form 990 informational tax returns that charities are required to file annually with the Internal Revenue Service provide a substantial portion of information used to determine the rankings.

Other data to help determine the Philanthropy 400 are gathered from groups’ annual reports, financial statements, and a Chronicle questionnaire that is based on the Form 990.

In many cases, groups with affiliates provided data from their consolidated, audited financial statements. Some religious organizations, which are not required to publicly disclose their finances, are included in the 400 because they provided their information to The Chronicle.

Rankings were based on donations raised in the fiscal year that ended in 2006, or in 2007 for organizations with fiscal years ending in January, February, or March.

Eleven organizations are included on the 400 with information for the 2005 fiscal year because they did not have more-recent complete information available. In most of those cases the organizations were granted a deadline extension by the IRS to file their Form 990, and in two cases the groups were unable to provide consolidated data more recent than 2005.

Making the Cut

The Philanthropy 400 rankings focus on an organization’s ability to attract private support.

As a result, some nonprofit organizations that have big budgets because they receive a lot of government money do not appear on the list.

This year, a charity had to raise at least $42-million from private sources. This cutoff is higher than last year’s, when charities needed to raise a minimum of $37.7-million to be included in the Philanthropy 400.

No money raised overseas is included in the private-support total that earns an organization a spot in the Philanthropy 400, even though some charities on the list have international affiliates.

Groups with affiliates, however, are encouraged to consolidate their fund-raising figures for the Philanthropy 400, even in cases where an affiliate is run by its own board and manages its operations separately from the parent organization. Consolidated figures were provided by 152 organizations in this year’s list.

United Jewish Communities, in New York, declined to provide The Chronicle with consolidated private support figures for the 155 Jewish federations that are its members.

The national office of United Jewish Communities ranked No. 31 on this year’s Philanthropy 400, but would probably place much higher if it had provided a consolidated figure.

The sum of the national office’s 2006 private support and that of the 11 other Jewish federations that appear on this year’s Philanthropy 400 comes to nearly $1.4-billion, which by itself would earn the federations a No. 4 ranking on The Chronicle’s list.

Interpreting the Data

Because public colleges and universities are not required to file the IRS Form 990, information collected on an annual survey by the Council for Aid to Education, a nonprofit organization in New York that tracks giving to educational institutions, provides the most reliable information about fund raising at such institutions.

For this reason, the Philanthropy 400 rankings for colleges and universities are based on private-support figures those institutions reported to the Council for Aid to Education, with the exception of a handful of institutions that did not respond to the council’s survey. In those cases, The Chronicle used data from the institutions’ Forms 990 to determine private support.

However, there are discrepancies in reporting requirements: The Form 990 allows an organization to include pledges in the amount of money it received from private sources, while the council’s survey only counts money in hand at the end of the institution’s financial year.

The Chronicle was not able to consider one organization that seemed to be eligible for inclusion on the Philanthropy 400 because it failed to provide its informational tax return.

By law, the documents must be provided within 30 days of a request, but the Hispanic Scholarship Fund, in San Francisco, did not send its latest Form 990 after repeated written requests, and did not tell The Chronicle whether it had sought an extension from the IRS.

The Chronicle has reported the organization’s failure to provide the document to the IRS.

According to its most recent tax return, the organization raised nearly $38-million in the year ending March 31, 2006.

The Philanthropy 400 report includes rankings based on money raised from private sources, but also provides figures on expenses such as fund-raising and program costs.

Comparisons of such expenses figures should be undertaken with care, as readers may not know about specific organizations’ work, such as programs, management, and accounting methods.

Many groups in the 400 distribute grants to other charities, for example, so comparing such entities with those that run charitable programs may not be fair.

The Chronicle strives to include all charities that might be eligible for the Philanthropy 400 each year. To notify the newspaper of an organization that should be included in next year’s survey, please send an e-mail message to survey@philanthropy.com

The Philanthropy 400 was compiled by Noelle Barton, Maria Di Mento, and Sam Kean.