How The Chronicle Compiled Its Annual Philanthropy 400 Rankings

The Chronicle’s 15th annual Philanthropy 400 uses financial data gathered from nonprofit

organizations to determine which charities raised the most from individuals, foundations, and corporations.

Cash and donations of art, stock, real estate, and other noncash items are included to determine how much an organization raised from private sources, and that figure determines the organization’s rank.

The Chronicle relied heavily on figures from the Form 990 informational tax returns that charities are required to file with the Internal Revenue Service each year.

Some groups that have affiliates provided data from their consolidated, audited financial statements. Data were also gathered from annual reports and from a Chronicle survey form that is based on the Form 990. Nonprofit groups are required by law to provide the Form 990 to anyone who asks for it.

Unlike secular charities, religious organizations are not required to make their finances public. Some religious groups are included in the Philanthropy 400, however, because they provided fund-raising figures and other financial data to The Chronicle.

The charities were ranked based on the amount they raised in the fiscal year that ended in 2004, or in 2005 for organizations with fiscal years ending in January, February, or March. Data from the 2003 fiscal year were used for 19 organizations that did not have or provide complete information for the 2004 fiscal year.

Five organizations that file their financial information in January, February, or March were unable to provide information for the 2005 fiscal year, so The Chronicle used data for 2004.

One organization, Lutheran Services in America, No. 8 on the list, said the most recent figures it could provide were for 2002 since the organization decided after that year that it would prepare financial statements consolidating information from its affiliates only once every three years. Though the headquarters for the organization files a Form 990, many of its affiliates do not, since, as churches, they are exempt from IRS regulations that require annual filings.

Jill Schumann, chief executive officer of Lutheran Services, says that after the group had collected consolidated information annually for four years, it noticed that it had not seen much change in the figures. She and other officials concluded that the less-frequent collection of more-detailed data would be most useful to both the headquarters and their affiliates.

Ms. Schumann estimates that giving is now higher than in 2002, since many of the organizaton’s affiliates have stepped up the amount of effort they put into fund raising.

Changes to the 400

The Philanthropy 400 rankings show how successful charities are at attracting private support. The rankings do not take into account money provided by government or fees that charities charge for their services.

As a result, nonprofit organizations with big budgets but relatively little in donations from individuals, corporations, or foundations may not be on the list.

The rankings take into account donations made to charities and their affiliates in the United States and do not include figures for international affiliates.

This year, in an effort to better show how effective organizations are as a whole at fund raising, The Chronicle asked groups that had previously been listed separately on the Philanthropy 400 to provide consolidated information for all their U.S. affiliates.

In response, United Way of America gave The Chronicle information for all of its 1,350 local affiliates.

Other organizations said they were unable to produce consolidated numbers. United Jewish Communities, an umbrella group for 155 Jewish federations, was the biggest of the entities that declined to submit consolidated information for all its local federations.

If United Jewish Communities, No. 42 on the list, had provided complete data for all Jewish federations, it would have ranked second on the list, since it estimates that it raised $2-billion last year. Twelve of the Jewish federations raised enough money to get on the list on their own.

Other groups, like the Public Broadcasting Service, No. 47, and National Public Radio, No. 32, told The Chronicle that consolidated information was not available for all local affiliates. Eight television and radio stations appear on the list, so those figures alone suggest that public-broadcasting organizations would move up to No. 3 if they consolidated their figures.

Because of The Chronicle’s change in approach to collecting figures, some groups that were previously listed separately, such as the United Ways in New York, Los Angeles, and Boston, no longer appear on the list.

The change also means that comparisons with a prior year’s list are not as useful. To make it easier for readers to compare fund-raising results for the organizations on the list, The Chronicle has provided the percentage change in total private support from the previous year for each organization included in the Philanthropy 400.

Reporting Approach Varies

Nonprofit organizations report their financial information in various ways. Many follow rules issued by the Financial Accounting Standards Board that are designed to standardize financial reporting. However, those rules are not necessarily consistent with the ones governing the Form 990.

Contribution figures for most colleges and universities come from an annual survey conducted by the Council for Aid to Education, a nonprofit organization in New York that monitors charitable giving to educational institutions. The Chronicle uses those data because public colleges and universities are not required to fill out the Form 990, and getting an accurate comparison of public and private institutions can be difficult.

One difference between the council’s data and the information reported on the Form 990 involves the counting of pledges. Under accounting standards used by most nonprofit organizations to fill out the Form 990, groups are supposed to count pledges as revenue that has been received. The council, however, directs colleges to count only money that is in hand at the end of the institution’s fiscal year.

Last year, the council began asking for total private-support figures, counting deferred gifts, such as trusts and annuities, at present value rather than face value. This is the same calculation that donors are supposed to use to use when they write off their donations on their tax forms. The present value of a gift, which takes into account the fact that nonprofit groups lose an opportunity to earn intereston a donation that is deferred rather than given right away, is generally the same or lower than face value.

Four institutions listed in the Philanthropy 400 did not participate in the council’s survey, but are included in the Philanthropy 400 based on their Forms 990 or information provided on the Chronicle survey form: Bard College (No. 383), Moody Bible Institute (No. 334), Oregon Health & Science University (No. 150), and Yeshiva University (No. 192).

Making Data Public

The Chronicle was not able to consider several organizations for inclusion on the list because they failed to provide their informational tax returns to the newspaper.

By law, the documents must be provided within 30 days of the request, but five organizations did not send the 990 after repeated requests and did not tell The Chronicle whether they had sought extensions from the Internal Revenue Service.

Those organizations, whose 2003 fund-raising figures suggest they might have been eligible for the 2004 list are: Clean Streams Foundation, in Lexington, Ky.; Downtown Now, in St. Louis; the Hospital for Special Surgery, in New York; West Penn Allegheny Health System, in Pittsburgh; and WHYY, in Philadelphia. The Chronicle has reported these violations of the law to the IRS.

While the rankings rely on the total amount that charities raise from private sources, the Philanthropy 400 tables provide figures on fund-raising costs and other expenditures by nonprofit organizations. Readers should take care in comparing those figures among charities on the list; such comparisons can be misleading if done without knowing more about the organizations, such as their programs, management, and accounting methods, and the amount of time they’ve been in existence.

Special circumstances affected four organizations included in the survey:

• Marine Toys for Tots Foundation, No. 66, included toys donated to its local affiliates in its figure for noncash gifts. In previous years, the organization included only the toys it received from Gifts In Kind International and corporations. As a result, the organization’s private support climbed from nearly $42-million in 2003 to $185.6-million in 2004.
• Special Olympics, No. 81, provided figures for the organization’s national office as well as its U.S. affiliates. About 30 percent of the group’s affiliates did not provide 2004 information, so 2003 figures were used for those chapters.
• Scholarship America, No. 113, an organization that raises money for its Dollars for Scholars program and other financial-aid programs for college students, last year began excluding from its private-support figure the money that flows into the charity’s coffers that is used for scholarship programs for corporations and other groups. This accounting change decreased the organization’s revenue figures by about $48.7-million.
• North Seattle Community College Foundation, No. 232, raised the vast majority of its private support from a single group: a consumer-debt management program called American Financial Solutions. The foundation operates the nonprofit credit-counseling division to raise money for scholarships for students who want to attend the community college, as well as to counsel people in debt.

The Philanthropy 400 was compiled by Leah Kerkman and Cassie J. Moore, with assistance from Maria Di Mento.