How The Chronicle Compiled This Year’s Philanthropy 400 Rankings

The Philanthropy 400 uses financial data gathered from nonprofit organizations to determine which charities raised the most from individuals, foundations, and corporations for the 2000 fiscal year, or the 2001 fiscal year for those with fiscal years ending in January, February, or March.

Cash and in-kind gifts are included in the private-support total, which is used to determine an organization’s rank.

Data from fiscal 1999 were used for nine organizations that did not have complete information for fiscal 2000.

The Internal Revenue Service extended the deadline for some of those groups to file their Form 990 informational tax returns, and other groups were not able to provide The Chronicle with consolidated fiscal 2000 data for all their affiliates.

YWCA of the USA was unable to provide consolidated fiscal 2000 figures because it said it had encountered technical problems with its database.

Seven organizations that have fiscal years ending on March 31 were unable to provide information for fiscal 2001, so data for fiscal 2000 were used.

In most cases, The Chronicle relied on figures from charities’ Forms 990.

Some nonprofit organizations that have affiliates but don’t file a consolidated Form 990 provided data from consolidated audited financial statements. The Chronicle also used information from annual reports and a survey form that asked organizations for financial information.

The Philanthropy 400 rankings show how successful charities are at attracting private support. The rankings do not take into account money provided by governments or as 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.

Accounting Practices

The policies that nonprofit organizations follow in reporting their financial information vary widely.

Many comply with rules issued by the Financial Accounting Standards Board that are designed to standardize financial reporting. However, some organizations use those rules on financial statements but not on Forms 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. Those data are used because public colleges and universities are not required to fill out a 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 and universities to count only money that is actually in hand.

Because the council’s data reflect only money received, the rest of the financial information for a university may include more than the amount listed as total private support.

In some cases, the total income may include pledges received, depending on how a university reports its financial data.

Some public universities report their financial data for an entire state higher-education system, while others provide information for each campus. How state systems report their data can change from year to year.

Three universities do not participate in the council’s survey, but are included in the Philanthropy 400 based on their Forms 990 or the Chronicle survey form. They are Tulane (No. 175), Wayne State (No. 328), and Yeshiva (No. 170) Universities.

On this year’s Philanthropy 400 survey, The Chronicle changed the way it reports income and expense data for United Ways. Instead of removing totals for money that donors have asked United Ways to distribute to specific groups, The Chronicle now includes those earmarked funds in the private-support, total-income, program-service, and total-expense figures.

The change stems from a recent ruling by the Internal Revenue Service. For many years the service and the Financial Accounting Standards Board stated that donor-designated gifts should not be counted as income or expenses. That had been the standard The Chronicle had used in the past for the Philanthropy 400 survey.

But in May, the IRS issued a private-letter ruling to United Way of Southeastern Pennsylvania, in Philadelphia, that states that the organization can include donor-designated funds on its Form 990. While a private-letter ruling applies only to the group that requested it from the IRS, The Chronicle has used the ruling as the basis for reporting all United Way income and expense figures in the expectation that other United Ways will eventually employ the same reporting standard on their Forms 990.

Special Circumstances

Special circumstances affecting a few organizations in the survey are important to note:

• Doctors Without Borders USA (Médecins Sans Frontières USA) (No. 343) is on the list with figures for only the U.S. office. If figures for affiliates in 17 countries and the international office in Brussels had been included, the organization’s private support total would have been $230.9-million. The Philanthropy 400 measures domestic giving primarily. Most of the money raised by affiliates of Doctors Without Borders USA comes from overseas donors.
• Operation Smile (No. 269) is included on the list based on information in its audited financial statements, as it was last year. The audited financial statements include in the group’s total private support a calculation of the cash value of the time volunteered by its doctors and nurses. That value is not included in the total private support it reports on the Form 990.
• United Cerebral Palsy Associations (No. 87) is included on the list using private-support figures estimated by the organization. Figures are estimated based on the total operating expenses for the main office and all affiliates.

The Philanthropy 400 provides information on fund-raising costs and other charity expenditures. The figures are best used to compare a charity’s ability to raise money from year to year. 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 religious groups are included, however, because they provided data to The Chronicle.

The Philanthropy 400 was conducted under the direction of Martha Voelz, with assistance from Marni Larose.