CharityWatch

Last updated
CharityWatch
Formation1992;27 years ago (1992)
FounderDaniel Borochoff
Type Nonprofit corporation
Legal statusActive
PurposeCharity evaluation
Headquarters Chicago, Illinois, U.S.
Official language
English
President
Daniel Borochoff
Main organ
charitywatch.org
Revenue
$605,768
Staff
5
Website www.charitywatch.org
Formerly called
American Institute of Philanthropy

CharityWatch, formerly known as the American Institute of Philanthropy (AIP), is a 501(c)(3) nonprofit organization in Chicago, [1] created in the United States by Daniel Borochoff in 1992, [2] to provide information about charities' financial efficiency, accountability, governance, and fundraising.

A nonprofit organization, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is dedicated to furthering a particular social cause or advocating for a shared point of view. In economic terms, it is an organization that uses its surplus of the revenues to further achieve its ultimate objective, rather than distributing its income to the organization's shareholders, leaders, or members. Nonprofits are tax exempt or charitable, meaning they do not pay income tax on the money that they receive for their organization. They can operate in religious, scientific, research, or educational settings.

United States Federal republic in North America

The United States of America (USA), commonly known as the United States or America, is a country comprising 50 states, a federal district, five major self-governing territories, and various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is slightly smaller than the entire continent of Europe. With a population of over 327 million people, the U.S. is the third most populous country. The capital is Washington, D.C., and the most populous city is New York City. Most of the country is located contiguously in North America between Canada and Mexico.

Charitable organization non-profit organization with a charitable purpose

A charitable organization or charity is a non-profit organization whose primary objectives are philanthropy and social well-being.

Contents

Overview

AIP analyzes charity financial documents to identify whether charities meet AIP's standards of financial efficiency, and publishes its findings. [3] AIP encourages donors to give to charities that will allocate most of their contributions to program services that benefit the people and to causes that donors wish to support. AIP also promotes charity accountability and transparency through its research on the rapidly changing nonprofit field. [4]

AIP publishes the Charity Rating Guide & Watchdog Report, containing ratings of the financial efficiency of over 500 United States charities and charges an annual membership fee of $50 to access it. Non-members are able to access this information only for top-rated charities. The ratings are grades ranging from A+ (best) to F (worst) and are based on analysis of charities' financial documents. [5] The ratings include the percentage of a charity's budget that is spent on program services, how much it costs a charity to raise $100, an accountability measure, and the salaries of the charity's three highest-paid employees. The Guide also features articles about problems in the nonprofit field and tips to help donors make wise giving decisions and avoid charity scams. [6] AIP posts its top-rated charities on its website. [7]

AIP also investigates ethical issues surrounding charity spending, including salaries and payouts, financial reporting, telemarketing and direct-mail solicitation campaigns, and governance. AIP shares the results of its research with the media and government agencies and works closely with these parties to educate the public about informed giving. AIP President Daniel Borochoff has testified before Congress about veterans charities, [8] [9] [10] the aftermath of Hurricanes Katrina and Rita, [11] and the philanthropic response to the 9/11 attacks. [12]

Telemarketing is a method of direct marketing in which a salesperson solicits prospective customers to buy products or services, either over the phone or through a subsequent face to face or Web conferencing appointment scheduled during the call. Telemarketing can also include recorded sales pitches programmed to be played over the phone via automatic dialing.

Hurricane Katrina Category 5 Atlantic hurricane in 2005

Hurricane Katrina was a Category 5 hurricane that made landfall on Florida and Louisiana in August 2005, causing catastrophic damage, particularly in the city of New Orleans and the surrounding areas. Subsequent flooding, caused largely as a result of fatal engineering flaws in the flood protection system known as levees around the city of New Orleans, precipitated most of the loss of lives. The storm was the third major hurricane of the record-breaking 2005 Atlantic hurricane season, as well as the fourth-most intense Atlantic hurricane on record to make landfall in the contiguous United States, behind only the 1935 Labor Day hurricane, Hurricane Camille in 1969, and Hurricane Michael in 2018.

Hurricane Rita Category 5 Atlantic hurricane in 2005

Hurricane Rita was the most intense tropical cyclone on record in the in the Gulf of Mexico and the fourth-most intense Atlantic hurricane ever recorded. Part of the record-breaking 2005 Atlantic hurricane season, which included three of the top ten most intense Atlantic hurricanes ever recorded, Rita was the seventeenth named storm, tenth hurricane, and fifth major hurricane of the 2005 season. Rita formed near The Bahamas from a tropical wave on September 18, 2005 that originally developed off the coast of West Africa. It moved westward, and after passing through the Florida Straits, Rita entered an environment of abnormally warm waters. Moving west-northwest, it rapidly intensified to reach peak winds of 180 mph (285 km/h), achieving Category 5 status on September 21st. However, it weakened to a Category 3 hurricane before making landfall in Johnson's Bayou, Louisiana, between Sabine Pass, Texas and Holly Beach, Louisiana, with winds of 115 mph (185 km/h). Rapidly weakening over land, Rita degenerated into a large low-pressure area over the lower Mississippi Valley by September 26th.

AIP's ratings have received exposure from Congress and the media; including AIP’s appearance on the front page of The Washington Post. [13] [14] [9] [15]

Governance and operations

Charity Watch is governed by a five-person Board of Directors which includes its founder and president, Daniel Borochoff, who was paid $198,548 in 2017. [16] In 2018, Charity Watch spent $584,887, of which 54% ($316,695) was spent on salaries. [17] Charity Watch employs one analyst in addition to Mr. Borochoff.

Charity Watch's stated goals are "To research and evaluate the efficiency, accountability and governance of nonprofit organizations; to educate the public about the importance of wise giving; to inform the public of wasteful or unethical practices of nonprofits and provide recognition to highly effective and ethical charities; to advise AIP members and conduct special investigations and evaluations of nonprofits; to expand and re-define our programs periodically to meet the continuing challenge of keeping the contributor informed." [18]

Reception

AIP was criticized in a study on rating nonprofits for having a "gotcha" mentality and limited explanation for their ratings. [19] The study criticized nonprofit watchdog organizations for relying heavily on financial data that is not adequate for evaluating a nonprofit organization and may misguide the public, although the study noted that AIP "recognizes the limitations of the [IRS Form] 990." [19]

Charity Watch discounts Generally Accepted Accounting Principles (GAAP) in its reporting of nonprofits' financials. Many in the nonprofit space have taken issue with this approach. [20] [21] [22]

See also

Related Research Articles

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The BBB Wise Giving Alliance (WGA) is a national charity monitoring organization. Under previous names, it has been reporting on nationally-soliciting charities since the 1920s. BBB’s Give.org evaluates charities, at no charge, using the 20 BBB Standards for Charity Accountability to help donors verify the trustworthiness of soliciting organizations and to strengthen charity practices. Resulting reports are freely accessible to the public at Give.org. These standards were developed with the help of the charitable community.

Charity Navigator charity assessment organization that evaluates charitable organizations in the United States

Charity Navigator is a major charity assessment organization that evaluates charitable organizations in the United States, operating as a free 501(c)(3) organization that accepts no advertising or donations from the organizations it evaluates.

Roger Chapin is an American businessman turned fundraiser living in San Diego, who calls himself a "nonprofit entrepreneur", according to Forbes magazine. He has launched more than 20 charities, and until 2009 was the president of Help Hospitalized Veterans, an American charity, whose stated purpose is, "Making time live for America's hospitalized veterans." The New York Times has labelled two of the organizations he founded, Help Hospitalized Veterans and Coalition to Salute America's Heroes as being " among a dozen military-related charities given a grade of F in a study last December by the American Institute of Philanthropy, a nonprofit watchdog group. These and other charities have collected hundreds of millions of dollars from kind-hearted Americans and squandered an unconscionable amount of it on overhead and expenses — 70 percent or 80 percent, or more."

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Evangelical Council for Financial Accountability

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References

  1. "Charity Ratings | America's Most Independent, Assertive Charity Watchdog". CharityWatch. Retrieved 2016-01-25.
  2. Daniel Borochoff. "Mission Statement, Goals and More". Charitywatch.org. Retrieved 2012-08-13.
  3. FNP Interactive – http://www.fnpInteractive.com (2007-12-21). "The Frederick News-Post Online – Frederick County Maryland Daily Newspaper". Fredericknewspost.com. Archived from the original on 2012-02-17. Retrieved 2012-08-13.
  4. "How to tell a good charity from a bad one". MSM Money. Retrieved 2012-08-13.
  5. Weekend Edition Saturday (2005-12-17). "Rating the Performance of Charities". NPR. Retrieved 2012-08-13.
  6. Daniel Borochoff. "Charity Rating Guide and Watchdog Report". Charitywatch.org. Retrieved 2012-08-13.
  7. Daniel Borochoff. "American Institute of Philanthropy, Top-Rated Charities". Charitywatch.org. Retrieved 2012-08-13.
  8. Charity Alert: Committee on Oversight and Government Reform. United States House of Representatives Archived January 31, 2008, at the Wayback Machine
  9. 1 2 "Failing to Serve America's Heroes on the Home Front". ABC News. 2007-11-09. Archived from the original on 2011-07-23. Retrieved 2012-08-13.
  10. Archived January 31, 2008, at the Wayback Machine
  11. Hearing Archives: Committee on Ways & Means. U.S. House of Representatives Archived January 31, 2008, at the Wayback Machine
  12. "Committee on Ways and Means, Oversight Subcommittee, 107-47, Response to the Recent Terrorist Attacks". Waysandmeans.house.gov. Retrieved 2012-08-13.
  13. "Study Faults Charities for Veterans". The Washington Post. 2007-12-13. Retrieved 2012-08-13.
  14. "'An Intolerable Fraud'". The New York Times. 8 February 2008. Retrieved 25 January 2016.
  15. "Vet's Charities Pocket Money". CBS News. 2007-12-13. Retrieved 2012-08-13.
  16. https://pdf.guidestar.org/PDF_Images/2017/330/491/2017-330491030-0f612537-9.pdf
  17. "2018 Charity Watch Audited Financial Statement" (PDF). 2019-05-22.
  18. "About AIP". Archived from the original on 7 December 2010. Retrieved 2010-12-03.
  19. 1 2 "The Ratings Game". Stanford Social Innovation Review. Summer 2005.
  20. https://www.perlmanandperlman.com/charity-navigator-dismisses-use-of-joint-cost-allocations/
  21. https://blueavocado.org/finance/charity-raters-part-i-charting-the-bad-and-the-bad/
  22. https://nonprofitquarterly.org/2016/06/02/is-charity-navigators-revised-rating-system-an-improvement/