Nonprofits Lend a Bigger Helping Hand
Houston groups ranked at top in national study
The Houston Chronicle
June 19, 2003
by Mike Synder
For every dollar it gets from donors, the Houston Area Women's Center spends 84 cents on shelter and services for domestic violence survivors. Only 16 cents goes to fund-raising and administrative costs.
Such efficiency is characteristic of Houston's largest nonprofits, which rank among the nation's best in a new study evaluating the financial health of some 2,500 tax-exempt organizations around the country.
On average, the 39 Houston organizations analyzed ranked first in efficiency and fourth overall in the study. The report also took into account the groups' revenue growth, reserve funds and other financial benchmarks.
The study by Charity Navigator of Mahwah, N.J., found that Houston nonprofits spent more on programs (85.49 percent) and less on fund raising (5.21 percent) and administration (9.28 percent) than their counterparts in the nation's other 19 top metropolitan areas.
Growth among Houston's nonprofits, however, was slower than that of agencies in most of the other cities studied.
Local nonprofit leaders said the findings help to explain the continued success of many Houston nonprofits amid a weak economy. The Chronicle of Philanthropy reported in May that the Houston area ranked ninth nationally in charitable giving.
"First and foremost, Houston is a very generous community," said Debra King, vice president for finance and administration for the United Way Texas Gulf Coast.
Donors increasingly demand "transparency and accountability" from groups asking for their money,
King said, and the new report should reassure local donors that the dollars they give are being spent wisely.
Kyle Waide, Charity Navigator's assistant director, said the organization provides data on its Web site as an educational resource for donors. He said donors who visit the site report that it prompts them to give more or to have more confidence in their decisions about which groups deserve their donations.
Despite the organization's name, many of the groups it studies do not fit the standard definition of a charity. The list of Houston organizations includes Rice University, Baylor College of Medicine and The Kinkaid School.
Waide said Charity Navigator studies all groups above a certain size that qualify for 501(c)3 status from the Internal Revenue Service, which exempts them from paying federal income taxes.
What these groups have in common, he said, is "they depend in some significant degree on donations from the giving public."
The top-ranking Houston organization, with a 69.14 score on a 70-point scale, was Gospel to the Unreached Millions, a Christian evangelical group based in Huffman near Lake Houston. Other groups performing at high efficiency levels included the Greater Houston Community Foundation (68.94), Baylor College of Medicine (68.54) and the Houston Humane Society (68.47).
The Houston Area Women's Center ranked seventh with a score of 64.91. The organization spent 83.9 percent of its budget on services and saw revenue growth of 23.9 percent in 2001, according to the latest figures available.
"We look very, very carefully at all our expenses, as do all of our brother and sister agencies," said Ellen Cohen, the women's center executive director.
She said the center's 500 volunteers would cost the agency about $500,000 a year if they were paid for their work.