The Dallas Morning News
December 29, 2004
by Kimberly Durnan
Dallas is the least charitable among the nation's largest communities, and some of the city's nonprofit organizations are among the worst run in the country, according to a watchdog group that rates charities on their efficiency in distributing donations.
To devise its rankings, Charity Navigator analyzed about 3,500 nonprofit groups, according to their federal tax-exempt filings. The organizations were graded on a scale of zero to four stars, taking into account factors such as administrative and fund-raising costs and program expenditures.
"We are evaluating them solely on the basis of their finances," said Trent Stamp, executive director of Charity Navigator in Mahwah, N.J. "We don't care about their ideology or philosophy. We look at their financial health. If you give them a buck, what will they do with it?"
Several area nonprofits on the list ? including public TV station KERA, Together in the Harvest Ministries and the Jewish Federation of Greater Dallas ? disagreed with the rankings and questioned Charity Navigator's methodology, saying that tax returns alone can't accurately evaluate performance.
As a city, Dallas came in last when Charity Navigator ranked 25 cities based on how much money was raised and the financial shape of its nonprofits. Houston, the only other Texas city noted, finished fourth; Pittsburgh was ranked first.
"We found that Dallas charities had the lowest scores, were growing the slowest, were smaller and were disproportionately religious compared to other cities," Stamp said.
Tracie Burns, marketing manager for the North Texas Food Bank, said she could not understand how Dallas earned such a low ranking.
"We don't see that," she said. "I was at an event last week where the city of Dallas announced that employees were donating $225,000.Vought Aircraft Industries in Grand Prairie just gave us $91,000 that they had collected in a weeklong drive. We had 300 canned food drives from companies calling us up and saying we want to do this ? that's not ungenerous."
As for the nonprofit rankings, KERA-TV (Channel 13) was considered the worst in the public broadcasting and media category, while Together in the Harvest Ministries, an evangelical ministry that moved to Dallas a few years ago, was the worst in the religious media and broadcasting category.
The state's other lowest performers were the National Center for Freedom and Renewal, a Dallas-based organization that promotes public interest in issues affecting the Christian community; Primarily Primates, a sanctuary for primates, birds and other animals in San Antonio; and the Jewish Federation of Greater Dallas.
KERA has faced a series of woes in the past few years. With a $4 million deficit looming and expenses that continued to exceed revenues, the public broadcaster eliminated 18 positions last month and canceled two weekly public-affairs programs. It was the third round of layoffs since 2002.
KERA took issue with Charity Navigator's methodology.
"The ranking is not accurate," said Sharon Philippart, vice president of communications and marketing. "They don't include all the funds that we raise but they include all of our expenses. According to them we raise about $10 million a year, but we actually raise around $16 (million) to $17 million, depending on the year."
Just as different groups use different criteria for ranking charities, the nonprofits themselves often categorize fund-raising expenses and revenues in different ways.
Philippart contended the ranking is unfair and could hurt the station. Station executives have tried unsuccessfully to get Charity Navigator to reconsider its formula.
"Public broadcasting is a complicated business because we are a media company and a nonprofit," Philippart said. "The bottom line for us is that we want people to know that we work very hard to be good stewards of the money people give us and we take it very seriously."
Stamps acknowledged that "it's hard for public television stations."
"They don't do well in this type of system because they have to count all the air time they use to advertise themselves," he said. "But (KERA was) only spending 48 percent of their budget on programs, which is a lot less than other public television stations, which are spending 70 to 75 percent."
Jewish Federation earned one star, meaning it ranked far below charities with similar goals. The federation raises money to give to local and international Jewish organizations focused on education, social services, humanitarian aid and poverty relief as well as some non-Jewish groups.
"I don't think they understand us," said Gary Weinstein, chief executive, director and executive vice president. "We don't provide services. We allocate them out. They put us in the same category of those that provide services."
Weinstein also criticized Charity Navigator for analyzing the federation's financial statements without calling him. "In fairness, you would think they would call me or allow me to respond or answer any issues of confusion," he said.
Michael Solomon, a spokesman for The Chronicle of Philanthropy, would not comment on Charity Navigator's methodology, but he recommended the organization's Web site, www.charitynavigator.org, as one place among several where donors can obtain information about charities.
He suggested visiting several sites when looking for background and analysis of a nonprofit. He cited the Chronicle's site, www.philanthropy.com; the Better Business Bureau's site, www.give.org; and the American Institute of Philanthropy's site, www.charitywatch.org.
"It's good to get a variety of opinions," he said. "Not everyone is an expert on deciphering the 990 tax form."
Two nonprofits ? Together in the Harvest and the National Center for Freedom and Renewal ? were given zeroes for falling far below industry standards for their type of charitable work. Of all nonprofits rated by Charity Navigator, only 100 have received a zero rating, Stamps said.
"To get that you have to be spending a ton of money on raising money and on administrative costs," he said. Together in the Harvest's chief executive "makes $210,000 a year. If their donors are happy, great, but it's not the most charitable of charities."
Nonprofits should be rated on more than just a tax return ? even if the focus is financial, said Richard Schulz, vice president of Together in the Harvest Ministries.
"I have a serious problem with the process they use to rate charities," Schulz said. "A tax return is not a complete financial picture. To use the one criterion is intellectually dishonest. It's designed based on IRS guidelines, a self-reporting process that is arbitrary. It doesn't measure what the charity does."
Schulz criticized Charity Navigator for not visiting or talking to someone at the nonprofit organizations before judging them.
"They need to talk to members of the church and find out how they feel about it," Schulz said. "I've never been visited by Charity Navigator, and they've never asked us for information."
The National Center for Freedom and Renewal did not return phone calls seeking comment.
Top Texas rankings
Conversely, several Texas nonprofits earned Charity Navigator's top ranking. The best five are the Texas Parks and Wildlife Foundation, Humane Society of North Texas, Houston A+ Challenge, Houston Area Women's Center and the North Texas Food Bank.
Dallas-based Texas Parks and Wildlife Foundation ranked highly because it has low administrative costs and fund-raising expenses.
Getting a top rating helps smartly operated nonprofits prove their credibility, said Rob Alberts, the wildlife foundation's CEO and executive director. Donors should trust the agencies that get their money, so assessments like Charity Navigator help the nonprofit sector a great deal, he said.
"I'm a huge proponent of accountability and transparency in nonprofits," Alberts said. "It increases the level of scrutiny so people can make sure they are making a good investment, whether it's time, money or political will."
The foundation, which raises money to support the goals of the Texas Parks and Wildlife Department, excels at forging partnerships and raising private funds, Alberts said.
"We have very good volunteer leadership. You will never achieve greatness without a great board as well," he said. "Part of why we rank so highly is we are so efficient. We are a very lean foundation with two full-time and two part-time employees."
The Fort Worth-based Humane Society of North Texas also was pleased to earn high marks.
"We work hard for that position and try to be very honest and make sure that every penny we get goes right back into the organization," said Tammy Kirkpatrick, director of animal care services.
The group, which has existed for about 100 years, provides shelter for about 25,000 animals each year. The shelter recently secured adoptions for 31 horses that had been mistreated. It also tries to find homes for dogs, cats, chickens, pigs and other animals when possible.
"People don't realize how much it takes to take care of these animals," Kirkpatrick said. "Food, antibiotics and veterinary supplies are going through the roof. We are here seven days a week and house 400 to 600 animals a day."
Keeping administrative costs low helped the Dallas-based North Texas Food Bank score highly. The food bank distributes 2.5 million pounds of food monthly to 13 counties and 400 agencies in the region. Forty-seven percent of the food goes to people 18 and under, marketing manager Burns said.
"We are not like those charities where executives are paid like a for-profit business," she said. "People like to know that when they give a dollar, most of that money goes to helping feed hungry North Texans rather than paying our salaries."