Palm Beach Post
June 20, 2006
By Susan R. Miller
BOCA RATON — It's not Monet, but money, that is troubling the Boca Raton Museum of Art.
Home to modern masters, African artifacts and shimmering sculptures, the museum recently received unfavorable reviews from Charity Navigator, a nonprofit organization that ranks more than 5,000 charitable and nonprofit organizations across the country based on their financial health.
A 3 percent decline in annual revenue growth, exorbitant fund-raising costs and less than two months in cash reserves earned the museum an overall rating of zero stars, down from one star the previous two years. The highest possible rating is four stars.
Museum administrators contend that the survey is based on IRS Form 990 tax filings that don't tell the entire story, failing to take into consideration variables such as the close of a successful capital campaign that meant the end of large contributions.
"They are taking numbers straight out of 990s and plugging them into formulas, which is fine because there is some consistency, but a 990 doesn't necessarily allow them to know what is going on with an organization," said Louise Adler, the museum's development director. "My recommendation is that a donor talk to the organization."
Still, only 2 percent, or 100 of the 5,000 charities on Charity Navigator's Web site, rank that low, said Sandra Miniutti, external relations director for the New Jersey ranking organization. In Florida, just five of the 233 charities reviewed received a goose egg.
"When we entered this marketplace, we weren't sure what we would find, but most nonprofits are healthy," said Miniutti, whose organization has been around since 2001. It was founded and originally financed by New York philanthropists John and Marion Dugan, who believed that an unbiased charity evaluator needed to be created to help donors make informed giving decisions.
Charity Navigator looks at four years' worth of nonprofit organizations' IRS 990 tax forms and takes into consideration various factors, including large capital campaigns.
"We try to give them the benefit of the doubt," Miniutti said.
Most troubling, she said, is the museum's fund-raising costs. For every dollar spent, Charity Navigator found that the museum was putting only 26 cents back into its programs.
"That would worry me as a donor," said Joan Sampieri, vice president of nonprofit services for Bristol Strategy Group in Miami. "If you were going to invest in the stock market, you would not like to see that for every dollar invested in taking something to market, the organization only got back 26 cents."
Other museums doing better
Overall, the museum's fund-raising events for its fiscal year ending April 2005 grossed $618,000 but netted just $214,000, according to its IRS filing.
By comparison, the Salvador Dalí Museum in St. Petersburg and the Museum of Art in Fort Lauderdale received three stars. For every dollar the Dalí museum spent on fund raising, 92 cents went back into programs and its revenue growth was up 3.6 percent. For every dollar spent by the Fort Lauderdale museum, 85 cents went back into programs and its revenue growth was up 6.9 percent. Even the Norton Museum of Art in West Palm Beach with its negative 5 percent revenue growth put 86 cents back into programs. It received one star.
"Fund-raising events are one of the most expensive ways to raise money," Adler conceded. "There are some donors who are much more interested in attending an auction or golf tournament than writing a check. That's the nature of philanthropy."
Although Boca Raton's museum has a healthy $11 million in assets, it showed a deficit of $251,000 in 2004, the most current year available.
"If one of our clients had a zero rating, we would immediately look at what is causing that because no one wants to feel like their charitable donation is at risk," Sampieri said.
CEO pay on par with others
Board members are not fazed.
"I am not concerned. I think they do a great job and they are efficient and I think their board is a good board and I look forward to serving them," said Paul Carman, a wealth specialist at Sagemark Consulting in Deerfield Beach, who recently was named to the museum's board.
Although many charities get a lot of heat for overpaying their leaders, museum Executive Director George Bolge's $140,000 salary seems to be in line with other executive compensation, Miniutti said. The average charity CEO's salary makes up about 3.4 percent of the organization's total functional expenses. Bolge's salary makes up about 3.8 percent.
"It tends to be higher with arts groups. Donors tend to be more wealthy and tend to want to hang out with the kind of people who have the same lifestyle," she said.
Charity Navigator found on average that chief executive officers of arts nonprofits made more, while charities for human services, the environment, animals and religion generally tend to have lower-paid CEOs.
The survey also found that the museum's reserves would pay for about two months of operations, down from six months in 2003. The average for other museums in the South was a little more than two years. The Norton Museum showed a little more than 4.5 years in reserves.
Adler defended the figures, saying that the museum's foundation, which files separately with the IRS, boasts a $2.6 million balance. It was not included in the numbers Charity Navigator reviewed. Although organizations are asked to provide consolidated financial data, they are not required. Endowments also aren't taken into consideration because it's difficult to know which assets might be liquid, Miniutti said.
Adler contended that the picture Charity Navigator paints is more bleak than reality but added that museum officials have been working hard during the past year to control expenses and increase fund raising.
"I think when we finish our audit, it will show we have been fiscally responsible on many different levels, and I think we are coming out of the year stronger," she said.
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