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Area charities found to use money wisely

But Milwaukee groups rank last in revenue growth

Milwaukee Journal Sentinel

August 7, 2004


By Tom Held

Non-profit agencies in Milwaukee, from colleges to theater groups, spend their dollars wisely but struggle to boost their revenue on pace with other charities across the country, a new evaluation has found.

As a group, 26 Milwaukee-area charities ranked 12th overall out of 25 metropolitan areas, in the analysis conducted by Charity Navigator. The organization, based in Mahwah, N.J., analyzed the non-profits based on financial data provided in the agencies' federal tax forms.

The analysis, which has some limitations, gives donors an idea of where their contributions will be most effective.

Collectively, Milwaukee charities scored high in efficiency. And while they ranked well in the amount of overall revenue, efforts to increase that revenue fell short.

"What's truly remarkable is that they have struggled to raise funds, but by keeping overhead costs low, they have managed to do more with less than most other cities," said Trent Stamp, Charity Navigator's executive director. "Milwaukee donors should be confident that their charities will spend their money wisely."

That assessment meets the expectations of local observers, who track the work of non-profit groups in and around Milwaukee.

"It's in part because organizations here tend to be very lean on the administrative end, purposely," said Doug Jansson, executive director of the Greater Milwaukee Foundation. "It's a conservative community and one that gives high marks to non-profits that provide as much service as possible."

It's also a community hit hard by the economic downturn and the loss of manufacturing jobs.

Deborah Fugenschuh, president of the Donors Forum of Wisconsin, sees that as a valid explanation for the local charities' poor showing in revenue growth. Collectively, the 26 Milwaukee-area non-profits ranked last among the 25 metropolitan areas, showing only 2.1% growth in the study period.

"When you don't feel prosperous and you don't feel you have as much discretionary income, you will cut the amount of your charitable giving," she said.

Charity Navigator rated the non-profit agencies individually and collectively, with a 70-point scoring system that analyzes how much they spent on fund raising and administration vs. the amount spent on carrying out their mission. The agencies also were rated on financial stability, based on revenue growth and assets.

The methodology has limitations, because different agencies follow different reporting practices on their federal tax forms, and some programs inherently require more administrative spending than others. In addition, the rankings are based on financial data from 2002 and 2003 fiscal years.

"I think generally, their conclusions are accurate, but the devil's in the details," Fugenschuh said. "I think these overviews are very valid and important to give you the broad brush with how we rank with other cities and how non-profits look when compared with each other."

Milwaukee charities scored well collectively, third of the 25 metropolitan areas, in the percentage of total spending allocated to administration. The national median was 10.2%, and Milwaukee charities were at 7.8%.

Local charities also were efficient at raising money, spending 8.7 cents on fund raising for each dollar raised. That ranked 11th of the 25 metropolitan areas, and fell below the median of 9.3 cents.

In part because of that efficiency, Milwaukee also ranked high in the proportion of dollars spent on mission, whether that's serving the poor, educating, supporting other non-profits or operating arts groups.

Milwaukee charities devoted 83.6% of their money toward their missions, placing the group fifth nationally. Cleveland led in that category, at 86%, and the median was 81.1%.

"Like the rest of our state, and the people that are here, we put the dollars where they are needed most," said Fugenschuh, who advises foundations on how to maximize their allocations.

Despite its low ranking in revenue growth, the Milwaukee group collectively outpaced most of its counterparts in total revenue, with a median of $12 million annually. That ranked fourth, and perhaps contributes to the low ranking in revenue growth, setting a higher base line than in most other cities.

The majority of the 26 agencies in the Milwaukee group ran deficits, however, in the years analyzed by Charity Navigator.

The 26 non-profits included in the Milwaukee group ranged from one of the area's largest, the Medical College of Wisconsin, with nearly $429 million in revenue, to the Midwest Center for Environmental Science and Public Policy, with roughly $637,000 in yearly revenue. The arts, social service agencies, colleges and health organizations were represented in the Milwaukee sample.

Based on the Charity Navigator scoring system, the Milwaukee Repertory Theater was the top-ranked non-profit of the 26 in the local group.

The Medical College of Wisconsin, the Greater Milwaukee Foundation, Marquette University and Goodwill Industries of Southeastern Wisconsin and Metropolitan Chicago rounded out the top five in local charities.

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