Checking in on Valley charities

Most large local nonprofit agencies spend more than what is recommended for programs.

Published online on Wednesday, Jan. 28, 2009

'Tis the season for giving. But when you donate to a local charity, just how do they spend your money?

The Bee looked at financial reports for 10 large local nonprofit organizations that have special appeal during the holiday season. These are $1 million-plus organizations that mainly help the homeless, poor and hungry in the central San Joaquin Valley.

The reports -- some more than a year old -- offer a snapshot of how charities allocate dollars to programs such as food giveaways and emergency shelters; to management and general expenses such as accounting and insurance; and to the cost of soliciting contributions.

The bottom line? All but one of the 10 area charities devoted more than 70% of expenses to programs, which is above the 65% threshold set by the Better Business Bureau.

Three charities -- Community Food Bank in Fresno, FoodLink for Tulare County and Madera County Food Bank -- put more than 90% of expenses into programs.

Spending patterns were calculated using the most current tax forms filed with the Internal Revenue Service.

Experts suggest potential donors consider spending practices -- along with other factors such as growth, mission, transparency and effectiveness -- in deciding where to give. Other documents, such as audited financial statements, can provide more detailed information.

Laurie Styron, analyst with the American Institute of Philanthropy in Chicago, said the tax forms can be tough to decipher if you don't have a financial background. But "taking a look at the form can give you an idea of who not to donate to," she said.

The institute generally suggests that most charities spend at least 60% of expenses on programs. The national Better Business Bureau recommends at least 65% and Charity Navigator, an independent evaluator of more than 5,300 nonprofit groups, sets the bar at 75%.

All 10 area charities exceeded 60%; eight topped 75%.

According to its 2007 report, Disabled American Veterans Charities of Central California devoted 61% of roughly $1.7 million to programs. The agency -- which transports veterans to medical appointments, buys equipment for the Veterans Affairs Medical Center and supports other programs -- allocated the rest to management and general expenses.

General Manager Butch Whitmer said the charity has higher overhead because it runs two thrift stores and must convert nearly every contribution into cash. It operates mainly on donations of clothing and household goods sold at the stores.

"We don't see the cash donations," Whitmer said.

The Visalia Rescue Mission spent 72% of its nearly $1.24 million in expenses on programs, according to its 2006 report. In part, the Christian social service organization operates men's and women's shelters, a thrift store and a substance-abuse recovery program.

Executive Director Danny Little said the 28% spent on fundraising and administration "doesn't sound that great." But, he said, the mission has worked to drive down its costs and now does most fundraising in-house.

"We shoot to keep our overhead as low as possible," Little said.

Most of the 10 charities direct more than 80% of expenses to programs. Several -- the United Way of Fresno County, the United Way of Tulare County and Catholic Charities of the Diocese of Fresno -- needed to supplement annual revenue with money banked in prior years.

Pat Clary, chief executive officer of the United Way in Fresno, said officials want to keep programs running even when contributions drop. The agency's 2006-07 report shows it needed about $316,000 from reserves to meet $2.23 million in expenses.