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Thread: Charities With the Highest Admin Costs

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    Elite Member celeb_2006's Avatar
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    Default Charities With the Highest Admin Costs

    Charities With the Highest Admin Costs | News | Money/Investing | Mainstreet

    A favorite saying in business is that you have to spend money to make money. Charitable organizations, on the other hand, have to spend money to give money, and it turns out that some are woefully inefficient at channeling donations to the people they're supposed to help.

    The non-profit Charity Navigator Web site tracks such expenses via charitiesí disclosure statements to the IRS to provide donors with an assessment of how well charities run themselves. Looking only at the supply side for the more than 5,500 charities that it tracks, the organization does not evaluate the impact on the recipients of funds, since that impact is often a subjective appraisal of "effectiveness." The statistics used in this list are from the most recent fiscal year's data on the Charity Navigator Web site at the time of publication.

    But it is safe to say that all donors give money not to pay for office supplies and inflated salaries for executives (check out MainStreet's overview of the highest-paid charity CEOs), but rather to the programs that charities undertake to further their goals. It is with this philosophy that we highlight the 20 charities in the U.S. with the highest administrative costs, to show which groups take the most of each donated dollar for themselves, in some cases leaving less than half for the intended recipients of aid.

    Whether it be rent on prime office space, generous pay and benefits for the board of directors, or the high fixed costs of running a summer camp, overhead like this reduces the impact of a charity no matter how that money is being spent. Donor bewareÖ

    20. Tucson Audubon Society

    Administrative expenses: 42.8%

    Well-known for its many programs focused on the protection of biodiversity and the environment, the Audubon society, based in Washington, D.C., has chapters across the country, run independently of the main office. Its affiliate in Tucson, Arizona, which fosters interest in and conservation of the bird population of southern Arizona, has seen its administrative costs skyrocket as the recession has eaten into its incoming donations. Partially due to Executive Director Paul Greenís inflated salary of $78,800, which accounts for more than 7% of the groupís expenses, the Tucson Audubon Society spends almost as much for its office as it does on the birds it aims to protect.

    19. New Hampshire Audubon

    Administrative expenses: 42.8%

    Like the Tuscon Audubon Society, the New Hampshire Audobon has also struggled to maximize the amount of donations that go toward its environmental programs. Much of the administrative costs can be traced to the groupís seven visitor centers that it runs throughout the state, where staff organize classes, summer camps, and activities for children and adults. These fixed costs mean that in lean years for donations, it is hard for the New Hampshire Audubon Society to trim down their considerable administrative expenses.

    18. Gospel to the Unreached Millions (GUM)

    Administrative expenses: 43.1%

    Based in Houston, this evangelical ministry is one of the least efficient in translating donations into international programs designed to spread its spiritual message. With administrative expenses topping 43% and fundraising expenses more than 38% of its total budget, GUM was able to disburse a mere 18% of incoming money to the targeted recipients of aid in its last reported fiscal year, 2006. Managing a budget of almost $1.5 million, GUM has a poor track record of directing that cash to its evangelical programs.

    17. American Psychiatric Foundation

    Administrative expenses: 43.7%

    Psychiatric evaluation and treatment are a big business in the United States, with new conditions being identified and monitored seemingly every day. The American Psychiatric Foundation, based in Arlington, Va., tries to improve the publicís understanding of mental illness and to advocate for early intervention programs and treatment services through grants, research funding and awards. The group, which is the philanthropic arm of the American Psychiatric Association, has received consistently low ratings for its high administrative costs, which consistently reach more than $500,000 annually.

    16. Marshall Heights Community Development Organization (MHCDO)

    Administrative expenses: 44.1%

    Poverty has long been a problem in Washington, D.C., where the Marshall Heights Community Development Organization seeks to improve the lives of the Ward 7 area of the district. Focusing mainly on affordable housing and adult education and job placement services, the MHCDO manages a budget close to $4 million. While its president, Michael Watts, pulls in an annual salary of more than $137,000, the groupís development of housing facilities and office space contributes to its high overhead costs and consequently low rating for operational efficiency.

    15. Please Touch Museum

    Administrative expenses: 44.9%

    Museums, which seek to educate and improve the lives of their visitors, play an important role in a modern society. The Please Touch Museum, founded in Philadelphia in 1976, targets children ages seven and below using play as an educational tool. With revenue of over $24 million in its last reported fiscal year (2008), the museum funneled just $2 million of that to its community outreach programs. A museum spokesman told MainStreet that the high administrative costs for the fiscal year were due to the one-time high cost of a major expansion and move.

    14. American Friends of the Open University of Israel (AFOUI)

    Administrative expenses: 45.2%

    The Open University of Israel, which runs 70 study centers and over 600 online courses, is the largest university in Israel and serves Israelis and Jews around the world. Based in New York, the American Friends of the Open University of Israel is an advocacy group that supports Israeli communities in the United States and raises awareness of the contributions of the Jewish community in American society. The group raises funds for scholarships, research centers, and other educational goals, but its high administrative expenses in its last reported fiscal year have stood in the way of maximizing the groupís reach. Having received higher marks in the past, the AFOUI will surely take steps to more efficiently manage its budget of around $4 million.

    UPDATE: AFOUI's administrative costs of 45.2% were based on their FY2007 numbers, which at the time of publication was the most recent fiscal year available on Charity Navigator. On June 1, the date of this article's publication, AFOUI added FY2008 numbers, which reported administrative costs of just 11%.

    13. Peter G. Peterson Institute for International Economics

    Administrative expenses: 45.4%

    With almost $10 million in revenue in its last reported year of 2007, the Peter G. Peterson Institute for International Economics, a nonprofit, nonpartisan public policy research organization in Washington, D.C., plays a considerable role in shaping U.S. economic policy. Widely praised as being one of the few truly neutral research organizations in the field, the Peterson Institute takes considerable resources to run, with administrative costs totaling over $4 million of its 2007 budget of just over $9 million. With the global economy in crisis and issues such as climate change and renewable energy being debated on the world stage, the Instituteís highly-paid researchers are no doubt doing valuable work, though donors may be put off by how much of their dollars go to running the organization compared to the amount going to further its goals.

    12. Stan Hywet Hall & Gardens

    Administrative expenses: 45.8%

    Like many historical landmarks, the Stan Hywet Hall & Gardens in Akron, Ohio is a window into the past. The former home of one of the founders of the Goodyear Tire and Rubber Company, it was built in 1915 and was turned over to a nonprofit organization in 1957. The site exists to educate the public about itself: the history of the land, the owners, and the local rubber industry. Maintenance of the property, as well as the $150,000 paid to its president and CEO, Harry Lynch, ate into the homeís budget of over four and a half million dollars in fiscal year 2007, which goes to educational programs for schoolchildren as well as the local population. Being the only historical landmark in Akron, known at one time as the ďRubber Capital of the WorldĒ, the Stan Hywet house is an important local resource whose impact would surely be even more substantial if it could reduce its administrative overhead.

    11. Victorious Christian Living International

    Administrative expenses: 46.0%

    Based in Phoenix, Arizona, VCLI is one of the smallest organizations on the list, as well as being one of the least efficient. With a budget of only around $100,000 in fiscal year 2007, the group spends almost half on administrative expenses stemming from the operational costs of running offices in Illinois, Alabama, Guatemala, and Cuba in addition to its headquarters in Arizona. The organization, founded by its charismatic leader Ray LíAmoreaux (whose $24,000 salary represented 2.24 percent of expenses in 2007), seeks to help churches further their efforts to recruit more committed followers of Jesus.

    10. The Center for Individual Rights has been removed from this list. Following the article's publication, CIR contested their inclusion and provided Charity Navigator with an updated itemized list of their administrative and program expenses. As a result of the update, CIR's administrative expenses for FY2008 dropped from 46.1% to 9.7% (as reflected in the functional expenses section of the CIR page on Charity Navigator).

    9. Changed Lives

    Administrative expenses: 47.4%

    Changed Lives is a Christian organization based in Tennessee whose message of Biblical values is broadcast streaming over the internet to followers around the world. Carried by speaker Ben Haden, who began his broadcasting career at NBC in 1967, Changed Lives features video lectures on a number of spiritual topics and distributes Bibles and other religious literature for free to its supporters. While the organizationís revenues have increased over the last three reported years, its overhead has more than kept pace, pushing administrative expenses to over 47 percent of the groupís 2008 budget of around $790,000.

    8. Vision New England

    Administrative expenses: 48.7%

    Another evangelical organization, Vision New England works with a network of over 5,000 churches to advance its goal of supporting and improving upon pastorsí efforts to increase bring more New Englanders to faith in Jesus. It does this through seminars and prayer groups throughout the region. The groupís $1.4 million budget in 2008 was significantly lower than the previous two fiscal years, but a significant rise in administrative costs during that same period brought overhead costs up to 48.7 percent of total expenses.

    7. Charleston Area Medical Center Foundation (CAMCF)

    Administrative expenses: 48.8%

    West Virginiaís Charleston Area Medical Center Foundation raises money for the hospital from which it gets its name, with donations in 2007 totaling over $26 million. Representing a 10 percent increase over the previous yearís revenue, the groupís $2 million program expenses that year, however, represented a 19 percent decrease in the money distributed to further the hospitalís research and community outreach goals, bringing it to number 7 on the list.

    6. National Museum of Racing and Hall of Fame

    Administrative expenses: 55.1%

    There has always been a lot of money in horse racing, and the New York-based National Museum of Racing and Hall of Fame has attracted some of that cash to further its goal of bringing the history and excitement of thoroughbred racing to the widest possible audience. With a 2007 budget of over $2 million, the museum provides educational program for children and adults, and organizes trips to horse races for interested groups. Unfortunately, over half of its expenses that year (as well as the previous year) went to administrative overhead, fueled in no small part by salaries paid to its director and acting director, together representing almost 10 percent of total expenses.

    5. Cherokee National Historical Society

    Administrative expenses: 58.2%

    Dedicated to preserving the history and traditions of the Cherokee people, the Cherokee National Historical Society, based in Oklahoma, is the fifth-most inefficient charity in the United States. With administrative expenses of over 58 percent of total expenditures dwarfing the 39 percent spent on programs in fiscal year 2007, the group saw its administrative costs almost triple from the previous year. While the cultural center that it runs has been a resource for Cherokee history since 1963, its skyrocketing overhead does not bode well for the groupís future efforts at fundraising and outreach.

    4. Union Rescue Mission, Little Rock

    Administrative expenses: 62.1%

    Arkansasís Union Rescue Mission is the first charity on the list whose administrative expenses reached over 60 percent of total expenses for the last reported year. The Missionís goals are of the highest importance, targeting hunger, victims of abuse, and people struggling with addiction in Arkansas and her neighboring states, which it pursues through the efforts of a few key Baptist reverends. The massive increase in administrative costs in fiscal year 2008 over the previous year, according to Executive Director William Toffett, were due more to accounting issues than operational costs, suggesting that the groupís recent poor performance is not indicative of fundamental inefficiencies in the mission itself.

    3. National Council of Negro Women (NCNW)

    Administrative expenses: 64%

    Serving as an umbrella organization for 39 national and local advocacy groups for women of African descent both in the U.S. and abroad, the National Council of Negro Women coordinates its activities with partners in 34 states. The Council also runs four research and policy centers in its efforts to develop best practices in addressing the health, educational, and economic needs of African-American women. Unfortunately, all of these centers take a lot of resources to run, and with administrative costs upwards of $4 million in 2007, there is comparatively little left over in the groupís approximately $6 million budget for programs.

    2. Boys Choir of Harlem

    Administrative expenses: 66.3%

    Long-respected for its role in improving the lives of disadvantaged and impoverished young people in Harlem, New York, the Boys Choir of Harlem went all the way to the White House, performing for sitting presidents since Lyndon Johnson. The group, which for 30 years turned neighborhood kids into performing singers, ended in disgrace last year after a child abuse accusation and the death of its founder in 2007. Drowning in debt with high administrative costs soaking up much of its ever-decreasing budget, the Harlem Boys Choir suffered the most dramatic fall from grace of any group on the list.

    1. American Tract Society

    Administrative expenses: 68.0%

    Topping the list of Americaís worst charities is an organization that spent more than $1.6 million dollars on its administrative expenses in 2007, over twice what it spent the previous year. The American Tract Society, based in Texas, distributes religious literature to spread its message around the world. With a history of low ratings from Charity Navigator, the groupís administrative expenses have consistently outpaced the amount of donations coming in. While the group receives income from other sources than contributions, donors to the American Tract Society may be surprised to know that the recipient is the most inefficient in the country at maximizing the impact of its donations.

  2. #2
    Elite Member cupcake's Avatar
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    I've always figured that half of what we give goes to the actual charity itself and the other half to administration costs. And we base our amount on that. Sayong that its a must to do your research, such as what you posted above to determine what you want to give to. We give locally and then to Red Cross. Some of them are really reaping and mishandling
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    Elite Member MontanaMama's Avatar
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    Anyone who is donating to a charity should always review a charity's financials and 501(c)(3) qualifications at guidestar. If the company isn't listed there, RUN.

    Since I sit on a couple boards and work for a non-profit, I will add that just because a charity's overhead is high for a single year, doesn't necessarily mean that they are fleecing the public. A one or 2 year jump in admin costs may mean that the company is expanding, growing or positioning themselves for growth. As an easy rule of thumb, if a charity pays for an outside firm to fundraise, their overhead will be high and it always gives me the heebie jeebies. I don't donate to those charities.
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    Super Moderator Tati's Avatar
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    I think a few of these are somewhat misleading. A research institute or a museum isn't exactly a charity per se, just a non-profit. What is the difference, for example, between a research institute "running the organization" and "furthering its goals"? It seems to me their main goal is "running the organization", and salaries, equipment, and other overhead should almost certainly be a primary cost. Ditto for a museum.
    If you reveal your secrets to the wind you should not blame the wind for revealing them to the trees.

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  5. #5
    Super Moderator twitchy2.0's Avatar
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    Mothers Against Drunk Driving belongs on the list.
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  6. #6
    Super Moderator Tati's Avatar
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    ^ Oh, yeah. Are they just Canadian though?
    If you reveal your secrets to the wind you should not blame the wind for revealing them to the trees.

    - Kahlil Gibran

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    Gold Member philbert_wormly's Avatar
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    This web site which was made reference of in the article...

    Charity Navigator - America's Largest Charity Evaluator | Home really informative!

    As an easy rule of thumb, if a charity pays for an outside firm to fundraise, their overhead will be high and it always gives me the heebie jeebies. I don't donate to those charities.

    That is a great rule of thumb there.

  8. #8
    Elite Member NoNoRehab's Avatar
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    I agree that you can't really lump museums and orgs like the APA into this list - their primary motivator is not to raise distributable charitable funds but to try and use donations to cover their operating/administrative costs.

    However, it looks like the Audobon Scoiety needs to get a handle on a couple of its local offices. Oh, and color me surprised about the number of evangelical orgs on the list.
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