America’s 200 Largest Charities
Think the now-famous richest 1% of all Americans have a big concentration of economic power? Take a look at our 13th annual list of the 200 Largest U.S. Charities. They aren’t even 2/100th of 1% of the country’s 1.2 million tax-exempt organizations. Yet in their most recent fiscal year the Forbes Charity 200 collectively received $41 billion in gifts–one-seventh of all charitable contributions. Now that’s a focus.
Our rankings are based on the amount of private gifts (as opposed to government grants, fee for service or investment revenue) received in the latest fiscal period. No. 1 again by far: United Way, whose network of community-based workplace contribution charities took in $3.9 billion. No. 2: Salvation Army, at $1.8 billion, followed by food bank supplier Feeding America at $1.1 billion. The cut-off for our list–No. 200–was $46 million.
We mention the stupendous number of charities mainly to make the point that if you’re in a charitable mood–and want a tax deduction, to boot–you have a huge number of choices. You can donate to big charities like the ones on our list, most of which operate nationally and even internationally, generally helping the downtrodden. Or you can contribute to tiny charities that maybe only work in the town where you live.
Since our list is mainly for the benefit of would-be donors, we don’t look at certain categories of nonprofits. Among them: academic institutions (who mainly hit up their alums), donor-advised funds (gifts from you to your own mini-foundation) and religious groups that don’t file tax returns with the Internal Revenue Service or voluntarily make public their financials. We also exclude nonprofits with few direct donors, such as Ted Turner‘s United Nations Association, and private foundations like the Bill and Melinda Gates Foundation or the Rockefeller Foundation, which don’t ask the public for funds. Others outside our universe include nonprofits that get most of their gifts from community-chest-style fundraising drives run by others.
We long have reserved our editorial right to exclude charities whose data we question. This year, we’re taking off two nonprofits that were on last year’s list: Christa Ministries of Seattle and Islamic Relief USA, based in Alexandra, Va. It’s the same reason for both. The amount they reported in gifts received included huge amounts of deworming pills that can be bought on world markets for 2 cents a pill but were included on their financial statements for as high as $10 to $16.25 a pop–markups of 50,000% to 80,000%. Click here to read the full story about these two, and a number of other large charities as well.
Cristia says it was following standard accounting rules but is reevaluating its bookkeeping. Islamic Relief has gone a lot further, cashiering an outside contractor who ran its program for gift-in-kind, as donated goods are called, hiring an outside law firm to investigate and signaling it intends to file amended financial statements.
Seeing the handwriting on the wall, a number of other large nonprofits that also handled deworming pills have greatly marked down their values this year. By far the biggest: Feed The Children, the Oklahoma City international-aid charity that has had its share of scandal over the years. It recorded a staggering $668 million drop in gift-in-kind receipts, knocking it out of our top 10 (but not off our list). Also seeing hefty hits: World Vision, MAP International and Food for the Hungry.
This more realistic accounting alone probably is responsible for most of the 1.9% drop from a year earlier in average contributions to the Forbes Charity 200, from $211 million to $207 million.
Where you donate is your choice, of course. A lot of factors, many intensely personal, go into the decision. At Forbes we have long urged that donors at least take into account financial efficiency–the extent to which donated funds are used for the charitable mission and not unnecessarily spent on overhead or fundraising costs. To that end, for each of the 200 we calculate three measures of financial efficiency, and their change from the prior accounting period. For a list of the 20 we deem most efficient, click here. For the 20 least efficient, click here.
These ratios can be used to help understand almost any nonprofit, and not just the 200 we look at. Say you want to contribute to a charity focused on fighting a specific illness. You can find similar health-research nonprofits on our list and get a sense of their “going rate” financial efficiency. That will start you on the road to a better understanding, and given you material to ask questions. An informed donor is a better donor. For tips on how to avoid charity rip-offs, click here.
Important caution: We strongly urge that you not compare efficiency ratios for different kinds of charities. If you’re thinking about giving to a nonprofit hospital, look at ratios on our list for hospitals and not, say, public policy think tanks or museums. They just aren’t comparable.
For the three ratios we calculate, higher usually means better. Here’s what they are:
Charitable commitment This figures out how much of a charity’s total expense went directly to the charitable purpose (also known as program support or program expense), as opposed to management, certain overhead expenses and fundraising. The average this year is 86%, unchanged from the previous two years. Five charities on our list have 100% ratios here: Brother’s Brother Foundation, Gleaning for the World, Kingsway Charities, Matthew 25: Ministries, and Operation Compassion. However, all get almost all of their donations in goods rather than cash, potentially making it easier to enhance values and therefore their efficiencies. The lowest charitable commitments were found at Smith Center for the Performing Arts, in Las Vegas; Texas Children’s Hospital, in Houston; Paralyzed Veterans of America, Veterans of Foreign Wars of the U.S., and Brookings Institution.
Fundraising efficiency This closely watched ratio shows the cut of gifts left after subtracting the costs of getting them. The average for all 200 charities is 90%, meaning that it cost 10 cents to raise $1. But this average masks a number of extremes. Eighteen charities on our list have have fundraising efficiencies that round to 100%. All of them receive most of their donations as gift-in-kind. Putting aside possible valuation enhancement issues, these gifts tend to come in larger chunks and without the need to fund-raise with direct mail or telemarketing, which can become expensive and pull down the efficiency. At Forbes we for many years have encouraged a steely look at any charity with a fundraising efficiency below 70%. On this year’s list there are five: Girl Scouts of the U.S., 57% (all that cookie money is not counted as gifts, but rather sale of goods); Veterans of Foreign Wars of the U.S., 58%; Cedars-Sinai Medical Center, 64%; Ducks Unlimited and Paralyzed Veterans of America, both 67%.
Donor dependency In some ways the most interesting ratio, this measures how badly a nonprofit needed your contribution to break even. We subtract the annual surplus or deficit from gifts, then divide this figure by the gifts. The higher the percentage, the more the charity needed your charity. This ratio is greatly affected by investment performance and is the most volatile of our ratios. This year’s average is 84%, down from 92% last year and 95% in 2009. A ratio of 100% means the charity exactly broke even. Higher than 100% means the charity ran a deficit. A rating below zero percent means the charity would have broken even without any contributions at all. Believe it or not, this was true of seven on our list, all but one of them medical facilities: Cedars-Sinai Medical Center, in Los Angeles; Cleveland Clinic Foundation, Lutheran Services in America, Memorial Sloan-Kettering Cancer Center, Mount Sinai Medical School and Hospital, New York-Presbyterian Hospital and Texas Children’s Hospital
For each charity we also list online the highest total compensation to a single employee. This includes salary, benefits, one-time payments and deferred compensation, and may be for a different fiscal year. The lucky recipient is usually the top person, although not necessarily the current one. The average for this year’s list is $565,539, down 9.5% from last year. We identified 24 charities where the top pay topped $1 million. The highest package went to Steven M. Altschuler, head of Children’s Hospital of Philadelphia. According to its tax return, he was paid a total of $4,068,143. No. 2 was Thomas M. Priselac of Cedars-Sinai. His haul was $3,918,207.