News and analysis
May 19, 2013

What Nonprofits Say About Spending and How Donors Respond

The Chronicle reviewed the statements that four charities made in recent fundraising letters about how much they spend on their programs, as opposed to administration or fundraising. We compared those numbers with the spending breakdown they are required to enter on their Form 990 tax documents, as well as the percentages publicized by the watchdogs Charity Navigator and CharityWatch.

In addition to allowing expenses involved with providing goods and services to fulfill their charitable missions, the Internal Revenue Service lets groups count as program costs a percentage of their spending on items like salaries, benefits, rent, depreciation, office expenses, lobbying, and travel.

Charity Navigator generally accepts the figures that appear on the tax forms, while CharityWatch analyzes the organizations’ audited financial statements to calculate its own numbers. It excludes certain spending that the IRS allows to be counted as program costs, for example, the value of donated goods.

To show the kind of pressure charities feel to keep administrative and fundraising costs low, we included selected comments by reviewers on the GreatNonprofits Web site, which allows people to rate charities on a five-star scale.

Use the arrows or page numbers at the bottom of the page to see the next charity we reviewed.

Send an e-mail to Suzanne Perry.