The Financial Statements
Charity Navigator does not use the same method to rate all groups. For leftist groups—including the Southern Poverty Law Center (SPLC) , People for the Ethical Treatment of Animals (PETA), and Planned Parenthood—it reports financial information provided to the IRS through the Form 990 (see our IRS filings and audited financial statements above). For others—including Young America’s Foundation and all or nearly all conservative groups—it reallocates joint costs to substantially increase fundraising costs and decrease program costs. Charity Navigator has agreed to consider stopping this punitive practice against Young America’s Foundation if we add a statement to our website stating our use of joint cost allocation (an accounting method supported by Generally Accepted Accounting Principles and the IRS). The leftist groups mentioned above also use joint cost allocation, but Charity Navigator has never reallocated their costs. None of these leftist groups have a statement on their website of the nature Charity Navigator has requested of YAF. Per Charity Navigator’s request, here is our statement:
Young America’s Foundation agrees with nonprofit advisor Doug White, whose Chronicle of Philanthropy article cautioned, “The [Charity Navigator] site is full of meaningless statistics, disguised—or promoted—as relevant data under the illusion of helping donors.”
That’s why Young America’s Foundation has refused to highlight our 4-star ratings in the past.
We also agree with James Bruner, whose Breitbart article exposed, “the criteria [Charity Navigator] uses actually discriminates against organizations that accept no government funding and those that use sound, free enterprise practices.”
Charity Navigator uses various tactics to downgrade conservative groups. Perhaps its most egregious is selectively veering from Generally Accepted Accounting Principles (GAAP), which all non-profits are required to follow, in order to play favorites.
GAAP and the IRS recognize that some organizations engage in activities that serve multiple purposes. To more accurately report the costs of these activities, Young America’s Foundation and other organizations use a practice called joint cost allocation. In violation of GAAP and despite widespread criticism within the non-profit community, Charity Navigator reallocates joint costs of some organization to 100% fundraising. All or nearly all conservative organizations receive this punitive treatment.
Young America’s Foundation’s actual fundraising percentage is 5% to 9%. Charity Navigator reports it inaccurately as 34% by reallocating our joint costs. Similarly, Young America’s Foundation’s program expenses are 82%, but Charity Navigator reports them inaccurately as 57%.
Charity Navigator is deeply flawed in other ways, including its discrimination against groups that do not receive government funds.
Since Charity Navigator’s founding in 2001, Charity Navigator has repeatedly admitted flaws in its methodology. Even though the website often changes its metrics to address problems, it has yet to caution users against relying on ratings subject to change. On the contrary, Charity Navigator represents each version of its methodology as the “gold standard.”
Charity Navigator does not rate itself, although the website claims “in the not-too-distant future, Charity Navigator will be able to offer a rating of itself.” The most recent Form 990 available online shows that Charity Navigator spends 96% of its total revenue on fundraising, salaries, compensation, and benefits—a formula that yields poor ratings for other groups. (By comparison, Young America’s Foundation allocates just 20% to those same categories.)
Young America’s Foundation rejects Charity Navigator’s approach, which would require our leadership to become obsessed with meaningless figures that would compromise the quality of our programs. Instead, we hold ourselves to higher of standards of excellence that advance our mission and keep us accountable to our conservative students and supporters.
- Provides current reports on programs as they happen throughout the year
- Invites media to attend and report on events
- Provides IRS Form 990 and audited financial statements online
- Issues an annual report
- Uses organization’s photographs, not stock images
- Encourages supporters and their legal and financial advisors to visit offices and attend programs
- Welcomes questions asked by supporters and their legal and financial advisors
- Protects confidential donor information
- Protects confidential student information
- Does not publish confidential donor information online
- Does not publicize gifts against a donor’s wishes
- Attains consent of students/parents before publishing photos
- Thinks creatively and dreams big, inspired by America’s great entrepreneurs
- Manages ambitious projects and maintains a consistent track record of doing so
- Accomplishes goals not being realized by other groups
- Achieves and reports on results regularly
HONORING DONOR INTENT
- Receives no government funding, so Americans are not forced to support Young America’s Foundation via coerced tax dollars
- Invites new participants to become involved with Young America’s Foundation
instead of restricting support to a privileged few
- Receives broad-based grassroots support
- Avoids telephone solicitation
- Uses free enterprise practices commonly used by for-profit businesses to
- Produces a track record of fulfilling supporters’ wishes
- Offers and honors a variety of giving and recognition options