If you’re feeling generous but want to be certain your charitable donation will have maximum impact, it might be a good idea check an organization’s financial health before giving.
Over the years, certain high-profile nonprofit organizations have been accused of misleading their donors about how their money was spent. In some cases, such as a 2014 investigation of the Red Cross by ProPublica and National Public Radio, it was discovered top executives used donations to pay themselves lavish salaries and lied to donors about how much of their contributions would be spent on programming.
To help donors avoid being taken advantage of by unethical or poorly managed organizations, a few watchdog groups, such as ProPublica and Charity Navigator, publish, analyze and rate nonprofits for their efficiency, financial health and transparency.
So how do nonprofits in the Milwaukee area hold up to scrutiny?
In 2015, Charity Navigator completed a market study of what it considered the largest 51 nonprofits in the Milwaukee metropolitan area. To date, the organization has rated 55 Milwaukee nonprofits.
Based on the results of the study, if you’ve recently donated to the United Performing Arts Fund or the Greater Milwaukee Foundation, your money was likely well documented and spent efficiently for its intended purpose.
On the flip side, if you’ve given to Christian Life Resources in Richfield or Ways To Work in Milwaukee, what happened to your donation is more difficult to pinpoint.
UPAF was the top-ranked Milwaukee nonprofit, with a score of 96.6 out of 100. The lowest ranked organization in the study was Christian Life Resources, which received a score of 66.5.
The study on the Milwaukee area is not exhaustive — there are thousands of registered nonprofits in the Milwaukee area — but Charity Navigator only ranks organizations that meet certain criteria.
Among them: an organization must actively solicit donations from the general public (which excludes private foundations), must have reported its fundraising expenses on federal tax forms for the two most recent fiscal years, and must have filed at least seven years of federal tax forms.
Compared to other major metropolitan areas studied by Charity Navigator, nonprofits in Milwaukee are well-run, earning an average rating of three stars out of four and an average score of 87.2 out of 100. Milwaukee ranked No. 13 out of the nation’s 30 largest metropolitan areas in average score.
Here’s what the leaders of the best- and worst-ranked Milwaukee charities had to say about their organizations.
UPAF is an umbrella nonprofit that solicits donations on behalf of 15 local performing arts organizations, including the Milwaukee Symphony Orchestra,
The Milwaukee Repertory Theater and the Milwaukee Ballet. Since 2012, the organization has increased its annual fundraising total by 18.1 percent and in that same time period, has managed to reduce the size of its small administrative staff by two.
This year, UPAF plans to raise more than $12.2 million.
“It’s part of our mission,” said Deanna Tillisch, UPAF president and chief executive officer, of the organization’s strong financial performance. “We raise dollars to ensure high-quality performing arts, we promote performing arts, and the third part of our mission is to steward the dollars that our donors so generously give us.”
Tillisch took over leadership of UPAF four-and-a-half years ago and right away made it a priority to improve the organization’s Charity Navigator rating.
In 2011, UPAF had a three-star rating and an overall score of 87.9 out of 100. In earlier years, the organization fared much worse, earning a one-star rating and overall score of 65.2 in 2008 and a two-star rating and score of 75.2 in 2009.
Since Tillisch took over, however, the organization has maintained a four-star rating and each year its overall score has climbed — 93.5 in 2012, 94.4 in 2013 and, most recently, 96.6 in 2014. The organization’s 2015 financial information has not yet been evaluated.
“Part of it was just making sure we have the documentation they ask that you include,” Tillisch said. “So some of it was retooling and refining; just making sure that we were compliant. But I think it’s also just making sure that we keep our finances under control. We have a very healthy reserve; it’s more than two years of our operating budget. Six months is the rule of thumb.”
Tillisch, who worked for Northwestern Mutual before joining UPAF, credits what she referred to as a “private-sector” financial evaluation process for the group’s success. Here’s how it works: UPAF budgets how much money each of its member organizations will receive based on its annual fundraising goal.
Then, each of its member organizations are evaluated on nine different metrics that judge their overall financial performance. Afterward, each group is given a rating on a five-point scale.
Although its members are guaranteed a certain amount of money, 25 percent of UPAF’s contribution to each organization is determined by that organization’s rating.
“If we are evaluating our 15 member groups on their financial acumen and performance, we need to reflect what we expect,” Tillisch said. “Our board does consist of a lot of business leaders in the community, so they expect us to be financially sound. And they closely monitor the performance of our organization.”
Christian Life Resources
On its website, Christian Life Resources describes its mission: “This organization educates people on what God’s Word has to say about the value and sanctity of human life.”
It’s a pro-life organization founded by members of Wisconsin Evangelical Lutheran Synod congregations. The group’s national director, Rev. Robert Fleischmann, said in regard to activism, the group has historically focused on anti-abortion efforts, but it now devotes more resources to opposing euthanasia.
The group also operates pregnancy care centers that provide counseling, resource centers for people seeking spiritual guidance on various life issues and a home for single mothers called New Beginnings.
Since 2007, Christian Life Resources has had a one-star ranking on Charity Navigator. Fleischmann said he suspects much of his organization’s poor performance is related to a large amount of debt it has accrued over the past 17 years.
In the late 1990s and early 2000s, the group invested around $1 million in a media campaign meant to spread its message, but found itself in tremendous debt after financing a feature film called “Finding Home” in 2003.
“That was a project that majorly got out of control, financially,” Fleischmann said.
Though the original budget decided upon by the group and the film’s director, Lawrence David Foldes, was around $700,000, by the time it was released, the film had cost the organization roughly $2.2 million. Around $1.8 million of the project was covered by a loan from the organization’s biggest backer, the Marvin M. Schwan Charitable Foundation, and an additional $400,000 of debt was racked up with M&I Bank.
Though the Schwan Foundation eventually forgave the group’s debt, it also withdrew all funding about three years ago while grappling with its own massive financial problems, Fleischmann said. The sons of the Schwan Foundation’s founder are currently engaged in a legal battle with its trustees over the organization’s loss of approximately $600 million in off-shore real estate ventures.
Fleischmann said around the same time the organization became indebted due to its film project, it had also started bleeding money trying to manage two mobile medical units it had sent to Ukraine.
“I think I failed in my administrative role, in that I just didn’t have the courage to eliminate friends,” Fleischmann said of the organization’s poor financial decisions over the past 17 years, and his own admission that he stuck with certain projects longer than he should have.
Recently, however, Fleischmann said things have been looking up. Christian Life Resources paid off $60,000 of its debt in 2015, and Fleischmann said he has a plan in place to pay off the rest over the next four to five years.
The group has also begun taking steps to address its low Charity Navigator ranking and posted the results of an independent audit its board of directors commissioned in 2015 from Wegner CPAs to its website.