A charity may use its unrestricted fund for any organizational expense, but may only use its restricted fund for a specific purpose, or within a certain time-frame, as designated by a donor or governmental authority. Smile Train, like most large charities, reports its net assets as being either unrestricted, temporarily restricted, or permanently restricted. AIP had previously made this point in the August 2005 Guide. This means that Smile Train had discretion to spend just about all of its reserves on programs and did not have to hang on to these funds for future overhead costs. Smile Train's fiscal 2005 audit shows that 99% of its $48 million fund balance is unrestricted. But overhead expenses will not disappear! Money is fungible, regardless of its source what is spent on one function is not available for another function. Smile Train promotes its no public contributions to overhead claim by stating in its solicitations: "All non-program expenses, such as overhead and fundraising, are paid for with start-up grants from our Founding Supporters." The problem with this reasoning is that any charity could ask a portion of its loyal supporters to use their donations to cover overhead. One may wonder how a group that spends about $15.5 million or 34% of its cash budget on overhead, and receives a B- from AIP, can make such a claim. Many AIP members have seen the above language in solicitations from Smile Train, a charity that treats children born with cleft lip and palate. 100% of your donation goes toward programs-0% goes toward overhead.
0 Comments
Leave a Reply. |