The San Francisco Shock selected National Alliance on Mental Illness – San Francisco as the recipient of the funds donated as part of the #BabyBayChallenge. I put NAMI San Francisco through the Charity Navigator scoring system (with some caveats, see below) to see how they’d do. The result: They would get one star out of five in the CN system.

Their financial health is pretty good; they’re on the higher end of four stars. Their accountability and transparency score, however, is an abysmal one star, which means that their overall score is one star as well.

As bad as that sounds, NAMI San Francisco could potentially get all the way up to three starts overall in a matter of days; they need only add important documents and information about the organization to their website.

Caveats

Some caveats before I go into the numbers:

  • Charity Navigator’s system is one group’s opinion of how to judge a charity. It’s not the divine word on whether a charity is well run or not. Most importantly, it doesn’t assess the value of programs, only financial viability and transparency. Whether NAMI SF does valuable work is a decision only you can make.
  • The CN system is designed for large charities (>$1 mil per year revenue) that have been operating for a decent amount of time (5 years of full 990s). Their system isn’t built with a charity as small as NAMI SF in mind.
  • The CN system uses 3-year averaging in some metrics, which creates vastly more work than just using the most recent year’s data. In any place where the CN system uses 3-year averaging, I only use the 2016 data. That said, I don’t think it’ll change their score drastically one way or the other.
  • I am not an accountant, I do not prepare form 990s professionally, and I have no affiliation with Charity Navigator.

Financial Health

NAMI-SF gets four out of five stars, with a raw score of 86.

Their financials are solid. Rapid growth can be unstable, but they have working capital to cover a potential drop in donations. Their fundraising expenses are high and not particularly efficient, but it’s really hard to get that right, especially in smaller, more specialized charities. An 86 is not a red flag.

Where they lose points:
In this section, there are seven criteria worth 10 points each, for a maximum of 70. 30 points are then added to that total to get the final raw score.

  • 71.2% of their expenses go towards programs, which is mediocre, and is good for only 6 out of 10 points. A perfect score requires 85% or above.
  • 17.5% of their expenses go towards fundraising, which is poor, and is good for only 5 out of 10 points. A perfect score requires 10% or below.
  • They spend $0.18 to raise $1, which is a mediocre fundraising efficiency, and is good for only 7.5 out of 10 points. A perfect score requires $0.10 or below.
  • They have 0.76% years if working capital (the ability to continue to run using only available assets), which is mediocre, and is good for 7.5 out of 10 points. A perfect score requires 1 year or above.

Where they don’t lose points:

  • 9.9% of their expenses go towards administration, which is excellent. A perfect score requires 15% or below.
  • Their financial capacity is excellent. This is a really complicated formula measuring growth in program expenses. A perfect score requires a value of 10 or above. NAMI’s value is 36.
  • Their liabilities are 0.57% of their assets, which is excellent. A perfect score requires 5% or less.

Accountability and Transparency

NAMI-SF gets one out of five stars, with a raw score of 51.

Simply not filling out entire sections of their Form 990 – the document they file with the IRS each year – has cost them dearly in the accountability and transparency metrics. Their website also doesn’t contain any of the information that Charity Navigator looks for. The good news is that most of this is quickly fixable; the problems with the 990 might even already be fixed (this was using their 2016 990; their 2017 one is not online yet). The bad news is that, for now at least, it’s an awful look.

Where they lose points:
In this section, the score starts at 100 and works down to get the final raw score.

  • Part XII is not filled out, so there is no information about whether they produce audited financial statements prepared or reviewed by an independent accountant (-15 points)
  • No whistleblower policy (they may have one, but they didn’t fill out Part VI, Section B) (-4 points)
  • No document retention policy (they may have one, but they didn’t fill out Part VI, Section B) (-4 points)
  • No process for reviewing and updating CEO compensation (they may have one, but they didn’t fill out Part VI, Section B) (-4 points)
  • Does not keep board meeting minutes (they may, but they didn’t fill out Part VI, Section A) (-4 points)
  • Does not publish board members on the website (-4 points)
  • Does not publish senior staff on the website (-3 points)
  • Does not publish audited financials on the website (-4 points)
  • Does not publish form 990 on the website (-3 points)
  • Does not publish donor privacy policy (-4 points)

Where they don’t lose points:

  • More than 5 independent voting board members; independent voting board members hold a majority.
  • No reported material diversion of assets
  • No loans to or from officers or other interested parties (they didn’t fill out Part IV, but they didn’t include a Schedule L, which would be required if they did have such loans)
  • Form 990 distributed to the board before filong
  • Has a conflict of interest policy
  • Reports CEO compensation
  • Reports board member compensation; board members are not compensated

Fast Fixes

NAMI SF can potentially get their accountability and transparency score up in a matter of days. Here’s how:

  • Publish the board members and senior staff. Pictures are nice, but even putting a list in plain text – just name and title – would meet the requirements. Depending on how complex the back end of the website is, this would take literally minutes to do. (+7 points)
  • Add a downloads page with the Form 990 and the audited financials (assuming, of course, that they have audited financials). Slightly more complex to implement, but we’re talking hours, not months. (+7 points)
  • Indicate on the downloads page that the financials are audited by an independent account (even if it’s immediately clear just by looking at the cover page). It’s no substitute for properly filling out the 990, but it’ll get the job done. (+15 points)

If NAMI San Francisco did all of those things, it would take their accountability and transparency score to an 84, which is good for three stars. That, in turn would, take their overall score to an 85, which is again good three stars.

If they don’t have audited financials to publish, but they did everything else above, it would give them a 61 in accountability and transparency, still one star, but would take their overall score up to a 71, good for two stars.

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