Boise-area charities report modest overhead, salaries

In the national news in the past month: The Wounded Warrior Project board fired its top two executives amid allegations of lavish spending. A former top official with a Philadelphia tourism organization was charged with embezzling $200,000. A former Cleveland Browns football player awaits sentencing to federal prison for stealing $100,000 from nonprofits he founded.

While news abounds of good nonprofits gone bad, in the Treasure Valley, tax returns suggest that good nonprofits are staying good.

Idaho has more than 5,500 nonprofit, tax-exempt organizations, including hospitals, foundations and charities. The charities rely greatly on contributions from individuals, businesses and government.

An Idaho Statesman analysis of the most recently available federal tax returns from the 25 largest nonprofit charities in Ada and Canyon counties found that, by their own accounts to the Internal Revenue Service, they are:

Doing a lot with little money: The five largest charities in the U.S. have revenues of $1 billion to $3 billion annually. Locally, the revenue of the five largest charities ranges from $7 million to $33 million per year. Sixteen of the top 25 operate on $5 million or less.

Providing program services is a priority: Charity watchdogs such as the Better Business Bureau, Charity Navigator and the American Institute of Philanthropy say no more than 25 percent to 35 percent of expenses should ordinarily go toward administration and fundraising, with 65 percent to 75 percent going to services. Twenty-one of the 25 local nonprofits report they spend 75 percent or more of their budgets on services. Two are between 70 percent and 75 percent, and two are at 67 percent.

Employees are not getting rich: Ten charities reported paying one or more employees $100,000 or more annually. The highest-paid was $203,805. One has no paid employees.

Idaho Nonprofit Center Director Janice Fulkerson is not surprised by what the returns say.

“It is rare in Idaho when we have a nonprofit that is intentionally misbehaving,” Fulkerson said. “I believe it has a lot to do with the Idaho culture and the intent to do good work.

“I also think a lot of it has to do with our size and geography. If somebody is doing something intentionally wrong with a charity, people in the community find out fairly quickly. We tend to self-regulate.”

Donors expect nonprofits to spend their money frugally.

“Fraud and excess is exponentially more of a problem in the business community than in the nonprofit community,” said Jeff Russell, CEO of Jitasa, a national accounting and bookkeeping firm in Boise that serves nonprofits. “It is not much of a headline to say, ‘Local businessman makes too much money’ or ‘Valley residents overcharged for dinner, local restaurant owner millionaire.’”

Attorney General Lawrence Wasden’s office rarely receives complaints about nonprofits, said spokesman Todd Dvorak. The Attorney General’s Office has authority over Idaho nonprofits’ charitable assets to ensure they are being used in accordance with state law.

Dvorak said only one Idaho nonprofit in recent years has run afoul of the law: the Idaho Aquarium. Its co-founders, Ammon Covino and Chris Conk, were sent to federal prison for bringing illegally harvested Florida marine life to Boise. A subsequent state investigation found mismanagement and misuse of funds.

The aquarium has since been reorganized with a new board and name, Aquarium of Boise. A judge prohibited Covino and Conk from having anything to do with it.

Here’s more about what we learned.

BECOME NONPROFIT SAVVY: GET TO KNOW 990s

All IRS-recognized nonprofit organizations with at least $200,000 in annual revenue must file an annual return, known as Form 990. The 990 must include information about revenue, expenses, programs, directors, employees and more.

Sometimes, through ignorance or misunderstanding, nonprofits complete the forms incorrectly, omitting information or assigning expenses to the wrong category. The Idaho Nonprofit Center, which provides training, help and other resources, encourages nonprofits to use outside accounting firms to ensure their returns are correct, Fulkerson said.

Jitasa’s Russell said he knows of no IRS audits of Idaho nonprofits in the past decade.

“There is no formal audit of a 990 — it is merely a disclosure document,” he said. “IRS audits happen so rarely.”

A nonprofit must provide its three most recent annual 990s to anyone who requests them. The website GuideStar provides 990s and information on thousands of U.S. nonprofits. Another website, Charity Navigator, evaluates the financial health, accountability and transparency of some of the nation’s largest nonprofits, including about 20 in Idaho. The Statesman collected 990s from the nonprofits or through GuideStar.

PROGRAM EXPENSES

The IRS requires an organization to break its expenses into three categories: program services, management/general expenses and fundraising.

“If you are spending at least 70 percent of your budget on programs and 30 percent or less is operations and fundraising, that’s great,” Fulkerson said.

“We have some nonprofits that try to keep their program spending at 90 percent or higher. But I tell people that if you think about (for-profit) businesses and administrative costs and salaries, you want to make sure you have really good people doing really good things. And nonprofits are no different.”

The Boise Rescue Mission and Ballet Idaho reported the lowest share of expenses going toward services, 67 percent. The Rescue Mission said nearly 18 percent of its expenses, or $1 million, went to fundraising. Ballet Idaho said 28 percent, or $439,287, of its spending went to management and overhead.

Russell said people should not place too much emphasis on percentages like those.

“Groups like Charity Navigator, which have historically rated nonprofits on percent of programs and percent of administration, are changing their rating systems,” he said. “The focus is much more on outcomes and programs. That is the true test. I think the overhead ratio is a bit of a misleading indicator of how effective the organization is.”

EXECUTIVE PAY

Nonprofit organizations are required to report all individuals receiving more than $100,000 annually in reportable income.

The highest paid executive among the Treasure Valley 25 is The Peregrine Fund’s president, J. Peter Jenny, who makes $203,805.

The Peregrine Fund, in Boise, is the only nonprofit on the list whose geographic focus is not Idaho or the Treasure Valley.

In addition to operating the World Center for Birds of Prey and California Condor breeding program south of Boise, the fund conducts research and conservation programs throughout the world. In 2015 it reported projects in two dozen countries, including Greenland, Argentina, Kenya, Nepal and Madagascar.

Jenny’s pay is better compared with the pay of CEOs in similar national and international conservation organizations than with local nonprofits, said Rick Watson, the fund’s vice president. So the Statesman did that and found that the Virginia-based Jane Goodall Institute director makes $186,000, the Austin-based Bat Conservation International director makes $152,867, and the director of the American Bird Conservancy, whose budget is double that of The Peregrine Fund’s, makes $199,000.

Some of the other highest-paid CEOs lead organizations with multiple facilities and myriad programs, such as the Treasure Valley YMCA, The Idaho Foodbank and Idaho Youth Ranch. Fulkerson said their higher pay is commensurate with their jobs’ requirements.

THE IMPORTANCE OF NONPROFITS

“Nonprofit organizations are the ones that can really help with some of the largest social problems, whether it is health care, homelessness, food distribution or some of those really core, basic needs,” Fulkerson said. “We have good nonprofits across the state that are making a difference every day.”

Idahoans give more of their time and money to nonprofits than residents of most states, she said.

“We are second in volunteerism to Utah, and oftentimes we are listed in the top five for giving based on per capita and salary,” she said. “We really have a strong sense of taking care of the people around us, either in our neighborhoods, through our charitable nonprofits or our religious organizations.”

This story was originally published March 26, 2016 at 9:29 PM with the headline "Boise-area charities report modest overhead, salaries."