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CharityWatch thoroughly analyzes charities

About CharityWatch
CharityWatch is America's most independent and assertive charity watchdog. Rather than merely repeat charities' self-reported finances using simplistic or automated formulas, we delve deep to find the real story of how efficiently charities use your donations to fund the programs you want to support. Founded in 1992 as the American Institute of Philanthropy (AIP), CharityWatch continues to expose nonprofit abuses and advocate for your interests as a donor.

The Chronicle of Philanthropy published several of our triumphs in an in-depth profile of CharityWatch & our president Daniel Borochoff: An MBA's Sleuthing Skills Puts Charities on the Hot Seat.

Mission Statement
The mission of CharityWatch, a nonprofit charity watchdog and information service, is to maximize the effectiveness of every dollar contributed to charity by providing donors with the information they need to make more informed giving decisions.

Goals
To research and evaluate the efficiency, accountability and governance of nonprofit organizations; to educate the public about the importance of wise giving; to inform the public of wasteful or unethical practices of nonprofits and provide recognition to highly effective and ethical charities; to advise CharityWatch members and conduct special investigations and evaluations of nonprofits; to expand and re-define our programs periodically to meet the continuing challenge of keeping the contributor informed.

The CharityWatch Difference

Say NO to Robo RatingsSay no to robo-ratings. All charity ratings are not alike. Other charity information services use simplistic or automated systems to generate ratings. CharityWatch analysts dig deep, carefully scrutinizing the individual finances of charities to give donors a clearer understanding of how their cash donations are being spent.

CharityWatch ratings are considered the most stringent in the sector. When a charity makes a claim that it spends "90% on programs," donors often wrongly assume this means $90 out of every $100 dollars they donate will be spent on the charity's programs, and only $10 will go to overhead. This is often not the case. Charities have wide latitude to include activities in their program expenses that most donors would not consider to be the bona-fide programs they are intending to support.

Other charity raters simply repeat or repackage at face value whatever a charity reports without adequate analysis of its finances or how it is operating. The CharityWatch rating system is unique in that we carefully analyze a charity's finances and make adjustments to better reflect the goals of most donors who want their cash donations to be used efficiently. We do not allow charities to count the funds they spend on direct mail or telemarketing in their program spending, or to include large amounts of undisclosed and often overvalued donated goods in their expenses, even if their accountants allow them to do so.

CharityWatch is fiercely independent. We do not charge the charities we review to be listed in our Guide or for the right to publicize their rating, nor do we accept any advertising whatsoever on our web site or in our publication. Our board of directors does not include any heads of nonprofit associations who receive their pay from the groups they are watching. Because over 95% of our support comes from small, individual donations, we have the freedom to speak openly and to be critical of the unethical practices of charities, without concern for special interests cutting our funding.

CharityWatch uses reliable information and treats charities consistently and fairly. The self-reported information charities provide in their tax forms or solicitation materials may not be the most useful source of information for donors. Unlike some raters that rely on the tax form alone, CharityWatch reviews a charity's tax form in conjunction with its more reliable audited financial statements, which are produced by independent, Certified Public Accountants outside of the charity. Audits often include information that a charity chooses to not report about itself in its tax form.

The rules governing charity financial reporting leave a lot of room for variation, which results in a great deal of information that is inconsistent, unclear, or even incorrect. Sometimes a charity may be doing an outstanding job with its funds but receive poor ratings from others due to computer-automated or overly simplistic evaluations that do not take into account the complexity of charity financial reporting and accounting rules.

CharityWatch rates charities that other raters won't. CharityWatch is the only national charity watchdog to evaluate social welfare groups that are not eligible to receive tax-deductible contributions such as the ACLU, Human Rights Campaign, League of Women Voters, NARAL Pro Choice America, National Right to Life Committee, and Sierra Club. CharityWatch also rates many religious charities such as the Salvation Army that are exempt from filing a tax form with the IRS but that share their audited financial statements with CharityWatch.

Bottom Line: With no SEC or federal government watchdog, no investors who will sue if given false information, and loose reporting rules, the nonprofit sector has little oversight and much room for financial manipulation. CharityWatch digs deep into the complex and often confusing financial reporting of charities and issues easy to understand A+ to F letter grade ratings for donors who want to know how efficiently their donations are being spent.

Chronicle of Philanthropy:
What Nonprofits Say About Spending and How Donors Respond

USA Today:
BBB Charity Ratings, Seal of Approval Under Fire

Related Articles:

BOARD OF DIRECTORS
Daniel Borochoff
President and Founder

Daniel Borochoff has long been a strong and independent voice for ethics and transparency in the nonprofit sector. He founded CharityWatch, a nationally acclaimed charity watchdog, in 1992 to address the need for research and analysis on charity finances, fundraising practices and governance. CharityWatch, originally named "American Institute of Philanthropy" or "AIP," provides information on wise giving to thousands of concerned individuals, foundations, and corporations. Borochoff has over 25 years of experience as a philanthropic and financial analyst. Thousands of newspapers, magazines, TV and radio stations have covered his insights into nonprofit practices. He was a founding board member of the Hearts and Minds Network and the ePhilanthropy Foundation.

During times of crisis, Borochoff has been asked by Congress to give critical and independent testimony. Borochoff testified on the charities’ response to the survivors of 9/11 in 2001 and in 2005 he testified on the charities' response in the aftermath of Hurricanes Katrina and Rita. CharityWatch's research on veterans charities’ failing performance, while wars in Iraq and Afghanistan rage on, triggered Congressional hearings in 2007 and 2008 and Borochoff was again asked by Congress to participate.

Borochoff served on two task forces of the Financial Accounting Standards Board that set accounting standards for charities. He served as an awards panelist for the Society of Professional Journalists (SPJ), Independent Sector, and the Community Arts Assistance Program for the City of Chicago. He has been a speaker at national SPJ conferences, the National Association of Attorneys General/NASCO conference, the Independent Sector annual conference, and the American Institute of CPAs Not-for-Profit Financial Executive Forum. He has an MBA from Indiana University and a BS in Accounting from Syracuse University.

Ray Lay
Secretary/Treasurer
President and Founder, Forestree, Inc.
Chicago, Illinois

James Vallone
Director
Bank Auditor
New York, New York

Clinton E. Berry
Director
Worldwide Procurement, PepsiCo
Somers, New York

William W. Newbill, Esq.
Director
Public Sector Attorney
Dallas, Texas

Newbill practices law in the public sector in Dallas, Texas, and previously worked as a social worker and in public welfare programs with low income and minority populations in Tulsa, Oklahoma.

FINANCIAL INFORMATION

If you would like to obtain the IRS 990 tax form for CharityWatch (and many other nonprofits), please visit the website of The Foundation Center. Because our name change to "CharityWatch" is so new, it may be easier to locate the document by using our original name, "American Institute of Philanthropy" in the search field. Please check our Links page for additional resources.

The most recent audited financial statements for American Institute of Philanthropy dba CharityWatch
(PDF documents require Adobe® Acrobat® Reader to view.)

STATE DISCLOSURES
American Institute of Philanthropy dba CharityWatch is registered in the following states which require these statements:

Florida – A COPY OF THE OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM THE DIVISION OF CONSUMER SERVICES BY CALLING TOLL-FREE 800-435-7352 WITHIN THE STATE.

Maryland – A copy of American Institute of Philanthropy/CharityWatch’s current audit and other information submitted under the Maryland Solicitations Act is available, for the cost of postage and copies, from Maryland Secretary of State, State House, Annapolis MD 21401, 410-974-5534

Michigan – Registration number is MICS 11307.

New Jersey – The percentage of contributions received by American Institute of Philanthropy/CharityWatch and dedicated to the charitable purpose during the last reporting period is available by telephoning the Attorney General or on the Internet.

New York – A copy of American Institute of Philanthropy/ CharityWatch’s latest annual report may be obtained, upon request, from the organization or from the New York State Attorney General’s Charities Bureau, Attn: FOIL Officer, 120 Broadway, New York, NY 10271.

North Carolina – A copy of the license to solicit charitable contributions as a charitable organization or sponsor and financial information may be obtained from the Department of Human Services, Solicitation Licensing Branch, by calling 919-733-4510.

Pennsylvania – The official registration and financial information of American Institute of Philanthropy/CharityWatch may be obtained from the Pennsylvania Department of State by calling toll-free, within Pennsylvania, 1-800-732-0999.

Virginia – Financial statements are available from the State Division of Consumer Affairs.

Washington – Financial information is available from the Secretary of State. Washington residents call toll-free 1-800-332-4483.

West Virginia – West Virginia Residents may obtain a summary of the registration and financial documents from the Secretary of State, State Capitol, Charleston, WV 25305.

REGISTRATION WITH THESE GOVERNMENTAL AGENCIES DOES NOT IMPLY ENDORSEMENT, APPROVAL, OR RECOMMENDATION BY THE STATE.

American Institute of Philanthropy dba CharityWatch is a 501(c)3 nonprofit organization, IRS EIN #33-0491030.

 
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Last Update: December 18, 2014