CharityWatch Analysts perform an in-depth analysis of charities' audited financial statements and IRS tax filings, and often review other documents such as state filings, annual reports, and fundraising contracts during their evaluations. Below are select notes that CharityWatch believes may be of interest to donors.

Any time an Analysts' Note refers to a charity's Audited Financial Statements or IRS tax form, CharityWatch encourages interested donors to obtain a copy of the referenced documents so that they may view the information in context. Please contact the charity directly to request a copy of any referenced document. Charity tax forms and audits may also be obtained from a number of online databases. For a list of sources, please visit our LINKS page.

Note(s)
According to the ACLU audit of March 31, 2015 (Note 10, Commitments and Contingency):

"The Foundation leases office space in various locations under various short-term operating leases. The ACLU is currently in litigation with the insurers of 125 Broad Street offices in connection with the damages caused to the building by Hurricane Sandy in October 2012. The amounts recoverable cannot be determined at present..."
CharityWatch's rating of the American Civil Liberties Union (ACLU) includes the financial activities of the 501(c)4 organization (Tax ID#13-3871360). Our rating does not include the financial activities of the local ACLU affiliates, or of the related 501(c)3 public charity entity, the American Civil Liberties Union Foundation (Tax ID#13-6213516), for which CharityWatch issues a separate rating.

Whenever practicable, CharityWatch obtains consolidated audited financial statements that include all of the entities of a charity. Such an audit eliminates related party transactions among related groups, and allows us to determine how efficiently an organization is operating on the whole. In the case of the ACLU, its local affiliates are separate legal entities whose financial activities are not included in its consolidated financial reporting.

The ACLU describes its organizational structure in its 2015 audit as follows:

"The ACLU is affiliated with 50 nonprofit, tax-exempt organizations and has a presence in every state in the United States and in the District of Columbia and Puerto Rico. All affiliates include reference to the 'American Civil Liberties Union' or some variation thereof in their names (the affiliates). The affiliates share the same overall mission and purpose as the ACLU, but their programs focus more on local or regional issues, while the ACLU's program activities are focused on overarching civil liberties issues and initiatives. Although the ACLU plays no direct role in the governance of and, except in very limited instances, does not share employees with, the affiliates, the organizations jointly fundraise and work together on certain programs and the ACLU, through either the [ACLU] or the [ACLU Foundation], as appropriate, at its sole discretion provides targeted financial and other support to its affiliates."

In cases where CharityWatch rates only the larger entity or entities of an organization that has multiple, related groups or affiliates, we make certain adjustments during our analysis so that a charity's grade is not artificially inflated. For example, since a charity does not expend fundraising dollars to receive contributions from a related organization, we generally subtract related party contributions from our contributions figure before performing our calculation of Cost to Raise $100.

CharityWatch issues separate ratings for 501(c)4 organizations, even when such groups are included in a charity's consolidated audit, due to the different tax treatment these groups. For more information on this topic, please see our sections on Types of Non-Profits and Tax Status, which can be found on the Criteria & Methodology tab under the "About Us" navigation header.

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