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.

According to the American Lung Association - National Office audit of June 30, 2016 (Note 1, Lung USA):

"The National Office's Board of Directors approved a Lung USA transition plan to reassign the territory as follows: North Carolina was assigned to the American Lung Association of the Southeast effective July 1, 2014; and Maryland, Virginia and the District of Columbia will be assigned to the American Lung Association of the Mid-Atlantic effective January 1, 2015."

[Prior to the transition noted above, Lung USA was an operating division of American Lung Association - National Office that provided local program services within Maryland, Virginia, North Carolina, and the District of Columbia. Given the effective dates of the Lung USA transition, its financial activities are no longer included in the National Office's financial statements for the fiscal year ended 6/30/16.]
CharityWatch rates the National Office of the American Lung Association. The rating does not include the financial activities of the Chartered Associations of the American Lung Association, of which there were nine at June 30, 2016, according to the National Office audit (Note 1).

According to American Lung Association - National Office audit of June 30, 2016 (Note 11, Related Party Transactions):

"Each Chartered Association is required to remit a monthly bundled billing amount, which includes a fee for some services or contracts held by National Office. Part of these fees pertain to National Office Direct Marketing and the ROI [Return On Investment] Data Program which provides information on donors and fundraising events conducted by and for the benefit of Chartered Associations. Donations resulting from the direct mail campaign and revenue raised by the Direct Marketing Program are remitted to the Chartered Associations based on the zip code of the donor. The Chartered Associations reimburse National Office for costs required to operate this program. ...This revenue is recognized as expenses are incurred. For the year[] ended June 30, 2016...program reimbursements approximated $20,000,000..."

CharityWatch analyzed the audited financial statements and IRS Form 990 of the American Lung Association - National Office and, prior to computing our rating calculations, made adjustments to reported figures in consideration of spending by the National Office for which it is reimbursed by its Chartered Associations, as noted above.

[Please visit CharityWatch's "Criteria & Methodology" page by clicking on the "About Us" header for more information about why we analyze multiple financial documents of a charity and what adjustments we make during our analysis of a charity's financial reporting.]
Also noted in the American Lung Association - National Office audit of June 30, 2016 re: transactions with the Chartered Associations (Note 11):

"Each Chartered Association is also required to remit a monthly assessment, which National Office uses in a variety of ways including, but not limited to, providing national leadership, assistance and guidance in the areas of Field Program Development, Field Fundraising and Field Management Advisory and other activities. This revenue is recognized over the assessment period. For the year[] ended June 30, 2016...Chartered Associations' assessments revenue approximated $5,700,000..."

"Additionally, per National Office's agreement with each Chartered Association, National Office receives 30% of direct response revenues, less direct response expenses. This revenue is recognized in the period when contributions are collected. For the year[] ended June 30, 2016...the allocable share of direct response activities from Chartered Associations approximated $2,300,000..."
According to the American Lung Association - National Office audit of June 30, 2016 (Note 2, In-Kind Contributions), the National Office received in-kind contributions valued at $10,929,701 in fiscal 2016, including $10,470,561 in in-kind billboard, print, and TV and radio advertisement space.

[Note: CharityWatch generally excludes the value of in-kind (non-cash) donations of goods and services from its calculations of Program % and Cost to Raise $100. More information on how grades are calculated and the treatment of in-kind donations can be found by clicking on "About CharityWatch" from the navigation bar and then clicking on "Criteria & Methodology".]

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