CharityWatch REPORT
Issued January 2016

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 Children's Defense Fund (CDF) consolidated audit of December 31, 2014 (Note 15, Related Parties):

"The Children's Defense Fund has a contractual agreement with the Southern Coalition for Education Equity, which is run by a member of CDF's Board of Directors. This organization provides services to support CDF's work in Alabama, Georgia and Mississippi. In 2014 and 2013, the total paid to this organization for consulting services was $57,580 and $83,171, respectively."

"The CDF Marlboro County Office in South Carolina leases office space, for the nominal rate of $1 per year, in a home that is owned by CDF's Founder. Additional office space for the expansion of the Freedom Schools program in Marlboro County was acquired in 2012 from a family member of CDF's Founder at a cost of $150,000. This transaction occurred in October 2012, but ownership did not pass hands until 2013."
According to the Children's Defense Fund (CDF) consolidated audit of December 31, 2014 (Note 16):

"These financial statements are prepared on a going concern basis... CDF experienced a decrease of net assets of approximately $2,721,000 in 2014 as a result of significant decline in contributions of approximately $2,597,000 from the prior year along with other revenue reductions of approximately $558,000. Although CDF reduced program service expenses and support service expenses by approximately $668,000 and $235,000, respectively, CDF's total expense reduction of approximately $904,000 was not enough to offset the decreased revenue."

"In 2015, management is prioritizing increasing unrestricted fundraising efforts by re-engaging lapsed donors and executing direct mail campaign initiatives using internal staff and board member networks and connections. CDF entered into a search process for a Chief Development Officer whose primary focus will be to restructure the development team and introduce new fundraising strategies. CDF is seeking increased federal and foundation grant funding by adding capacity to grant proposal writing. CDF continues to be engaged with real estate consultants to explore all options to maximize the value of its real property, which is appraised significantly above its book value. CDF is introducing new financial system improvements to enhance financial and operational oversight with the goal of improving operational efficiency. Management believes that these combined steps will allow the organization to fund future operations."

According to the Children's Defense Fund (CDF) consolidated audit of December 31, 2012 (Note 15):

"These financial statements are prepared on a going concern basis... CDF experienced a loss of $4,023,247 and $5,733,789 in 2012 and 2011, respectively. This loss is primarily driven by a significant amount of multi-year grant revenue recognized in 2010... and the expense of implementing those grants occurring in 2011 and 2012... CDF is reducing approximately $1.8 million in expenses on an annual, sustainable basis (a process which started in 2012) without affecting programs. This represents approximately 18% of CDF's recurring expense base, excluding salaries, employee benefits and re-grants. In addition to expense containment, CDF management aims to increase revenue by: pursuing new federal government funding sources; expanded fundraising activities launched on the organization's 40th Anniversary... and evaluating real estate holdings to maximize their full value. Management believes these actions will permit CDF to fund its future operations."

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