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.
|CharityWatch's rating of the Cystic Fibrosis Foundation (CFF) is based on the Foundation's 2014 audited consolidated financial statements, which include the operations of CFF, including all of its chapters, Cystic Fibrosis Foundation Therapeutics (CFFT), and the Cystic Fibrosis Patient Assistance Foundation, LLC.|
|According to the Cystic Fibrosis Foundation (CFF) consolidated audit of December 31, 2014 (Note 2, Revenue recognition):|
"CFF and CFFT [CFF Therapeutics] retain legal and beneficial rights to intellectual property developed under certain scientific grants and drug discovery agreements... In addition, at times CFFT may sell its intangible rights under certain agreements in exchange for a lump sum... In May 2013 and November 2014, CFFT entered into agreements to sell its intangible rights to future revenues under a drug discovery agreement. Net revenue from the May 2013 transaction was $247,900,946... Net revenue from the November 2014 transaction was $3,274,431,963..."
*Note: CFF's audited Consolidated Statement of Financial Position at December 31, 2014 reports Net Assets of $3,814,362,946, which is over 18 times its total expenses for 2014. However, the $3,274,431,963 in net revenue that CFF received from the November 2014 transaction noted above represents over 85% of its Net Assets balance at year-end. Therefore, in consideration that this massive $3.27 billion cash infusion was received so close to CFF's fiscal year end and that it would be unreasonable to expect CFF to spend significant amounts over such a short-term period, CharityWatch has not downgraded CFF's A-minus grade for having large asset reserves (i.e., "High Assets") at 12/31/2014.
CharityWatch will reassess the status of CFF's asset reserves when performing our future ratings of CFF.
|According to the Cystic Fibrosis Foundation - Group Return 2014 tax filing, the Foundation reports receiving donated in-kind "tangible and service auction items" valued at approximately $9.84 million in 2014 (IRS Form 990, Schedule M).|
[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".]
|According to the Cystic Fibrosis Foundation Headquarters 2014 tax filing (IRS Form 990, Schedule O re: Significant Diversion of the Organization's Assets):|
"... During the year, the organization's internal controls detected misappropriations of Foundation assets, which amounted to approximately $1,470,000[.] The misappropriations were carried out from 2010 to September 2014, with approximately $1,233,000 of the losses incurred between January 2013 and September 2014[.] These misappropriations involved IT equipment that was stolen by two employees, and fraudulent invoicing by a vendor and employee[.] Upon discovery, the Foundation immediately notified the Audit Committee of the Board of Trustees who engaged an independent law firm to investigate the schemes[.] The individuals involved are no longer employed by the Foundation and the Foundation has terminated its business relationship with the vendor involved in the fraudulent invoicing[.] The Foundation is cooperating with law enforcement officials in support of prosecution of any individuals who have violated the law[.] The Foundation has filed claims with its insurance company and corrective actions have been instituted[.]"
|According to the Cystic Fibrosis Foundation consolidated audit of December 31, 2014 (Note 6, Awards payable and commitments):|
"As of December 31, 2014, the Foundation and CFFT [Cystic Fibrosis Foundation Therapeutics] have additional medical scientific grant commitments of approximately $40,635,000, which extend through December 31, 2020. These subsequent year awards are contingent upon renewal criteria, and therefore the costs and liabilities are not reflected in the consolidated financial statements."
"Certain CFFT agreements provide for future contracted drug discovery and development research payments amounting to approximately $88,100,000. These costs will be expensed when the services are provided."
|In a November 19, 2014 news release by the Cystic Fibrosis Foundation, the Foundation announced:|
"... [A]n unprecedented acceleration and expansion of its research, care and patient programs for the CF community. This action is possible as a result of the sale of the Foundation's royalty rights to CF treatments developed by Vertex Pharmaceuticals Inc. The Foundation received $3.3 billion from the sale to Royalty Pharma."
"In addition to increasing its research funding for innovative strategies to target the genetic cause of CF, the Foundation plans to strengthen the specialized care and support that people with CF and their families receive at more than 120 Foundation-accredited care centers across the country. The Foundation will also expand its resources to help people with CF and their families afford costly medications and manage health care coverage and insurance."