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.
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|CharityWatch's rating of NARAL Pro-Choice America Foundation, a 501(c)(3) public charity, is based on our analysis of its audited financial statements and IRS Form 990 for the fiscal year-ended 9/30/2016. CharityWatch provides a separate rating for the related 501(c)(4) tax-exempt, social welfare organization, NARAL Pro-Choice America.|
The two, related NARAL organizations cited above share certain Officers, Directors, Trustees, Key Employees, and Highest Compensated Employees (ODTKEs). According to an August 2017 letter to CharityWatch from NARAL's CFO, "...all of the employees are the employees of the c(4)." NARAL's (c)(3) and (c)(4) organizations each report aggregate total ODTKEs reportable compensation of $1,064,452 and estimated other compensation of $192,261 in fiscal 2016 (IRS Form 990, Part VII).
In total, NARAL's (c)(4) organization reports on its Form 990 Statement of Functional Expenses employee (including ODTKEs) compensation, salaries, wages, and benefits related expenses of $5,447,381 in fiscal 2016. The (c)(4) then subtracts $3,343,065 of this amount, described as "Shared Services-NARAL Fdn," from its total reported expenses (IRS Form 990, Part IX, lines 5-10 & 24a). Therefore, the (c)(4) organization's net remaining employee compensation, salaries, wages, and benefits related expenses were $2,104,316 in fiscal 2016.
Corresponding to the NARAL (c)(4) organization's Form 990 reporting, the (c)(3) NARAL Foundation reports on its fiscal 2016 Form 990 Statement of Functional Expenses $3,343,059 that it describes as "Shared Personnel & Other Exp." Rather than reporting the $3,343,059 on the lines designated by the IRS for employee compensation, salaries, wages, and benefits expenses (on which $0 is reported), however, NARAL Foundation reports the $3,343,059, along with other expenses, on line 11g, as "Other" "Fees for services (non-employees)." The $3,343,059 in "Shared Personnel & Other Exp" description and dollar amount is provided on the Supplemental Information schedule of the NARAL Foundation Form 990 (IRS Form 990, Part IX, lines 5-10 & 11g and Schedule O).
This method of reporting employee compensation, salaries, wages, and benefits expenses is different than the method NARAL has used in certain prior years. CharityWatch contacted NARAL in August of 2017 to inquire about this reporting change. The CFO responded:
"All employees are employees of the c(4) and one can see that on the c(3) schedule of functional expenses where there are no employee expenses. ...This change was due to a new CFO and new auditor seeing things in a new light. ...The deduction in expense of the Shared Services in the c(4) is an expense in the c(3) schedule of functional expenses line 11g."