CharityWatch's rating of 350.org is for the 501(c)(3) public charity. The rating does not include the financial activities of the related 501(c)(4) tax-exempt, social welfare organization, 350.org Action Fund, for which CharityWatch does not provide a separate rating at this time.
According to the 350.org audit of September 30, 2019 (Note 5, Related Party Transactions):
"The Organization shares office space and other related expenses and services with 350.Org Action Fund (the Fund), a nonprofit organization exempt under Section 501(c)(4) of the Internal Revenue Code. Costs have been allocated between the Organization and the Fund based upon salaries and other contractual arrangements. Total expenses allocated to the Fund for the year ended September 30, 2019, were approximately $122,000. The Organization made a grant of $60,000 to the Fund for mobilization services and other support during the year ended September 30, 2019."
According to the 350.org audit of September 30, 2019 (Note 15, Management's Plan):
"The Organization experienced a decrease in net assets of $10.6 million and a decrease in operating cash flow of $10.3 million for the year ended September 30, 2019 due to revenue being below targeted levels as the Organization continued its worldwide expansion. As a result, management eliminated 27 staff positions in the year ended September 30, 2019 and to date in the year ending September 30, 2020, and reduced its planned fiscal year 2020 expenditures by $7 million, while redoubling its fundraising efforts.
"For the year ended September 30, 2020, the Organization has reported an unaudited increase in net assets of $4.1 million, and a cash and cash equivalents balance of $8.2 million. Management has a reasonable expectation that the Organization has adequate resources to continue in operational existence for the foreseeable future."
According to the 350.org audit of September 30, 2019 (Note 16, Subsequent Events):
"The spread of COVID-19 (coronavirus disease) has had a disruptive impact on the daily life and operations of individuals, businesses, and nonprofits around the world. There is uncertainty about financial and economic impacts in all sectors of the economy. The financial markets have experienced significant volatility, and this may continue for an extended period of time. In light of these circumstances, management continues to assess how best to adapt to changed circumstances.
"The Organization has received a Small Business Administration (SBA) loan under the Paycheck Protection Program (PPP) in the amount of $1,291,828. PPP provides up to eight or twenty-four weeks of cash-flow assistance through 100% federally guaranteed loans to eligible recipients to maintain payroll during the COVID-19 public health emergency and cover certain other expenses. The first loan payment is deferred for six months. Assuming the Organization maintains its workforce and meets certain requirements, up to 100% of the loan is forgivable by the SBA if the loan proceeds are used to cover the first eight or twenty-four weeks of payroll, and certain other expenses. The Treasury Department anticipates that no more than 40% of the forgiven amount may be for non-payroll costs. Also, if the Organization does not retain its entire workforce, the level of forgiveness is reduced by the percentage of the decrease. Loans under PPP have an interest rate of 1% and a maturity of two to five years.
"Subsequent to year end, the Organization's employees in the United States completed the process of unionizing with the Progressive Workers Union.
"Subsequent events were evaluated through January 11, 2021, which is the date the [audited] financial statements were available to be issued."
CharityWatch had previously issued 350.org a "?" rating for its fiscal year ended 09/30/2018 due to our specific concerns related to aspects of the charity's financial reporting. Specifically:
CharityWatch analyzed the fiscal 2018 tax Form 990 and audited financial statements of 350.org and contacted the organization via email and U.S. Mail in June and July 2020, respectively, with questions about its financial reporting. On August 13th, 2020, the charity communicated in an email that answering the questions is taking "longer than planned" and that they are "working on this." As a result, CharityWatch is unable to conduct a meaningful evaluation of 350.org at this time to determine its program and fundraising efficiency and assign it a letter grade rating.
In a July 17th, 2020 letter to 350.org's Executive Director, Gillian May Boeve, we asked the charity to explain why Form 990 Schedule D was not completed. This is the schedule that reconciles a charity's tax form and audit reporting, accounting for any discrepancies between the two. For example, the charity reports grants and contributions of $19,128,157 in its tax form, but the audit reporting reflects $100,000 less than this amount. CharityWatch was unable to confidently compute 350.org's fundraising efficiency without understanding what accounted for this difference or if one of the financial documents contained an error.
We also asked 350.org to confirm that $1,157,657 of reported spending on "Events & Materials" in its Form 990 was properly reported in the correct section. The charity included almost 99% of this total in its reported program expenses. In asking this question, CharityWatch was attempting to discern whether or not some or all of these expenses should have instead been netted from fundraising events revenue in a different section of the Form 990 rather than included in program expenses. In the absence of such information, CharityWatch was unable to confidently compute 350.org's program efficiency percentage.
Update: In an email dated March 16, 2021, 350.org communicated that its reported "Events & Materials" expenses do not meet the IRS definition of Fundraising Events and stated that this spending is properly reported as program expenses. Examples of such program events, according to 350.org, include "large scale public mobilizations such as the Peoples Climate March...or Rise for Climate Action."
CharityWatch observed in 350.org's fiscal 2018 Form 990 that it reported spending $5,140,438 on "Consulting Services." This line item comprised more than one-third of 350.org's fiscal 2018 reported total expenses of $15,450,256, and the portion of this amount the charity claims are program-related expenses amounted to $4,713,283. This latter amount accounted for nearly 39% of 350.org's total program spending in fiscal 2018. We asked 350.org to provide a brief description of the consulting services included in this line item. We also asked the charity if this spending on consulting services triggered any additional required IRS disclosures for joint costs, Schedule G reporting on fundraising activities, or an accounting of any independent contractors who received $100,000 or more from the charity in calendar year 2017. 350.org reported no joint costs, did not attached a Schedule G to its Form 990, and does not disclose any independent contractors on Part VII, Section B of its Form 990 other than a $114,375 payment for "Law Services." In the absence of such information, CharityWatch was unable to confidently compute 350.org's program efficiency percentage.
Update: In an email dated March 16, 2021, 350.org responded to our questions and confirmed that the $5.1 million of reported expenses for Consulting Services did not include any expenses related to combined educational/fundraising campaigns, nor did it include fundraising activities required by the IRS to be reported on Form 990 Schedule G. In response to CharityWatch's request to describe the types of consulting services in included in this expense line item, 350,org stated: "The scale of this line item is due to personnel costs where our staff were paid through third party Professional Employer Organizations. We employ individuals in many countries to support 350's global mission, but it is cost prohibitive for us to maintain a corporate presence in all jurisdictions in which we have staff. Professional Employer Organizations provide 350 with the employment infrastructure for us to be able to hire more individuals with on the ground experience in the communities we wish to serve. We have recently (after FY18) adjusted our accounting to better reflect these expenses as part of our overall personnel costs."
Finally, 350.org's fiscal 2018 audited financial statements report as a subsequent event a "significant unaudited loss" that occurred during the fiscal year-ended 9/30/2019. We asked the charity if it was willing to provide CharityWatch with any additional information regarding the nature and amount of this loss.
Update: In an email dated March 16, 2021, 350.org did not provide additional detailed information in response to our question about its reported "significant unaudited loss" in fiscal 2019, saying: "We prefer to provide additional information through our FY19 [fiscal year 2019] filings. Please find the FY19 990 filing attached and please let us know if that satisfies the need here." [See the Analysts' Note, above, citing Note 15, Management's Plan from the 350.org fiscal 2019 audit referencing "a decrease in net assets of $10.6 million and a decrease in operating cash flow of $10.3 million for the year ended September 30, 2019..."]