Arc of the United States (National Office)

CharityWatch's rating of The Arc of the United States is for the national office of the organization (tax ID #13-5642032). The rating does not include the financial activities of the over 600 individual state and local chapters of The Arc.

According to The Arc of the United States consolidated audit of December 31, 2020 (Note 1 re: Organization):

"The Arc of the United States (The Arc) is the national headquarters of the largest community-based organization of and for people with intellectual and developmental disabilities...

"The Arc provides an array of services and support for families and individuals and includes over 140,000 members affiliated through over 600 state and local chapters across the nation..."

According to The Arc of the United States consolidated audit of December 31, 2020 (Note 11, Contributed Services), The Arc received in-kind donated services in 2020 on which it placed a total value of $4,706,407. Of this amount, $4,606,407 consisted of donated legal services.

[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 on the Our Process page.]

According to The Arc of the United States consolidated audit of December 31, 2020 (Note 4, PPP Loan Funding):

"On April 20, 2020, The Arc received loan proceeds in the amount of $1,111,300 under the Paycheck Protection Program (PPP). Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the promissory note must be used for certain expenditures within a 24-week period to ultimately be forgiven by the Small Business Administration. During the year ended December 31, 2020, The Arc expended and tracked the PPP funds for purposes outlined in the CARES Act guidance and believes they have met all conditions set forth for full forgiveness. Accordingly, under [accounting standards] guidance...The Arc has recognized the PPP funding as a conditional grant by which all conditions have been met. The Arc has deemed the forgiveness by the SBA to be highly probable, an administrative task only, and not a barrier to recognition. The full amount of the grant was recognized as grant income in the [audited] Consolidated Statement of Activities and Change in Net Assets. Subsequent to year-end, The Arc received notification the total amount of the PPP funds were forgiven by the SBA."

According to The Arc of the United States consolidated audit of December 31, 2020 (Note 1 re: Risks and uncertainties):

"The Organizations invest in various investment securities. Investment securities are exposed to various risks such as interest rates, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the accompanying [audited] consolidated financial statements."

According to The Arc of the United States consolidated audit of December 31, 2020 (Note 1 re: Economic uncertainties):

"On March 11, 2020, the World Health Organization declared the Coronavirus disease (COVID-19) a global pandemic. As a result of the spread of COVID-19, economic uncertainties have arisen which may negatively impact the Organizations' operations. The Arc cancelled their Disability Policy Seminar in April 2020. There were no penalties assessed due to the cancellation. The Arc then held virtual meetings for the July 2020 Summer Leadership Institution and the October 2020 National Convention. The Arc is also planning to hold the Disability Policy Seminar virtually in April 2021.

"The Organizations are planning very cautiously to pursue a strategy of delaying and rescheduling events throughout fiscal year 2021. Other potential financial or operational impacts from COVID-19 are unknown at this time."

According to The Arc of the United States consolidated audit of December 31, 2020 (Note 16, Subsequent Events):

"In preparing these [audited] consolidated financial statements, the Organizations have evaluated events and transactions for potential recognition or disclosure through April 18, 2021, the date the consolidated financial statements were issued.

"In February 2021, The Arc of the United States entered into a five year promissory note agreement in the amount of $1,115,357 with a 1% fixed interest rate under the second round of funding from the Paycheck Protection Program. The promissory note calls for monthly principal and interest payments amortized over the term of the promissory note, unless otherwise forgiven. Under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the promissory note may be forgiven by the Small Business Administration in whole or in part."

According to The Arc of the United States 2020 tax filing, The Arc reports re: Compensation, Supplemental Information (IRS Form 990, Schedule J, Part III):

Regarding nonfixed payments to officers, directors, trustees, key employees and highest compensated employees (Schedule J, Part I, Line 7):

"The CEO earned bonuses under the terms of a written bonus plan that includes quantitative goals that are based, in part, on achieving increases in certain types of revenue. This amount has been reflected in Part II, column B(ii) ['Bonus & incentive compensation']."

In addition, The Arc reports providing "bonus compensation" to the CEO and seven other individuals "for performance above and beyond the regular expectations of their positions..."

The reported "bonus compensation" is $2,000 for each of the eight individuals, including the CEO, Peter Berns. The associated reported total compensation for those eight individuals in 2020 ranges from $530,611 to $145,536 (IRS Form 990, Schedule J, Parts II & III and IRS Form 990, Part VII).