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Invisible People

CharityWatch report issued
August 2021

 
NOT
RATABLE
CharityWatch Grade
 

Contact Information

Invisible People
7119 W Sunset Blvd
#618
Los Angeles, CA 90046

Other Names

None

Tax Status

501(c)3

Stated Mission

An innovative organization that inspires action by curating thoughtful content and networking individuals, brands, and organizations to change the way we think about people experiencing homelessness.

View similar charities
Data based on Fiscal Year Ended 12/31/2020

*Why Not Ratable?

CharityWatch is currently unable to rate this organization. This does not imply a negative or positive evaluation. Please see the Analysts' Notes section for a more detailed explanation.

Governance & Transparency

CharityWatch evaluates certain criteria related to a charity's Governance and Transparency. Donors may want to consider a charity's willingness to be open and transparent with CharityWatch to be a good litmus test for determining its commitment to public accountability.
Invisible People
does not meet governance benchmarks.
 
Invisible People
does not meet transparency benchmarks.
Transparency
Provides Financial Information
Audit Accessibility
Governance: Policies
Reports regularly & consistently monitoring & enforcing compliance with a written Conflict of Interest Policy
Reports required, annual disclosure by officers, directors, and key staff of interests that could give rise to conflicts
Reports having a written Whistleblower Policy
Reports having a written Document Retention and Destruction Policy
Governance: Financials
Reports providing copy of tax form to all board members prior to filing it with IRS
Reports that financial statements were audited by an independent accountant
Governance: Board of Directors
Reports at least 5 voting board members
51% or more of voting board members reported as independent
Reports documenting minutes of board and board committee meetings
Privacy Policy
Privacy Policy

Unable to Provide Salaries

CharityWatch is unable to provide a range of Top Three Salaries for this charity for the above fiscal reporting year because we lack complete salary data for the organization. Except for officers, directors, and trustees, the IRS does not require breakouts of salaries totaling less than $100,000.

For example, XYZ charity would be required to provide a breakout in its tax form of compensation to its president of $55,000, but would not be required to provide a breakout of $99,000 in compensation to its top medical researcher if that person is not also an officer, director, or trustee of the organization.

This charity reports that compensation to its officers, directors, and trustees is under $100,000 per individual. Donors who would like to view limited salary data for this organization should refer to its tax form, which may be available on the charity's web site or from a number of third-party sources. See CharityWatch's Links page for information on obtaining copies of charity tax forms.


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.

CharityWatch is unable to provide a rating for Invisible People based on its fiscal year ended 12/31/2020 due to the charity's small size. CharityWatch's inability to provide a rating for Invisible People at this time does not imply a negative or positive evaluation. According to its 2020 IRS Form 990, Invisible People raised $457,458 in contributions and reported $249,709 in total expenses in 2020. Though Invisible People was formed in 2009, it reports raising just $1,225,658 in total contributions during the five-year period of 2016 through 2020, which averages less than $250,000 annually (IRS Form 990, Schedule A, Part II, Section A).

The financial reporting of small charities is often not comparable to that of larger ones for several reasons: 

Cash Basis Accounting

Smaller charities tend to report their financial activities using the cash basis rather than accrual basis method of accounting. Though the IRS allows charities to use cash basis accounting to prepare their annual IRS Form 990 tax filings, the cash basis accounting method is not acceptable under Generally Accepted Accounting Principles (GAAP) in the United States. Accrual basis accounting reports revenue as it is earned and expenses as they are incurred, providing a more complete picture of an organization's assets and liabilities (resources owed to outside parties), and a better measure of how efficiently it is operating. Cash basis accounting is a less reliable method for assessing a charity's financial health or measuring its financial efficiency because it reports revenue and expenses based on the timing of when cash deposits or payments are made, which can be arbitrary and open to manipulation. Charities often opt to use the cash basis method of accounting when they are newly formed or small in size because using cash basis is more simple than using accrual basis and requires less accounting expertise to maintain. 

In its 2020 IRS Form 990, Invisible People reports using the cash basis method of accounting to prepare the Form 990 (IRS Form 990, Part XII, line 1).

Lack of Independent Audited Financial Statements

Most charities forego hiring external auditors to produce annual audited financial statements until they reach a size that subjects them to regulations requiring them to do so, such as to satisfy state fundraising regulations, to obtain credit, or for insurance purposes. Audits conducted by Certified Public Accountants (CPAs) can cost thousands of dollars, which is relatively expensive for small charities. The lack of an audit, however, means that a qualified outside party has not subjected the charity's financial reporting to auditing standards that would test the effectiveness of its internal controls and assess whether or not the charity's financial information is fairly presented and free of material misstatements. 

In its 2020 IRS Form 990, Invisible People responds "No" to the question: "Were the organization's financial statements compiled or reviewed by an independent accountant?" It also responds "No" to the question: "Were the organization's financial statements audited by an independent accountant?" (IRS Form 990, Part XII, lines 2a & 2b).

Economies of Scale

Economies of scale occur when the size of an organization's operations allow it to operate more efficiently. As an organization grows it costs it less (per unit) to produce its goods or services due to its overhead and other fixed costs being spread over a larger volume of output. For example, a small charity that serves 500 poor people per year may need to pay $8,000 for its annual financial audit. A larger charity that serves 3,000 poor people per year may need to pay $10,000 for its annual financial audit. The first charity spent $16 per person served for the overhead cost of its audit, while the second spent far less at only $3.33 per person served. Charity rating methods suitable for larger organizations often cannot be fairly applied to much smaller charities given that the latter lack the economies of scale necessary to operate at the same level of efficiency. Small charities that assist underserved populations, that are fulfilling an unmet need, or that are new or in the process of scaling up to a larger size may still be worthy of donors' support despite CharityWatch's inability to rate them due to this comparability issue.


CharityWatch reached out to Invisible People via mail and email in July 2021 with several questions about its 2020 IRS Form 990 financial reporting. As of August 6, 2021, Invisible People has not responded to our requests for information. Among our questions were the following:

(1) In an effort to understand how Invisible People's reporting requirements might change for fiscal year 2021, CharityWatch asked if it anticipated that its contributions would grow significantly (to $1 million or more) in 2021.

(2) CharityWatch observed that Invisible People reported Other Fees for Services expenses of $106,473, all of which is allocated to program service expenses. This accounts for over 42% of Invisible People's reported total expenses for the year 2020. On the Supplemental Information schedule of the Form 990 (Schedule O), Invisible People reports that $54,017 of this amount is for "IP writers" and $51,859 is for "Outside Services." CharityWatch asked Invisible People to provide a description and some additional details about these expenses in order to help donors better understand what types of activities are included in this spending. 

(3) In its 2020 IRS Form 990, Invisible People reported $0 in fundraising expenses despite raising a reported $457,458 in contributions that same year. In the opinion of CharityWatch, when a charity reports $0 for fundraising expenses in a year that it raises contributions, this can be a red flag that the reporting is not correct since it is very rare for a charity to be able to raise contributions without spending any money to do so. To this end, we asked Invisible People to clarify how some of its expenses are characterized and allocated. 

(4) When a charity provides grants or other direct assistance to individuals, these expenses are generally reported on specific lines designated for this purpose in a charity's IRS Form 990. Reporting on these specific lines of the tax form can trigger requirements for a charity to file additional schedules that include more detail about the number of grants made, the dollar amounts or non-cash values of those grants, and whether they were received by individuals or other charities. In its 2020 IRS Form 990, Invisible People reports spending $19,128 in "Direct Assistance to Individuals" on a line designated for "Other expenses" rather than on the lines specifically designated for "Grants and other assistance." CharityWatch asked Invisible People about its choice to report the $19,128 as "Other expenses" rather than as "Grants and other assistance."

If Invisible People responds to CharityWatch's questions in the future, we may update our information at that time.


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