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Paws for Purple Hearts

CharityWatch report issued
October 2021

 
CharityWatch Grade
 

Contact Information

Paws for Purple Hearts
10201 Old Redwood Hwy
Penngrove, CA 94951

Other Names

None

Tax Status

501(c)3

Stated Mission

To offer therapeutic intervention for veterans & active-duty personnel by teaching those with PTSD to train service dogs for their comrades with combat-related disabilities; built upon the trust & time honored tradition of veterans helping veterans.

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Data based on Fiscal Year Ended 12/31/2019

*Why a Question Mark Rating?

CharityWatch currently has concerns about this organization and/or is unable to provide complete rating information due to the organization's nondisclosure of financial information. 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.
Paws for Purple Hearts
does not meet governance benchmarks.
 
Paws for Purple Hearts
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 letter grade rating of Paws for Purple Hearts (Paws) at this time. Paws has declined to respond to CharityWatch's inquiries about its fiscal 2019 reporting of program expenses that may include fundraising activities. For this reason, we have issued Paws a "?" rating for its fiscal year-ended 12/31/2019. CharityWatch previously issued Paws a "?" rating for its fiscal year-ended 12/31/2017 for the same reason. 

CharityWatch's most recent letter grade rating of Paws was an "F" for spending 26% of its budget on programs and $44 to raise each $100 of contributions in its 2015 fiscal year.

CharityWatch sent an inquiry to Paws' Chief Operating Officer, Dave Platte, in September of 2018 asking for an explanation regarding certain variances in Paws' program expense reporting in 2017 compared to 2016 & 2015. In October of 2018, Mr. Platte responded that he was working to provide CharityWatch with "thorough responses...as soon as I can." When a response wasn't received, CharityWatch re-sent its inquiry to Mr. Platte in February of 2019. On March 1, 2019, Mr. Platte responded that Paws is "going to have to decline the opportunity to provide a detailed response" to CharityWatch's inquiry.

In our 2018/2019 inquiry to Paws, CharityWatch asked the following:

"CharityWatch...has noted that Paws did not report expenses related to joint costs from a combined educational campaign and fundraising solicitation. Paws, however, has reported a significantly higher amount of 'Postage' and 'Printing and copying' expenses in Program Services since 2015, especially in 2017. Additionally, Paws allocated almost 60% of its 'Mailing lists' expenses to Program Services in 2017. Such expense reporting is typical for charities that have joint cost direct mail solicitation fundraising activity.

"...[I]f it is correct that Paws did not have joint cost solicitation activity in 2017:

"(1) Please provide CharityWatch with an explanation as to why the 'Postage,' 'Printing and copying,' and 'Mailing lists' expenses Paws allocates to Program Services per its 2017 audited Statement of Functional Expenses should be considered pure programmatic expenses and not joint costs. (Those three expense line items combined make up almost 30% of Paws' total reported program expenses in 2017. In contrast, they comprised 17% and 23% of total program expenses in 2015 and 2016, respectively.)

"(2) Please provide CharityWatch with further detail concerning the 'Professional services' Paws allocates to Program Services in 2017. What type of service(s), specifically, were provided for that $540,804 in total program expenses? Please provide a breakdown of the services provided with corresponding dollar amounts. (Similar to the expense items noted in (1) above, 'Professional services' comprised less than 5% of total program expenses in 2015, but that proportion increased to 12% in 2016 and 14% in 2017.)"


CharityWatch sent a similar inquiry to Mr. Platte on September 10, 2021. We communicated that the purpose of our inquiry was to attempt to discern whether Paws fundamentally changed its operations in a way that caused a dramatic reported financial efficiency improvement, or rather if Paws is simply reporting the same activities in a more favorable light in its tax form and audited financial statements. For example, in 2019 Paws allocated approximately 53% of its "Mailing lists" expenses to program services, as compared to certain prior years when this expense was allocated 100% to fundraising. About 30% of Paws' reported program spending in 2019 consisted of expenses for postage, printing and copying, mailing lists, and professional services. 

In an email dated September 15, 2021, Mr. Platte responded: "We simply do not have the resources to chase this issue around again as we have in the past, so we'll have to settle for the '?' rating for 2019." 

It is important to note that neither Mr. Platte nor anyone else at Paws has provided CharityWatch with responses to our questions about the charity's financial reporting. For this reason, Mr. Platte's statement, "as we have in the past," is not referring to Paws actually providing an explanation to CharityWatch about what accounts for its claimed financial efficiency improvements in fiscal years 2017 and 2019.

According to the Paws for Purple Hearts audit of December 31, 2019 (Note 2, Related Party Transactions):

"The founder, who is also a member of the board of directors of the Organization, is a member of the board of directors of Bergin University of Canine Studies (BUCS). The Organization has a contract with BUCS located in Penngrove, California, as discussed further in Note 7 [cited, below]. As a result of the contract, the Organization paid $543,022 to BUCS during the year ended December 31, 2019..."


According to the Paws for Purple Hearts audit of December 31, 2019 (Note 7, Agreements):

"The Organization has an agreement with Bergin University of Canine Studies (BUCS) to provide dogs that are suitable for candidates for training by veterans suffering from psychological scars, curriculum and updates for teaching veterans about training services and assistance dogs and oversight of the program, consulting regarding dogs being trained by the Organization, and services and expenses. The Organization has agreed to identify veterans eligible for dogs, work with veterans under the Organization's supervision, obtain dogs exclusively from BUCS, provide for the health and maintenance of the dogs, to extent possible, and all instructors of the Organization shall be BUCS graduates. In addition, the Organization will return the dogs to BUCS when suitable for placement. The agreement requires the Organization to reimburse BUCS for the cost of services and expenses, and an annual licensing fee of 9.75% of the Organization's revenue from $250,000 to $499,000, 8.5% of revenue from $500,000 to $749,000, 7.25% of revenue from $750,000 to $1,000,000 and 6% of revenue in excess of $1,000,000. During the year ended December 31, 2019 the Organization recorded $636,548 for licensing and administrative fees... As of December 31, 2019, the Organization owes $335,332 to BUCS related to the above agreement..."

According to the Paws for Purple Hearts audit of December 31, 2019 (Note 11, Subsequent Events):

"In early 2020, an outbreak of a novel strain of coronavirus was identified and infections have been found in a number of countries around the world, including the United States. The coronavirus and its impact on trade including customer demand, travel, employee productivity, supply chain, and other economic activities has had, and may continue to have, a significant effect on financial markets and business activity. The extent of the impact of the coronavirus on the Organization's operational and financial performance is currently uncertain and cannot be predicted.

"During May 2020, the Organization received a SBA [Small Business Administration] loan of $150,000 under the Paycheck Protection Program Loan, a loan program designed to provide a direct incentive for small businesses to keep their workers on payroll. The SBA will forgive the loan if employees are kept on payroll for 8 to 24 weeks and the money is used for payroll, rent, mortgage interest or utilities. If not forgive[n], the interest rate is 2.75% per year and payments of principal and interest of $641 must be made every month beginning 12 months from the date of the promissory note.

"Subsequent events were evaluated through August 12, 2020, which is the date the [audited] financial statements were available to be issued."