Boys Town Scrutinized by CharityWatch and Others for High Fundraising Costs
Dec 07, 2023
Founded in 1917 by Edward J. Flanagan, Boys Town is a charity with a stated mission of "saving children and healing families" by "changing the way America cares for children and families." It works with families to provide resources and support to children and parents in their communities.
Boys Town raises a staggering amount of donations and bequests each year—more than what is received by 99% of America’s 1.37 million public charities, according to a November 2, 2023 article in the Des Moines Register. However, these donations have not shown a positive correlation with Boys Town’s placement of additional disadvantaged youths into its programs. The Des Moines Register reported that the charity "has provided a home for far fewer youths in the past five years than decades past. And it provides relatively little specific assistance to the wider mix of children and families it serves, despite assets of $1.76 billion and substantial reserves.” This has caused some to question the efficiency and effectiveness of Boys Town’s fundraising practices.
As quoted in the Des Moines Register article:
“’They haven’t been a very efficient fundraiser for years,’ said Laurie Styron, executive director of CharityWatch, which has examined the finances and fundraising of Boys Town and its endowment, along with hundreds of other high-asset charities, since the 1990s.”
“In its last analysis of high asset charities in 2020, CharityWatch calculated Boys Town spent $45 for every $100 it pulled in, the worst ratio of any nonprofit with over $1 billion in assets it reviewed.”
“In an era when Americans know more youth are troubled and residential facilities across the country have been closing, Styron of CharityWatch questioned the ethics of Boys Town focusing so much of its donor marketing on the relatively few needy wards it serves today.”
“’If they are giving donors the impression that most of their donations are going to a specific program, say, housing children, but then they are spending most funds on other programs, that’s an example of their marketing materials not aligning with what their finances reveal,’ she said.”
Online Charity Rating Databases Don't Provide a Complete Picture
Several online charity databases exist, some of which provide ratings on hundreds of thousands of charities. Such databases typically rely on some combination of crowdsourcing and automation in order to pump out data on such a large volume of organizations. Unfortunately, such methods rarely take into account the inaccuracy, incomparability, inconsistency, or incompleteness of much charity financial reporting. This often results in ratings that can most aptly be described as "garbage in, garbage out." For example, CharityWatch has identified many organizations that spend 35% or less on their programs and 65% or more on overhead that receive top scores and seals on these sites.
According to the Des Moines Register's article, "Like many large charities, Boys Town touts stamps of approval from charity trackers such as the Better Business Bureau's Wise Giving Alliance, Guidestar (now Candid) and Charity Navigator." However, the article continues, the endowment in which Boys Town holds the bulk of its assets isn't ranked or rated by most of the organizations consumers use to make decisions about giving."
One reason such online charity databases may offer ratings based on incomplete information is due to an overreliance on automation or crowdsourcing. For example, if a charity's rating is created by pulling information from its tax filings, the rating might only include the financial activities of one small part of the organization. Some charities, especially larger ones, often have separate, related legal entities that each file their own, separate IRS tax Form 990 every year. To understand how efficiently an organization is operating on the whole, or how much money and other assets it is holding in reserve, its consolidated audited financial statements would need to be analyzed. The algorithms used by online charity databases are too simplistic to analyze charity audits and make necessary adjustments for consistency, comparability, completeness, or accuracy. Likewise, when "impact" data and other marketing materials are crowdsourced directly from the charities being rated, those organizations have little incentive to include information in their self-published reports that could make the charity look inefficient or ineffective to donors.
CharityWatch's current rating of Boys Town is based on our analysis of its fiscal 2020 consolidated audited financial statements and IRS tax Forms 990. CharityWatch's rating of Boys Town includes the financial activities of Father Flanagan's Boys' Home, as well as its active affiliates and related entities, which are consolidated in the Boys Town audited financial statements for the fiscal year ended December 31, 2020.
According to the Boys Town 2020 consolidated audit (Note 2(a) re: Basis of Presentation), the affiliates and related entities of Father Flanagan's Boys' Home that are consolidated in the audited financial statements include:
(1) Boys Town Central Florida; (2) Boys Town North Florida; (3) Boys Town Louisiana; (4) Boys Town Nevada; (5) Boys Town New England; (6) Boys Town South Florida; (7) Boys Town Washington, DC; (8) Father Flanagan's Fund for Needy Children; (9) the Lied Learning and Technology Center for Childhood Deafness and Vision Disorders, a 501(c)(3) research and treatment facility operated and occupied by Boys Town National Research Hospital personnel; and (10) PromiseShip, a separate nonprofit corporation in which Boys Town has a controlling interest. All intercompany balances and transactions have been eliminated in the audit consolidation.
CharityWatch determined, based on our analysis of the consolidated organization, that Boys Town could continue to operate at fiscal 2020 cash spending levels for 3.6 years without raising another penny of donations or other revenue. We downgraded its rating from a B-minus (based on financial efficiency) to a C due to its high assets relative to spending.
In its consolidated audit, Boys Town reported net assets of $1,547,568,000 as of 12/31/2020. CharityWatch subtracted from this amount assets that the charity could not easily spend, such as equity in land, buildings, and equipment, and restricted beneficial interests in trusts. We also subtracted amounts that the charity is legally not allowed to spend, such as permanently donor-restricted funds. We then divided the balance by the charity's 2020 cash spending of approximately $374 million, arriving at our end computation of 3.6 years of available assets.
CharityWatch's complete rating of Boys Town can be viewed here.
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