For more than 15 years CharityWatch had assigned Red Cloud Indian School a "?" rating. The reason? Due to its religious exemption the charity is not required to file an annual IRS tax Form 990 with the IRS, or submit audited financial statements and other reports to charity regulators in the states in which it solicits donations.
Last year CharityWatch asked our readers to reach out to charities with "?" ratings due to their religious exemptions and ask them for copies of their audited financial statements, explaining that if they were to forward these statements to CharityWatch we may be able to finally rate these organizations. This year we received from our readers 4 copies of Red Cloud Indian School's audit and were finally able to complete an analysis and assign this charity a letter grade rating for the very first time.
CharityWatch's Rating of Red Cloud Indian School
Red Cloud Indian School receives a "B-" rating from CharityWatch based on our analysis of its audited financial statements for its fiscal year-ended 6/30/2020. In fiscal 2020 the charity raised about $15 million in cash contributions and spent about $14 million. CharityWatch's analysis determined that Red Cloud Indian School spent 62% of its cash expenses on programs. It cost the charity $23 to raise each $100 in cash support that fiscal year.
Other American Indian Charities
While Red Cloud Indian School does not meet CharityWatch's financial efficiency, governance, or transparency benchmarks necessary to achieve Top-Rated status, when compared to some other American Indian charities we have analyzed, it is reasonably financially efficient. For example, CharityWatch has been rating Partnership With Native Americans (formerly National Relief Charities) for about 20 years and has assigned the charity only "D" and "F" ratings on our "A+" to "F" scale since that time. Its current rating (based on its 2018 fiscal year) is "F" for spending only 30% of its cash budget on programs and because the charity spends a whopping $69 to raise each $100 of cash support.
While Partnership With Native Americans is only one charity, it has solicited donations using at least fourteen other names. Donors who may have thought they were supporting several different American Indian charities may be disappointed to learn that all of their donations actually went to one "F" rated charity. These names include:
American Indian Education Foundation
American Indian Education Fund
American Indian Relief Council
Council of Indian Nations
National Relief Charities
Native American Aid
Navajo Relief Fund
Northern Plains Reservation Aid
Rescue Operations for Animals of the Reservation
Reservation Animal Rescue
Sioux Nation Relief Fund
Southwest Indian Relief Council
Southwest Reservation Aid
Red Cloud Indian School's "Church" Status
CharityWatch periodically requests financial information from religious organizations (appearing on our A to Z list) that solicit the public for contributions. When a religious organization declines to provide requested financial documents, and these documents are not publicly available from third-party sources, CharityWatch is unable to provide complete information and assigns a "?" rating. Requests for information sent from CharityWatch directly to Red Cloud Indian School on 7/28/2021, 9/26/2020, 2/9/2018, 1/27/2017, 6/2/2015, 2/7/2014, and in many prior years dating from 1999 were not answered.
In July of 2021, a CharityWatch member mailed to us a signed copy of Red Cloud Indian School's complete audited financial statements for its fiscal year ended June 30, 2020. We analyzed the information reported in this document, and thanks to this CharityWatch member, we are now able to offer a letter grade rating for Red Cloud Indian School. Unfortunately, because audited financial statements do not include complete breakouts of individual salaries and governance data, and because Red Cloud Indian School has not responded to our requests for information, CharityWatch is unable to provide complete salary and governance data for this organization as we do for charities without "church" status.
Though Red Cloud Indian School is not required to publicly disclose this information to the IRS, it could choose to disclose it to CharityWatch so that we can publish it for interested donors. The charity has chosen to not respond to our requests. CharityWatch encourages donors to reach out to Red Cloud Indian School to ask the charity to disclose to CharityWatch information about its governance practices and how much it pays its executive staff so that we can publish this data for interested members of the public.
Red Cloud Indian School Received Paycheck Protection Program (PPP) Funds
Charities with "church" status have the best of both worlds. Churches, synagogues, mosques, and certain other types of religious organizations are not legally required to file annual reports with the IRS or state charity regulators, which allows them to avoid being rated by CharityWatch. Such groups often do not even have to notify the IRS when they form. They receive the same tax benefits as other charities, including tax-exempt status and the ability to accept tax-deductible contributions, with little to none of the reporting obligations or oversight. Donors wanting to know how such a charity spends its contributions, compensates its employees, or even who sits on the charity's board of directors may be at a loss if the organization does not want to open its records to outside scrutiny.
It is CharityWatch's position that this is wrong. While it makes sense for religious organizations to be shielded from significant government scrutiny of their religious practices, it is wrong to ask taxpayers to fund religious organizations with their tax dollars, and more specifically, to do so without requiring the religious charity to disclose its audited financial statements to the public so taxpayers can see how their money is being spent.
According to the Red Cloud Indian School audit of June 30, 2020 (Note 19, Refundable Advance):
"The Organization was granted a $1,000,000 loan under the Paycheck Protection Program (PPP) administered by the U.S. Small Business Administration (SBA) from a qualified lender. The loan is uncollateralized and is fully guaranteed by the SBA. The Organization may be eligible for loan forgiveness of up to 100% of the loan, upon meeting certain requirements. Because the Organization anticipates forgiveness, this is considered a conditional contribution and funds received in advance of meeting the conditions are recorded as refundable advances. Proceeds from the loan are eligible for forgiveness if they are used for certain payroll, rent, and utility expenses. In addition, other requirements regarding salary and employee levels must be maintained.
"For any portion of the loan not forgiven, repayment begins November 2020. Monthly payments of $56,277, including interest at 1 percent, would be required through April 2022."