Vietnam Veterans of America's 'Recycling' Program, Debunked!
Vietnam Veterans of America (VVA) reports reasonable overhead and program spending in its annual financial documents, but a closer analysis by CharityWatch reveals a different picture of how efficiently this charity operates.
Vietnam Veterans of America reported spending 69% of its expenses on programs in fiscal 2017. CharityWatch's analysis of VVA's tax form and audited financial statements for that year shows the charity spent only 21% of its expenses on programs.
Why the difference?
In short, in its audit VVA refers to the costs associated with collecting "discarded household items and automobiles from the community" to be a "Recycling Program." It subtracts these costs from the revenue it generates from selling these donated items to "contracted private companies." Therefore, these costs do not show up in VVA's reported fundraising and total expenses. A donor who takes the charity's reported operating expenses at face value would think VVA is operating more efficiently, and spending a higher portion of its budget on programs, than it actually is.
CharityWatch disagrees with VVA's reporting. The expenses a charity incurs to raise donations, whether the donations are in the form of cash or non-cash items like donated household goods, are fundraising expenses and should be reported as such. In fiscal 2017, VVA reported spending approximately $18.8 million on "solicitation costs for generating the items collected and sales costs for selling the items," according to its audit of the same year. For this reason, CharityWatch adds this amount to the charity's reported fundraising expenses so that all of its solicitation costs are reflected in its rating.
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