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Web site ranks charities on finances

Charities are struggling to raise funds as corporations and consumers alike guard their wallets in tough economic times.

Now they've got a new challenge: a Web site that ranks nonprofit groups' financial performance.

Charitynavigator.org reviews Form 990s filed with the Internal Revenue Service by about 1,750 nonprofits nationwide. Among the data analyzed: how much a nonprofit spends to raise money, and how much of the funds raised go for programming versus administrative costs, such as executive pay.

Ten nonprofit groups from the Tampa Bay area have been reviewed by Charity Navigator. While two-thirds of the national database earned a three- or four-star rating, reflecting good or exceptional performance, only half of the local group earned those ratings.

Two Tampa Bay area organizations rated two stars, indicating a need for improvement; two earned a single star and one, Florida West Coast Broadcasting, which operates WEDU, was rated "exceptionally poor." Only 1.3 percent of charities nationwide received that rating. (See chart.)

Kyle Waide, deputy director of a Web site that rates nonprofit group's financial performance, said his organization's efforts are well-intentioned.

"We're about celebrating the work of charities and helping donors make more informed decisions," Waide said.

But Waide may have a hard time convincing some non-profit executives of his group's motives.

"I applaud their efforts, but I don't think comparing this financial data really paints an accurate picture," said Joel Momberg, executive vice president of All Childrens Foundation in St. Petersburg, which received just a single star, indicating poor performance, under Charity Navigator's system. "It doesn't do anybody justice."

Momberg said his organization, which raises money for All Childrens Hospital, fared poorly under the Web site's rating system because it doesn't spend all its money immediately.

"Just because you don't spend your funds within a year or two doesn't mean you're not a good steward," Momberg said. "We spend money when it's needed. And it's all directed toward the kids."

Charity Navigator's Waide said his group's analysis is intended only as a starting point for potential donors.

"We believe givers should not use our ratings as the sole piece of information about a charity," he said. "Intelligent giving involves asking multiple questions so we encourage givers to contact the charity to find out more about what it does and how well it's achieved its goals."

Charity Navigator was started in April with a $1.5-million grant from John P. Dugan, the retired founder of a drug marketing company. He saw the need for an independent analysis of nonprofits' finances. The group's executive director, Trent Stamp, worked for Congress and was a senior executive with a large non-profit organization. Charity Navigator, based in Mahwah, N.J., is funded by private donations and is seeking support from individuals, corporations and foundations, Waide said.

"We'll never charge charities to be listed on the site," he said. "And we'll never charge users for accessing the information."

Waide said Charity Navigator's initial database was intended as a cross-section of the nation's largest charities with a sampling from each of nine categories. "If we had only gone by size, we would have only universities and no environmental organizations," he said. "We wanted our base to be as rich as possible."

To deflect criticism that Charity Navigator unfairly compares different types of charities, each charity is also compared with peers in the same category. WEDU, for instance, is compared with Kentucky Educational Television Foundation, which received two stars based on the same criteria.

Still, Heather Mudrick, spokeswoman for the Tampa public television group, doesn't think Charity Navigator's rating is fair.

"WEDU is a community-owned station," Mudrick said. "We don't receive any assistance from a university system or school board as many other stations do." WEDU receives about half its support from the community, 30 percent from corporations and 20 percent from federal and state grants, she said.

Mudrick also said the station's latest financial statements were skewed by the fact that WEDU recently launched a capital campaign to raise $20-million to convert to digital television.

"Starting a capital campaign creates a big shock in a budget," Mudrick said, referring to the cost of hiring staff and paying grant writers to raise major funds. "Next year those costs won't be as visible."

Several local non-profit executives said special fund-raising campaigns created temporary blips, both positive and negative, in their financial reports. At the YMCA of St. Petersburg, which rated two stars, president and chief executive Doug Lindner said a three-year capital campaign ended in 2001, the year analyzed by Charity Navigator.

"We didn't raise nearly as much as in the previous two years, but our ongoing expense was still large," said Lindner, whose group opened a new facility last year. "And one-third of those fundraising expenses was real estate fees for the purchase of our land and interest payment on our construction loan."

On the flip side, Dan Gura, vice president of development at the University of Tampa, would love to gloat about his institution's four-star rating by Charity Navigator. But he admits it helps that UT is nearing the end of a major capital campaign that has raised nearly $72-million.

"Bringing in large gifts will often make the cost of fundraising more reasonable," he said of his office's record of spending just 15 cents to raise $1. "Though even prior to this campaign, we've pretty consistently kept our cost of fundraising at that level."

Karleen Kos of Tampa's Metropolitan Ministries, which relies mainly on community support to underwrite its $8-million budget, appreciates the University of Tampa's strong financial performance but thinks they're on a different playing field.

"They're a great school with a nice endowment and tuition-paying students," she said. "But right now I've got 9,400 families coming at the holidays for help. And unless a similar number of families show up carrying turkeys and toys, there's no way we're going to be able to meet those needs."

Referring to her group's two-star rating, Kos said Metropolitan Ministries faces a constant challenge between saving for the future and meeting present needs.

"We're trying all the time to find that fine line between treating the suffering before our noses and being fiscally prudent," she said. "It's a tough line to walk."

_ Kris Hundley can be reached at hundleysptimes.com or (727) 892-2996.

Nonprofit rankings

Tampa Bay area nonprofit organizations ranked by Charity Navigator based on their IRS Form 990s. Four stars is the highest rating:

Florida West Coast Public Broadcasting (WEDU) -- 0 stars

Florida Aquarium -- 1 star

All Childrens Hospital Foundation -- 1 star

Metropolitan Ministries -- 2 stars

YMCA of Greater St. Petersburg -- 2 stars

Community Foundation of Tampa Bay -- 3 stars

Humane Society of North Pinellas -- 3 stars

Lowry Park Zoological Society of Tampa Inc. -- 3 stars

Lowry Park Zoo Endowment Foundation Inc. -- 3 stars

University of Tampa -- 4 stars

Source: www.charitynavigator.org

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