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Holiday donations? Check your charity's rating first

Tuesday, December 18, 2012

It's a holiday tradition to give money for a worthy cause like a charity close to your heart. But many charities with good intentions are not always good with their own finances. You should check out a charity to ensure it's spending your donations wisely.

The Food Bank of Southern California is the largest independent food bank in the country. Every day it's bustling with volunteers loading up trucks stocked with food that will be distributed to nonprofit charities across Los Angeles County. The Food Bank of Southern California gives away 40 million pounds of fresh and healthy food every year.

It's a worthwhile cause that also gets the highest marks from Charity Navigator, a website that ranks thousands of charities from zero to 4 stars on how efficiently they're run and how effectively they spend donations.

The Food Bank gets 4 stars on the site and is lauded for putting more than 99 percent of the money raised right back into its programs and services.

"We do not want to take what we want, we want to take what we need, and that's why we're right now fiscally healthy, and a lot of nonprofits and food banks are either cutting back services or closing their doors," said John Knapp, Food Bank of Southern California president.

Charity Navigator says many charities spend the majority of the money raised on administrative costs, not on the programs they run. And few donors actually research where the money is really going.

"The problem is that more often than not, they don't then take the next step and do a little research and use their heads," said Ken Berger, president and CEO of Charity Navigator.

Numerous charities get high marks from Charity Navigator.

The Richard Nixon Foundation, which supports programs and exhibits at the Nixon Library and Museum in Yorba Linda, gets just 1 star from Charity Navigator, despite having $56 million in reserves.

"Their very high administrative expenses, so their leadership and the back office is very high, and they've been getting less and less revenue at the same time," said Berger.

Charity Navigator says the Nixon Foundation ran at a deficit last year and is spending more money than it takes in.

But the Nixon Foundation says the rating system is flawed and outdated because it doesn't represent the Foundation's split with the now-unrelated Washington, D.C.-based Nixon Center.

The Nixon Foundation's auditor and tax preparer issued a statement: "This comparison skews the results and public policy negatively due to the complete separation of the two entities. ... The Charity Navigator rating system isn't equipped to handle the complexities of a non-profit separation, which apparently isn't very common."

The Ronald Reagan Presidential Foundation , which supports the Presidential Library and Museum in Simi Valley, gets a 4-star rating from Charity Navigator.

But the Nixon Foundation's auditor says the two libraries use different accounting measures, which helps the Reagan Library score a higher rating.

But other charities like the CHOC Children's Foundation, which provides resources for Children's Hospital of Orange County, say Charity Navigator is a useful tool not only for donors, but for CHOC and other nonprofit organizations.

"We benchmark ourselves against others that are on Charity Navigator so that we can continue to be current, we can continue to look at ourselves and we can continue to improve our scores," said Kerri Ruppert Schiller, CHOC chief financial officer.

Children's Hospital of Orange County gets 4 stars from Charity Navigator, which says the nonprofit has low overhead and robust growth.

Along with Charity Navigator, GuideStar is the other major website that analyzes data from nonprofits.

(Copyright ©2014 KABC-TV/DT. All Rights Reserved.)

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