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The Forbes 100 Top Charities for 2019 collectively received more than $51.5 billion in private donations in their most recent fiscal years. That’s up an impressive 4.9% from the year earlier and accounts for 12% of the estimated $427.7 billion received in contributions by all of the country’s one million-plus charities according to Giving USA.
The cutoff to make this, our 21st annual list, was private donations of $146 million, up $1 million from last year. That was the sum received in the fiscal year ending June 30, 2018, by Covenant House, the New York City-based agency providing shelter to homeless and runaway youths. (It returns to the list after an absence of some years.) The lone first-time-ever member of the list has a well-known name: Ronald McDonald House Charities. Ranked No. 98 with private contributions of $149 million, the Chicago-based nonprofit is best known for its houses which allow the families of children being treated at distant hospitals to stay together.
Despite a continuing slide in donations, United Way Worldwide was again the leader of the 100 by a wide margin. For its fiscal year ending in June 2019, United Way reported private contributions received of $3.30 billion, down 5.7% from a year earlier, and off 20% from its 2007 peak. Based in Alexandria, Va., United Way consists of more than 1,000 legally separate franchises that receive most of their donations from paycheck deductions authorized by workers. Each individual unit (or alternately, each worker) determines which charities ultimately get the money that passed through United Way. But the United Ways as a whole have been losing ground to single-purpose causes as well as donor-advised funds—charitable-giving vehicles (including three affiliated with Fidelity, Charles Schwab and Vanguard) that provide a tax efficient way for individuals to funnel money to individual charities. It’s also gotten new competition in the workplace from Benevity, a fintech upstart that expects to process $1.2 billion in employee giving worldwide for 2019.
No. 2 on the list remains Feeding America, the Chicago-based network of more than 200 food banks around the country. For the fiscal year ending June 30, 2018, it listed private contributions of $2.76 billion, a 3.8% increase over the previous year. Almost all of that was donated food, a form of “gift-in-kind.”
To review the full list of 100 charities, with detailed data on each, including financial efficiencies and highest compensated employees, click here.
Some 17 of the 100 charities on the Forbes list reported a total compensation for someone of more than $1 million. The average highest compensation—usually going to the top person—was $954,998, a 20% increase over last year’s list. By far the highest paid was Kenneth Davis at Mount Sinai Health Systems in New York, at $12,457,914. Next was Steven J. Corwin, New York-Presbyterian Hospital, $7,407,452; followed by Thomas M. Priselac, Cedars-Sinai Medical Center, Los Angeles, $4,326,820. (Total compensation may include benefits, deferred compensation and one-time bonuses, and can be for a different fiscal year than that on the list.)
As in the past, rankings on our list are determined by the amount of private contributions that came in during the latest fiscal period. It’s quantitative, not qualitative. So we don’t pass judgment on the merits of a charity, although in past years we occasionally have excluded a charity for accounting we considered totally beyond the pale. (More on regulatory actions involving members of this list is at the bottom of this story.)
Contributions we count can come from individuals, corporations, estates, federated campaigns and even other nonprofits. But our evaluations exclude government grants (that’s public, not private), revenue from sales or services (not a gift at all), and investment returns. Gifts can be in cash, stock, goods and even labor or services if the charities choose to include them in their statements (not all do).
A true contribution is made with charitable intent, with the donor receiving nothing back beyond the pleasure of supporting a meritorious cause. So we also don’t count as a donation membership dues, reckoning that the donor/member is getting something tangible back, such as reduced admission fees for a museum. All of these non-clean-donation receipts are included in other revenue and total revenue, which we list for each charity.
Since the purpose of our list is to canvas charities appealing to the general public, we exclude significant categories of nonprofits from consideration. These include: academic institutions (which focus on gifts from alumni), donor-advised funds (which don’t solicit), and the many religious entities that don’t furnish information publicly (obviously). Also excluded are nonprofits with very few direct donors (this includes almost every private foundation) and charities that receive most of their donations indirectly from community chests and such models.
Note well: Our list is based on private contributions, not total revenue. There are charities for which private gifts are just a small portion of total intake. Chicago-based YMCA of the USA, No. 9 on the list, received $1.07 billion in gifts in its most recent fiscal year but $6 billion in other revenue, mainly fees for its many health club facilities. The Washington, D.C.-based Lutheran Services in America, an umbrella group for hundreds of social service agencies and No. 16 on the list, reaped $810 million in gifts in the year ending June 30, 2018, but received a whopping $21.1 billion in other revenue, mostly fees for services.
For each of the charities on the list, Forbes calculates three financial efficiency ratios, also indicating the direction of change from the prior period. Here are the ratios, how we calculate them and what they mean:
CHARITABLE COMMITMENT This calculates how much of a charity’s total expense went directly to the charitable purpose (also known as program support or program expense), as opposed to management, certain overhead expenses and fundraising. The average this year is 87%, up from 86% last year. Charities that receive most of their donations as gift-in-kind do better here, because individual gifts are larger and involve little or no fundraising expense. Charity watchdogs such as the Better Business Bureau Wise Giving Alliance say charitable commitment should be no lower than 65%. None on this list is.
FUNDRAISING EFFICIENCY This shows the percent of private donations remaining after deducting the costs of getting them. The average for all 100 charities is 91%—unchanged from last year—meaning that it cost 9 cents to raise $1. But this is an average of many different kinds of charities using many different fundraising procedures. With fewer but larger donations and perhaps puffed-up valuations, some gift-in-kind charities look very efficient, with fundraising efficiencies of 100% (rounded) or very close. At the other end are charities employing expensive direct-mail and telephone solicitation. While the BBB considers 65% to be the bottom of respectability, at Forbes we draw the line at 70%. There is no nonprofit on this list below that mark.
DONOR DEPENDENCY This intriguing ratio calculates how badly a nonprofit needed contributions to break even. A ratio of 100% means revenues were the same as expenses. A ratio higher than 100% means the charity had more expenses than revenue. A negative ratio (below 0%) means the charity had an annual surplus greater than all private donations! (This is often a hospital or museum.) The average for the list is 66%; the typical charity was able to put away 34% of donations for the future. Last year’s ratio was 73%, meaning 27% of donations were banked. The difference was largely due to better investment returns. The donor dependency ratio is extremely sensitive to financial markets and for many charities varies wildly from year to year. For the other two ratios, the higher the ratio, the better, especially in year-to-year change. But what makes the donor dependency ratio interesting is that its significance depends on the aims of the donor. If a contributor is looking for a charity that desperately needs contributions and is likely to put them to work immediately, a rating above 100 might be considered good. On the other hand, if the patron wants a charity that can better stand on its own long term, a rating below 100 might be viewed as optimal. This ratio does identify some charities pleading for money that actually have substantial financial reserves or other kinds of revenue.
This leads us to our annual warning: Do not compare efficiency ratios for different kinds of charities. The ratios for a hospital or an animal rights group cannot be meaningfully compared with that of, say, a museum, a foreign aid provider, an environmental cause or a health research organization.
Financial efficiencies are hardly the end-all of charity analysis. But they are a place to start. And it’s possible to use the Forbes list to help evaluate just about any charity. Thinking of donating to a specific charity not on the list? Download the financials—audited financial statements and/or the IRS Form 990 for free from sources like from Guidestar, Foundation Center or ProPublica. Find several charities on the Forbes list in the same general line of work. Compare financial efficiencies. If the charity you’re eying has worst efficiencies, query it and ask it to explain why that is or why it thinks it does a better job. You might get a satisfactory answer—or not.
Still, financial efficiency ratios are important. The year 2019 saw an unusual level of regulatory activity against several charities on the list because of them. In September, the California Attorney General’s Office, which regulates charities operating or soliciting in the state, won cease and desist orders as well as penalties against three charities it said exaggerated certain financial efficiencies, as follows:
—Food for the Poor, a Coconut Creek, Fla.-based of foreign aid that is No. 13 on the list, with 2018 contributions of $929 million, was hit with a $1 million penalty for “deceptive acts or practices … that create a likelihood of confusion or misunderstanding” in its solicitations. The decision said that Food for the Poor’s solicitations for monetary gifts said it used 95% of the cash raised for charitable purposes when in fact less than 70% was used, the rest going to fundraising and administration. (In 2018 the nonprofit agreed to pay $300,000 to settle claims of financial efficiency exaggeration brought by the Michigan Attorney General’s Office.)
—Catholic Medical Mission Board, a New York City-based provider of foreign assistance that is No. 18 on the list with 2018 contributions of $727 million, was assessed a $409,575 penalty on the same grounds. That decision said CMMB’s requests for cash donations said it used as high as 98% of the cash raised for charitable purposes when the true number was less than 80%.
—MAP International, the Brunswick, Ga.-based foreign aid provider that is No. 27 on the list with most-recent-fiscal-year private contributions of $573 million, was penalized $80,600. The decision said that MAP’s solicitations for monetary gifts stated that it used 98% of the cash raised for charitable purposes when in fact only 75% was used, the rest going to fundraising and administration.
The charities dispute the allegations, asserting a First Amendment right to make their claims, and are planning to appeal in California courts.
In all three cases, the California administrative law judge hearing the matters rejected a separate claim by the AG’s office that the three charities had inflated the value of donated pharmaceuticals in violation of generally accepted accounting principles, or GAAP. The wild valuation of deworming medicines was an issue that Forbes highlighted eight years ago in a story that specifically mentioned MAP International.
During 2019, the California legislature—prominently citing the Forbes story in legislative proceedings—passed a bill at the request of the AG’s office that would have required more realistic valuation of donated medicines going overseas. But in October, at the behest of dozens of charities, Gov. Gavin Newsom vetoed the bill. While agreeing that “overvaluation is a problem,” Newsom in his veto message said a California-only accounting rule for national charities would provide “burdensome implementation challenges.”