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Resource ID: #25901
Subject: Nonprofits
Source: Chronicle of Philanthropy (Washington
Affiliation: 
Date: Nov. 29, 2012; Dec. 10, 2012

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Description

The overvaluation of non-cash donations such as medicine, food, and medical supplies can often lead to charities inflating revenues and appearing to be spending more on their programs than on administrative expenses such as salaries and benefits. Donors giving to a good cause are largely unaware of such overvaluations, especially when a charity's claim of having "delivered $450 million worth of food and medicine" is the type of success that has lured their donation in the first place. Often, however, that claim of $450 million "worth" of goods is a very generous estimate based on valuations that can be difficult to disprove. The Chronicle of Philanthropy publishes a list of the nation's top 400 charities each year and decided to take a closer look at nonprofits whose revenues are predominantly comprised of such non-cash donations, called "gifts in kind," that regulators are beginning to take a closer look at because of how easily they can be overvalued. We had hoped to find a story that would highlight this element of revenue reporting in order to inform donors, alert charities, and put regulators on notice since enforcement is so lax in this particular area. Our reporting led to a charity subtracting $250 million of revenues from its books and dismissing the consultant it had hired specifically to secure non-cash donations.

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