Friends of AKIM USA

MISSION:
Friends of AKIM USA (FAU), www.akimusa.org provides funding
for AKIM Israel. AKIM is an acronym for the Hebrew words
which, translated, means Association for the Habilitation of the
Mentally Handicapped in Israel. AKIM, founded over 54 years
ago, is the largest organization in Israel caring for mentally
handicapped, Down Syndrome and developmentally disabled
children and adults. Over 30,000 mentally handicapped and
120,000 members of their families benefit from these services.
AKIM cares for all Israelis, including Christians and Moslems in
need of AKIM services. AKIM's early intervention and follow
through eases the burden for families, providing real hope for the
future for mentally handicapped infants and children.

FINANCIAL EVALUATION:
According to Charity Navigator
(http://www.charitynavigator.org/),
America’s leading charity evaluator, FAU has an overall
rating of one star (four stars is the highest rating.)
Charity Navigator provides the following financial
breakdown of FAU based on 990 tax returns through
2006:
Overall Rating: One star *
Organizational Efficiency:
Efficiency Rating: One star *
Program Expenses: 67.2
Aministrative Expenses: 16.7%
Fundraising Expenses: 15.9%
Fundraising Efficiency: $0.13
(FAU spends $0.13 to raise $1.)

Organizational Capacity:
Capacity Rating: One star *
Primary Revenue Growth: -12.8%
Program Expenses Growth: -13.0%
Working Capital Ratio (years): 1.47
(FAU can sustain itself for 1.47 years
without generating new revenue.)
Organizational capacity refers to an organization’s
ability to sustain itself over time. Charities that exhibit
consistent revenue and expenses growth are more
likely to sustain their programs and services over the
long haul.

Compensation for its Executive Director, James Knee, was
$51,923 which represents 9.4% of expenses. For comparison
purposes, compensation for the President of the American Jewish
World Service, Ruth Messinger, was $191,000 which represents
0.79% of expenses.

As of fiscal year 2006, FAU had net assets of $832,665. FAU had
investments of publicly traded securities of $0 and cash non-interest
bearing investments of $251,398 and savings and temporary cash
investments of $0. It had pledges receivable of $521,596. FAU had
fixed assets of land, buildings and equipment less accumulated
depreciation of $3,976. In fiscal year 2006, FAU operated with an
excess of $97,794. It was able to award a grant of $338,100 to AKIM
Israel.

As of fiscal year 2007, FAU had net assets of $510,952. FAU had
investments of publicly traded securities of $0 and cash non-interest
bearing investments of $197,492 and savings and temporary cash
investments of $0. It had pledges receivable of $251,596. FAU had
fixed assets of land, buildings and equipment less accumulated
depreciation of $2,291. In 2007, FAU operated at a deficit of $321,713. It was able to award a grant of $413,150 to AKIM Israel.



DISCUSSION:
1) As of fiscal year 2007, FAU had 37% of its total assets in liquid
cash investments. This is less than what FAU needs for one year’s administrative and fundraising expenses. 48% of its total assets were
in the form of pledges receivable with no allowance for doubtful
accounts. In the present economic environment, FAU will not be able
to count on these pledges, thus, FAU will have difficulty surviving the
present economic downturn.
2) In 2007, FAU operated at a deficit of $321,713. In spite of this
deficit, in 2007 FAU actually increased its support of AKIM Israel.
Continuing this support may be difficult in the current economic
downturn. FAU will have much difficulty realizing its commitment
to AKIM Israel. It cannot continue to function at a deficit.
3) ANY had no exposure to Madoff investments.
4) FAU’s mission statement says that it helps over 30,000 “mentally
handicapped” persons are benefiting from AKIM Israel. In fiscal year,
FAU gave $413,150 to AKIM Israel. This works out to a little less
than $15 per person. It is misleading for FAU to say that it is helping
the “mentally handicapped.”

RECOMMENDATIONS:
The recent financial turmoil, caused by the Wall Street and Madoff
scandals, has also affected the relationship between donor and
non-profit. The turmoil has caused donors to become uncertain and
more selective in giving to non-profits. Non-profits that are
transparent about their finances will regain the lost trust of its
donors sooner than those non-profits that are not transparent about
their finances. In order to reach out to more selective donors, FAU
should be more transparent about its finances.
FAU should provide the following information on its web site:
1) It should provide its three most recently filed tax returns.
2) Since FAU has done a superb job in keeping most of its assets in
cash, it was probably able to avoid taking a big hit in its total assets.
Accordingly, FAU should provide its investment philosophy and
a breakdown of its investments on a semi-annual basis.
3) It should provide information about its exposure to Madoff
investments on the homepage of website, especially since it had
NO exposure to Madoff.
4) FAU must update its website. The last news event on its website
was an event held in July, 2007.
5) Donors who want their giving to help the mentally challenged
of Israel should consider giving their money to Ezer Mizion.
Ezer Mizion helps the Israel’s sick and disabled and has received
an overall four star rating from Charity Navigator. Such a
donation would be a more efficient and effective use of donors’
giving dollars.

Next Week's Blog: Jewish National Fund