Thursday, July 30, 2009

American Jewish Joint Distribution Committee

MISSION:“Since 1914, the American Jewish Joint Distribution Committee (JDC), www.jdc.org, has given global expression to the principle that all Jews are responsible for one another. Working today in over 70 countries, JDC acts on behalf of North America's Jewish communities and others to rescue Jews in danger, provide relief to those in distress, revitalize overseas Jewish communities, and help Israel overcome the social challenges of its most vulnerable citizens. JDC also provides non-sectarian emergency relief and long-term development assistance worldwide.” (Quote from Charity Navigator)

FINANCIAL EFFICIENCY EVALUATION:
According to Charity Navigator, (http://www.charitynavigator.org) America’s leading charity evaluator, JDC has an overall rating of four stars (four stars is the highest rating.) Charity Navigator provides the following breakdown of JDC based on 990 tax returns through fiscal year 2007:

Overall Rating ****
Organizational Efficiency: Program Expenses 92.2%
Administrative Expenses 6.4%
Fundraising Expenses 1.2%
Fundraising Efficiency $0.01
(JDC spends $0.01 to raise $1.)
Efficiency Rating ****

Organizational Capacity:
Program Revenue Growth 7.1%
Program Expenses Growth 7.2%
Working Capital Ratio (years) 1.53
(JDC can sustain itself for 1.53 years
without generating new revenue.)
Capacity Rating ****

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 its programs and services over the long haul.

Compensation for its Chief Executive Officer, Steven Schwager,
was $431,654 which was 0.17% of expenses. For purposes
of comparison, Ruth Messenger, the President of the
American Jewish World Service, was $218,625 which
was 0.76% of expenses. These are both extremely low
percentages for a nonprofit to pay its chief executive.

As of fiscal year 2007, JDC had net assets of $379,673,951
and total assets of $474,991,928. JDC had investments of
publicly traded securities of $337,787,541 (990 Tax return –
line 54a) and it had investments of other securities of $0 (line
54b). JDC had cash non- interest bearing investments of
$64,486,725 (line 45) and savings and temporary cash
investments of $11,482,486 (line 46.) It had pledges receivable
less allowance for doubtful accounts of $22,642,102 (line 48c.)
JDC had fixed assets of land, buildings and equipment less
accumulated depreciation of $24,292,621 (line 57c) and other
investments of $0 (line 56.)

According to this blog’s financial transparency rating system
of information provided by the nonprofit on its own website,
JDC has a transparency rating of 1 star (6 stars is the highest
Rating.) Of the following six items, JDC provided only its
Charity Navigator rating on its website:
1) The nonprofit’s Charity Navigator rating
2) A pie-chart breakdown of the nonprofit’s expenses
3) The nonprofits most recently filed 990 tax return
4) The nonprofit’s annual report
5) The nonprofit’s audited financial statement
6) The nonprofit’s investment philosophy

DISCUSSION:
As of fiscal year 2007, JDC was a highly financially
efficient nonprofit with high organizational capacity.
A large percentage of its assets, 71%, were in publicly traded
securities that have since taken a 30-40% hit from the Wall Street
meltdown. Another 5% of its assets were in pledges
receivable of which JDC discounts 21% for doubtful
accounts; this optimistic expectation will not be realized.
Though JDC had no direct exposure to Madoff investments,
the downturn on Wall Street will cause its donors to reduce their
support. Its excellent working capital ratio, of 1.53 years, will
help it limit the amount it will have to reduce its support other
nonprofits.

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,
JDC should be more transparent about its finances. JDC
should provide additional financial information on its web site.

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