Monday, September 21, 2009

American Friends Alyn Hospital

MISSION:
“American Friends of ALYN Hospital (AFAH), www.alynus.org
supports Israel's premiere rehabilitation center for physically
disabled children, adolescents and young adults. ALYN Hospital
combines expertise and love so that each patient and family can
meet the challenges of living with disabilities and achieve the
highest possible level of mobility and independence. ALYN
Hospital, established over 50 years ago, is one of the world's
leading specialists in the active and intensive rehabilitation
of children with a broad range of physical disabilities and is
the only facility of its kind in Israel. The Hospital currently
has 93 beds for hospitalized patients, 100 beds for day-care
treatment and specialized out patient clinics which receive over
10,000 patient visits a year.”

FINANCIAL EFFICIENCY EVALUATION:
According to Charity Navigator, (http://www.charitynavigator.org)
America’s leading charity evaluator, AFAH has an overall rating
of three stars (four stars is the highest rating.) Charity
Navigator provides the following breakdown of AFAH based on
990 tax returns through fiscal year 2006:

Overall Rating ***
Organizational Efficiency: Program Expenses 84.2%
Administrative Expenses 4.1%
Fundraising Expenses 11.5%
Fundraising Efficiency $0.13
(AFAH spends 0.13 to raise $1.)
Efficiency Rating ***

Organizational Capacity:
Primary Revenue Growth 17.0%
Program Expenses Growth 5.2%
Working Capital Ratio (years) 1.71
(AFAH can sustain itself for 1.71 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 Executive Director, Cathy Lanyard,
was $206,615 which was 5.85% of expenses. For purposes
of comparison, compensation for Ruth Messenger, the
President of the American Jewish World Service, was
$218,625 which was 0.76% of expenses.

As of fiscal year 2008, AFAH had net assets of $5,450,214
(down from 7,176,198 in 2007) and total assets of $5,508,989
(down from $7,219,210 in 2007.) AFAH had investments of
publicly traded securities of $3,524,025 (990 Tax return –
Part X: Balance sheet line 11) and it had investments of other
securities of $0 (line 12). AFAH had cash non- interest bearing
investments of $745,598 (line 1) and savings and temporary
cash investments of $0 (line 2.) It had pledges receivable
of $0 (line 3.) AFAH had fixed assets of land, buildings and
equipment less accumulated depreciation of $0 (line 10c) and
other investments of $0 (line 13.)

According to this blog’s financial transparency rating system
of information provided by the nonprofit on its own website,
AFAH has a transparency rating of 0 stars (6 stars is the highest
Rating.) Of the following six items, AFAH did not provide any
of this information 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 2006, AFAH was a financially
efficient nonprofit with high organizational capacity.
As of fiscal year 2008. large percentage of its assets,
64%, were in publicly traded securities; this explains
why its net assets took a hit of 24% reflecting the
meltdown on Wall Street. meltdown. Though AFAH 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 1.71 years,
will help i t limit the amount it will have to reduce its
support of the ALYN Hospital in Israel.


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

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