BBB Wise Giving Report for
Operation Smile

BBB Wise Giving Report issued August 2011
BBB Wise Giving Report expires August 2013


Does not meet one or more standards
This charity does not meet one or more of the 20 standards for Charity Accountability. Find out more...


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Charity Contact Information

Name: Operation Smile
Address: 6435 Tidewater Drive
  Norfolk, VA 23509
Phone: 757-321-7645
888-677-6453
Web Address: www.operationsmile.org
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BBB Wise Giving Alliance Comments

Year, State Incorporated: 1987, Virginia
Affiliates: Operation Smile Foundation, and 11 chapters

Stated Purpose: "to advance developments and care in the areas of plastic, reconstructive and specialized surgery by such methods as the Directors of the Corporation shall from time to time deem feasible and appropriate."

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Evaluation Conclusions

               

Operation Smile (OS) does not meet the following Standard for Charity Accountability.

Standard 4: Compensated Board Members - Not more than one or 10% (whichever is greater) directly or indirectly compensated person(s) serving as voting member(s) of the board. Compensated members shall not serve as the board's chair or treasurer.

OS does not meet this Standard because:

  • Three members out of the 13 member board of directors (23%) are compensated either directly or indirectly.  The Chairman is indirectly compensated as the father of a staff member.  One board member is directly compensated as an employee, and another board member is indirectly compensated as the spouse of an employee.

In response to the Alliance's findings for Standard 4, OS states:

"The organization was founded 30 years ago by Dr. William Magee and his wife Kathy who could not turn away from the hundreds of thousands of children worldwide suffering from correctable facial deformities. Their children shared their passion for philanthropy and creating an impact on global healthcare, and they helped to expand the organization. One of the co-founders' children is now an employee of the organization, as she shares their same drive. In addition, two of Operation Smile's employees are related to a Board member, because they too share a family commitment to expand access to healthcare for impoverished populations. To avoid potential conflicts, none of the employees who are related to a Board member report to a related family member and they are located in a different physical location from their related family member. All of these individuals, as well as all of Operation Smile's employees and volunteers throughout the world, are dedicated to Operation Smile’s mission. In that regard, the Magees have a life-long appointment to the Board of Directors."
Operation Smile (OS) meets the remaining 19 Standards for Charity Accountability.
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Programs

               

OS is a not for profit health and welfare organization whose principal purpose is to perform reconstructive surgery on children around the world suffering from cleft lip, cleft palate and other facial deformities. In addition to contributing free medical treatment and improving the health and welfare of children, OS trains and educates local medical professionals in its partner countries and leaves behind equipment to lay the groundwork for long-term self-sufficiency. The organization also seeks to improve the quality of surgical care around the world. OS creates partnerships to research the cause of clefting, in order to eradicate clefting. The organization reports that it is educating students through its student programs initiatives.

For the fiscal year ended June 30, 2010, OS's program expenses were:

  
Medical missions 39,870,437
Education and sustainability 7,358,021
Total Program Expenses: $47,228,458
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Governance

               

Chief Executive : Dr. William P. Magee, Jr., Co-Founder and Chief Executive Officer
Compensation*:
 $328,133

Chair of the Board: William R. Fox
Chair's Profession / Business Affiliation: Chief Operations Officer, The Brambleton Group

Board Size: 13

Paid Staff Size: 143

*2010 compensation includes annual salary and, if applicable, benefit plans, expense accounts, and other allowances.
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Fund Raising

               

Method(s) Used:

Direct mail, telemarketing, special events, print advertisements, television, radio, grant proposals, Internet appeals, planned giving, cause-related marketing, and membership appeals.
Fund raising costs were 24% of related contributions. (Related contributions, which totaled $66,471,938, are donations received as a result of fund raising activities.)
OS incurred joint costs of $2,855,900 for informational materials and activities that included fund raising materials. Of those costs, $2,308,823 was allocated to fund raising expenses, $291,649 was allocated to administrative expenses, and $256,981 was allocated to program expenses.
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Tax Status

               

This organization is tax-exempt under section 501(c)(3) of the Internal Revenue Code. It is eligible to receive contributions deductible as charitable donations for federal income tax purposes.
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Financial

               

The following information is based on OS's audited financial statements, combined with affiliate, for the fiscal year ended June 30, 2010.

Source of Funds  
Contributions 33,557,812
Contributed program services 26,380,670
Gifts-in-kind 6,533,456
Program service revenue 476,362
Other income 7,386
Total Income $66,955,686


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Uses of Funds as a % of Total Expenses

Programs: 74%  Fund Raising: 24%  Administrative: 2% 

Total income   $66,955,686
  Program expenses $47,228,458
  Fund raising expenses 15,762,851
  Administrative expenses 1,565,424
 
Total expenses   $64,556,733
Income in Excess of Expenses   2,398,953
Beginning net assets   18,022,407
Ending net assets   20,421,360
Total liabilities   4,970,950
Total assets   $25,392,310

Note: According to OS's audited financial statements for the year ended June 30, 2010, the organization received in-kind contributions in the amount of $30,392,472 including medical services ($26,380,670) and mission supplies ($4,011,802).

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New Section

               

Number of complaints processed by the BBB in the last 36 months:  1

Phone list removal

The organization addressed the complaint issue brought to its attention: 1

The organization did not address the complaint issue brought to its attention: 0

(This complaint involved an individual seeking to have their name removed from the organization's phone list).

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An organization may change its practices at any time without notice. A copy of this report has been shared with the organization prior to publication. It is not intended to recommend or deprecate, and is furnished solely to assist you in exercising your own judgment. If the report is about a charity and states the charity meets or does not meet the BBB Standards for Charity Accountability, it reflects the results of an evaluation of information and materials provided voluntarily by the charity. The name Better Business Bureau is a registered service mark of the Council of Better Business Bureaus, Inc.

This report is not to be used for fund raising or promotional purposes.

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