Standard 12: Detailed Functional Breakdown of Expenses - Include in the financial statements a breakdown of expenses (e.g., salaries, travel, postage, etc.) that shows what portion of these expenses was allocated to program, fund raising, and administrative activities. If the charity has more than one major program category, the schedule should provide a breakdown for each category.
AOPA does not meet this Standard because, in the organization's 2011 financial statements, the detailed functional breakdown of expenses:
Standard 13: Accuracy of Expenses in Financial Statements - Accurately report the charity's expenses, including any joint cost allocations, in its financial statements. For example, audited or unaudited statements which inaccurately claim zero fund raising expenses or otherwise understate the amount a charity spends on fund raising, and/or overstate the amount it spends on programs will not meet this standard.
AOPA does not meet this Standard because, in the Alliance's opinion, the audited financial statements for 2011 do not provide an accurate presentation of AOPA's fund raising and program expenses.
AOPA provided a copy of its audited financial statements for 2011, which included an auditor's opinion that the statements were prepared in accordance with Generally Accepted Accounting Principles (GAAP). According to the audited financial statements, AOPA incurred joint costs of $3,028,000 for informational materials and activities that include fund raising appeals. Of this amount, $2,153,000 was allocated to program service expenses and $875,000 was allocated to fund raising expenses.
Based on an evaluation of sample AOPA appeals, the BBB Wise Giving Alliance disagrees with the allocation of $2,153,000 of appeals to the program service category. The Alliance is of the opinion that AOPA's joint cost allocation does not follow AICPA Statement of Position 98-2, which requires, in part, that all allocated appeals must include a call to action other than donating to the charity. After reviewing appeals provided by AOPA, the Alliance found that several of the joint cost allocated appeals did not include such calls to action.
Depending on how one recognizes AOPA's appeal expenses, its fund raising costs could be higher than the 14% of related contributions that were reported and the program service costs could be lower than the 82% reported by AOPA. Since the Alliance disagrees with AOPA's allocations, we are unable to determine whether the organization meets Standards 8 and 9, which address fund raising and program expenses.
Year, State Incorporated: 2007, Maryland
Affiliates: Aircraft Owners & Pilots Association (AOPA), AOPA Insurance Agency, AOPA Service Corporation, AOPA Membership Publications
Stated Purpose: "to improve aviation safety through the Air Safety Institute, preserve community airports, and encourage learning to fly for career and personal benefit -- all in the interest of ensuring the future of general aviation in America."
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
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,
This report is not to be used for fund raising or promotional purposes.
©2012 BBB Wise Giving Alliance
Organizations shall have a board of directors that provides adequate oversight of the charity's operations and its staff. Indication of adequate oversight includes, but is not limited to, regularly scheduled appraisals of the CEO's performance, evidence of disbursement controls such as board approval of the budget, fund raising practices, establishment of a conflict of interest policy, and establishment of accounting procedures sufficient to safeguard charity finances.
The organization meets this standard.
Soliciting organizations shall have a board of directors with a minimum of five voting members.
An organization shall have a minimum of three evenly spaced meetings per year of the full governing body with a majority in attendance, with face-to-face participation. A conference call of the full board can substitute for one of the three meetings of the governing body. For all meetings, alternative modes of participation are acceptable for those with physical disabilities.
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.
No transaction(s) in which any board or staff members have material conflicting interests with the charity resulting from any relationship or business affiliation. Factors that will be considered when concluding whether or not a related party transaction constitutes a conflict of interest and if such a conflict is material, include, but are not limited to: any arm's length procedures established by the charity; the size of the transaction relative to like expenses of the charity; whether the interested party participated in the board vote on the transaction; if competitive bids were sought and whether the transaction is one-time, recurring or ongoing.
Have a board policy of assessing, no less than every two years, the organization's performance and effectiveness and of determining future actions required to achieve its mission.
Submit to the organization's governing body, for its approval, a written report that outlines the results of the aforementioned performance and effectiveness assessment and recommendations for future actions.
Spend at least 65% of its total expenses on program activities.
Spending should be no more than 35% of related contributions on fund raising. Related contributions include donations, legacies, and other gifts received as a result of fund raising efforts.
Avoid accumulating funds that could be used for current program activities. To meet this standard, the charity's unrestricted net assets available for use should not be more than three times the size of the past year's expenses or three times the size of the current year's budget, whichever is higher.
Make available to all, on request, complete annual financial statements prepared in accordance with generally accepted accounting principles. When total annual gross income exceeds $500,000, these statements should be audited in accordance with generally accepted auditing standards. For charities whose annual gross income is less than $500,000, a review by a certified public accountant is sufficient to meet this standard. For charities whose annual gross income is less than $250,000, an internally produced, complete financial statement is sufficient to meet this standard.
Include in the financial statements a breakdown of expenses (e.g., salaries, travel, postage, etc.) that shows what portion of these expenses was allocated to program, fund raising, and administrative activities. If the charity has more than one major program category, the schedule should provide a breakdown for each category.
Accurately report the charity's expenses, including any joint cost allocations, in its financial statements. For example, audited or unaudited statements which inaccurately claim zero fund raising expenses or otherwise understate the amount a charity spends on fund raising, and/or overstate the amount it spends on programs will not meet this standard.
Have a board-approved annual budget for its current fiscal year, outlining projected expenses for major program activities, fund raising, and administration.
Have solicitations and informational materials, distributed by any means, that are accurate, truthful and not misleading, both in whole and in part. Appeals that omit a clear description of program(s) for which contributions are sought will not meet this standard. A charity should also be able to substantiate that the timing and nature of its expenditures are in accordance with what is stated, expressed, or implied in the charity's solicitations.
Have an annual report available to all, on request, that includes: (a) the organization's mission statement, (b) a summary of the past year's program service accomplishments, (c) a roster of the officers and members of the board of directors, (d) financial information that includes (i) total income in the past fiscal year, (ii) expenses in the same program, fund raising and administrative categories as in the financial statements, and (iii) ending net assets.
Include on any charity websites that solicit contributions, the same information that is recommended for annual reports, as well as the mailing address of the charity and electronic access to its most recent IRS Form 990.
Clearly disclose how the charity benefits from the sale of products or services (i.e., cause-related marketing) that state or imply that a charity will benefit from a consumer sale or transaction. Such promotions should disclose, at the point of solicitation: (a) the actual or anticipated portion of the purchase price that will benefit the charity (e.g., 5 cents will be contributed to abc charity for every xyz company product sold), (b) the duration of the campaign (e.g., the month of October), (c) any maximum or guaranteed minimum contribution amount (e.g., up to a maximum of $200,000).