This story can’t be allowed to pass uncommented upon. Or at least, I feel the need to comment more extensively than did Thomas Cott when he tweeted this link.
In a case of damned if you have too much overhead and damned if you don’t have enough, ALS Association is in a panic about their rating as an effective charity due to the windfall they received thanks to the ice bucket challenges.
Since they didn’t expect such a surge in donations, they don’t have a plan formulated to use it. As a result, they are in danger of having their rating fall from a B+ to an F.
“You can get in trouble for having too much money in the bank,” said Daniel Borochoff, founder and president of Chicago-based CharityWatch, part of the American Institute of Philanthropy. “We want to see that there is a plan for spending down this money.”
[…]
Borochoff said having so much cash and no plan for what to do with that money could lead to an automatic F. Newhouse said those plans are in the works, which I ‘ve written about here in a separate post.
Concern over a potential downgrade lead ALS Association CEO Barbara Newhouse to take a peremptory step of writing to three rating agencies asking them not to penalize the association.
So let me get this straight. A commercial business makes five times their normal annual income and they are celebrated for it. Even if someone takes a close look at how this amazing feat was accomplished and sees something fishy, it is often difficult to get regulators, who wield legal authority, to take effective action. (Not to mention the business can sit on the cash as long as they want.)
However, a charity experiencing unprecedented largess starts to react with panic that the judgment of unofficial entities may result in bad will for them. This despite the fact that the process by which this funding is acquired is transparent, public and clearly unexpected.
The one glimmer of hope is that two of the three rating agencies she sent letters to, Guide Star and Charity Navigator, were signatories to the letter sent out last year urging donors not to use overhead ratio as a prime criteria for giving.
Hopefully there won’t be any problems for ALS Association as they consider their next move.
Otherwise, we may see spiteful people leveling the curse of prosperity in this post title.