For the third time since I became New To Seattle, United Way of King County recently released yearly results claiming absolutely phenomenal financial efficiencies. And for the third time, I’m here to tell you the agency–the nation’s largest United Way unit by donations–has gilded the lily by employing convoluted, creative accounting to make that declaration.
To be clear, I mean gilded the lily exactly the same way Shakespeare meant it when he coined the sentiment in his famous, four-century-old play, King John. “To gild refined gold, to paint the lily … is wasteful and ridiculous excess,” a character says. In other words, UWKC unnecessarily adorned something already pretty.
In its financial statement for the year ending June 30, 2013, UWKC calculated what amounts to its charitable commitment ratio–the percent of total expenses spent on the charitable mission as opposed to management, fundraising and certain other overhead–as 98%. Looking at exactly the same data but not competing in the tough world of nonprofit fundraising, I figured 91%.
The reason this is lily-gilding is that 91% is a very respectable charitable commitment ratio. The Better Business Bureau Wise Giving Alliance says anything at or above 65% is okay. The average last year for all 1,300 United Way units was 86%. So that means UWKC claimed it had only one-seventh the overhead of all the other United Way units, which pretty much operate in the same workplace-deduction fashion.
Really? Maybe a little too good to be true?
Sit back and let me explain hothouse accounting, Seattle style. Continue reading