This document shows a typical reporting tactic that the vast majority of NGOs use; not just Red Cross. Admin (or "overhead") expenses are allocated to various functional areas such as Sanitation, Shelter, etc. based on some (hopefully standardized) methodology. It's used for M&E (Monitoring & Evaluation) purposes which abstracts financial data for use in calculating the social return on programs. The thing about this data is that there's no standard framework they are required to use to produce these numbers. They could allocate their admin/overhead down to zero if they wanted to (it looks like that's what was done here). So... incorrect? Technically no. Misleading? You betcha. That's good NGO marketing!
They couldn't report this stuff to the IRS, as GAAP accounting principles are required for actual regulatory bodies (duh). That data exists, of course, but as you've pointed out, they have no legal obligation to comply with requests for such data.
Source: I'm a non-profit consultant accounting, systems, and management consultant.
rockin_hokie352 karma
This document shows a typical reporting tactic that the vast majority of NGOs use; not just Red Cross. Admin (or "overhead") expenses are allocated to various functional areas such as Sanitation, Shelter, etc. based on some (hopefully standardized) methodology. It's used for M&E (Monitoring & Evaluation) purposes which abstracts financial data for use in calculating the social return on programs. The thing about this data is that there's no standard framework they are required to use to produce these numbers. They could allocate their admin/overhead down to zero if they wanted to (it looks like that's what was done here). So... incorrect? Technically no. Misleading? You betcha. That's good NGO marketing!
They couldn't report this stuff to the IRS, as GAAP accounting principles are required for actual regulatory bodies (duh). That data exists, of course, but as you've pointed out, they have no legal obligation to comply with requests for such data.
Source: I'm a non-profit consultant accounting, systems, and management consultant.
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