Sunday, May 06, 2007

International Development Enterprises

I blogged about International Development Enterprises (IDE) a few weeks ago after hearing a snippet about them on public radio. Although IDE is a 501(c)(3) non-profit, the organization is not currently reviewed by Charity Navigator (CN), an organization that assesses the financial efficiency and strength of non-profits. Although I have had some success in the past at estimating likely CN ratings, I wish to provide the disclaimer that I do not analyze non-profits for a living. My analysis is not guaranteed to match CN's analysis once they add IDE to their database. I also attest that I am not getting paid by anyone for my review; it's just my good-faith effort to do some due diligence on the organization before donating or promoting the organization to others.

Below are my calculations:

Organizational Efficiency
Program Expenses: 90.8%
Administrative Expenses: 9.1%
Fundraising Expenses: 0.1%
Fundraising Efficiency: $0.00

Organizational Capacity
Primary Revenue Growth: 21.6%
Program Expenses Growth: 25.8%
Working Capital Ratio (Years): 0.11

Primary Revenue: $6,803,355
Other Revenue: $343,275
Total Revenue: $7,146,630

Program Expenses: $6,605,397
Administrative Expenses: $663,149
Fundraising Expenses: $6,110
Total Functional Expenses: $7,274,656
Payments to Affiliates: $0
Excess (or Deficit) for the Year: $246,047
Net Assets: $797,391

Name: Paul Polak
Title: President
Compensation: $115,067
% of Expenses: 1.58%

Predicted Stars and Scores
Efficiency Rating: 4 Stars (39.1)
Capacity Rating: 4 Stars (25.0)
Overall Rating: 4 Stars (64.1)

Based on my calculations using International Development Associates' 2002-2005 Form 990s, I predict that IDE will be classified as a 4-Star charity once CN reviews them. To me it's clearly a legitimate, efficient, sustainable organization. Receiving a $13.4 million grant from the Bill & Melinda Gates Foundation further legitimizes the organization and gives it stronger financial footing to carry out its programs.

Financial efficiency and financial strength alone are not good reasons to donate to a charity. What is IDE's mission, and what has the organization accomplished? To answer these questions, I'll refer to IDE's web site:

Enabling Prosperity

Core Values
IDE is a different kind of non-profit organization. We are dedicated to ending poverty in the developing world not through handouts, but by helping poor farmers invest in their own success. Our core values are

  • We believe in the right of poor women and men to a secure livelihood
  • We believe that markets can be a powerful force for poverty reduction
  • We listen to and learn from the people we work with
  • We value innovation and entrepreneurship
  • We have confidence in our ability to make a significant difference

IDE and its partners are actively working to reach 30 million families (150 million people) and help them escape poverty by 2020 by facilitating an annual family income increase of at least $500.

5 Key Principles

  1. local ownership
  2. client participation
  3. rapid return on investment
  4. affordable cost
  5. market sustainability

2005 Funding by Region/Country (% of Total)
Bangladesh $649,718 (10.4%)
Cambodia $542,717 (8.7%)
China $82,583 (1.3%)
Nepal $1,735,860 (27.8%)
Other Asia $294,588 (4.7%)
Vietnam $412,608 (6.6%)
Zambia $1,037,059 (16.6%)
Zimbabwe $104,604 (1.7%)
Multi-country grants $757,014 (12.1%)
Other Africa $193,654 (3.1%)
Other $429,248 (6.9%)
Total $6,239,653 (100.0%)

The $6.2 million program expense total provided by IDE in its 2005 annual report is $0.4 million lower than the $6.6 million total on their Form 990. Looking into this expense, it appears that the Form 990 attributes compensation of officers and directors to program expense, though it appears their compensation was pulled out when calculating the $6.2 million included in IDE's 2005 annual report. I am uncertain how other non-profits code their expenses into one bucket versus another, and I'm equally uncertain how/whether Charity Navigator adjusts for such differences.

To date, it appears that approximately 200,000 households have been reached by IDE's projects, with an average annual income increase of over $150 on an average investment of about $65. I'm curious to learn more about their goal of facilitating an annual family income increase of at least $500.

Since IDE is based in Lakewood, Colorado, I will have an opportunity to meet with some of IDE's employees later this week. I look forward to learning more about their programs, their new CEO, and their future direction. I'm also interested to learn specifically what is meant by IDE's comment that Each dollar donated by an individual, corporation, or private foundation is leveraged by a factor of 10 by institutional donors.

I'll probably write more later in the week, or perhaps over the weekend.

1 comment: said...

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