In a highly critical article questioning the categorization of the Spirit Awards as a charitable event, published on the front page of the Los Angeles Times on the morning of Film Independent‘s annual awards show, the paper reports that a nonprofit watchdog group gave FIND its lowest rating (a zero) because only slightly more than half of its budget goes to events benefitting members. After being contacted by The LA Times, the paper’s Paul Pringle reports that FIND re-classified its $1.3 million Spirit Awards and $2 million Los Angeles Film Festival (according to 2005 numbers) as charitable services to boost the program-spending ratio to about 75% when ($1.5 million went to workshops and services in 2005, according to the LA Times which said that FIND had a $6.3 million budget in ’05).
The piece, which also notes budgets and ratios for other non-profits like Sundance Institute, American Cinematheque, and AFI, additional cited FIND head Dawn Hudson‘s salary as high, as well. “There’s hardly anything we do that is not a service,” Hudson told the LA Times; the paper also received statements from FIND lawyers and its board president Vondie Curtis Hall.
Barring unusual circumstances, a well-run charity spends at least two-thirds of its budget on programs, say Charity Navigator, the American Institute of Philanthropy and the Better Business Bureau. When program spending falls below 65% or so, the raters assign charities poor grades as a heads-up to donors. The IRS requires no set percentage for program spending, although if a charity’s numbers remain low from year to year, it risks a government audit – and, in extreme cases, loss of its tax exemption.
“It doesn’t look good,” (Daniel) Borochoff, the American Institute of Philanthropy president, said of Film Independent’s spending priorities” According to the Times article, “Film Independent says the reported decline in program spending actually reflected new accounting methods, not service cuts.”