January 2011
Dear ACT Supporter,
The trust and confidence you place in our work to conserve the Amazon is extremely important to all of us at ACT. Your support - whether recent or longstanding - has enabled our staff and our indigenous partners to make great strides in Amazonian conservation by effectively and efficiently putting your hard-earned dollars toward projects with long-term impact. We understand that as a donor you are making an investment, and that we are entrusted to responsibly manage your contribution with complete transparency.
In the last week of December 2010, we were informed by the independent nonprofit evaluator Charity Navigator that they had completed their assessment of our 2009 financial statements and subsequently lowered our overall rating. We at ACT naturally are disappointed by this news, as it breaks a string of five consecutive years of obtaining Charity Navigator's highest rating.
Below, we will provide our explanation of this change. However, we wish to preface with the fact that in the first of Charity Navigator's two top-tier categories, Organizational Efficiency, ACT continued to rate quite highly. Moreover, applying Charity Navigator's calculations, over the past six years, ACT has averaged a superior rating of 36.92 out of 40 in the efficiency measure, which evaluates fundraising efficiency and percentage of income applied toward administrative expenses.
Why our overall rating fell
In 2008, as the economy was showing signs of a recession, ACT hit a high-water mark in fundraising with two seven-figure multi-year gifts: the Skoll Foundation recognized ACT with their Award for Social Entrepreneurship, and the Gordon & Betty Moore Foundation made a major grant to our work in the northeast Amazon. In accord with GAAP requirements, we reported these and all of our gifts in accrual accounting, booking the entire grants in 2008 even though large annual installments of the multi-year grants were scheduled for the following two years. Thus, significant sums received in 2009 were not reflected in the analyzed statements. To be sure, the accrual standard applies to all U.S. NGOs, but the impact on our rating is no less strong.
Then, in 2009, as was much the rule in the charitable sector as the global economic crisis set in, our revenue declined sharply as compared to that of the prior year. It is the contrast between the analyzed statement of annual revenue and the amount that we applied to our programs that accounts for the majority of our downgrade.
The Present and Future
Fortunately, ACT continues to be exceptionally resilient. We are pleased and proud that our programs in South America began to see an increase in the funds transmitted directly to our field offices, largely from government sources including USAID. In 2009, ACT-US raised nearly $3 million in funds while an additional half million went directly to ACT's programs in Brazil, Colombia and Suriname, additional revenue not reflected in the financial statements reviewed by Charity Navigator. This trend has increased in 2010 with additional funds raised in our country programs. Indeed, we feel the irony of the fact that something that we consider a strong positive - increased fundraising effectiveness with more in-country grants - also has reduced the point total determining our final score (though not in itself determining the outcome).
Charity Navigator has been a highly regarded consumer watchdog that a number of our supporters look to when making philanthropic decisions; with this stature, we believe, comes an obligation to incorporate data and factors that paint a more complete picture of an organization's capacity. There are indeed signs that this is occurring: in 2010, Charity Navigator stated they are reassessing their formula to feature organizational transparency and accountability in their overall assessment rating.
ACT is proud of our accomplishments, as well as the support and trust that you place in us. To be sure, we have been affected by a struggling economy and its effect on large funder portfolios, while the need to conserve the Amazon and the cultures of its people remains urgent. ACT prides itself on being an innovative organization, and you can be assured that your investments in our work are efficiently managed and leveraged by funds that are being raised in our program host countries. As Charity Navigator reassesses and improves their rating calculations and develops additional scoring criteria to be used in the coming years, we anticipate a reinstatement of our four-star status. Should you have any questions or concerns, please contact us at (703) 522-4684 or info@amazonteam.org, or write to us at 4211 N. Fairfax Drive, Arlington, VA 22203.
With enormous appreciation for your support and continued confidence,
Amazon Conservation Team
