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How an issue of 'legalese' affects Nature Conservancy's ranking

By Guy Halverson / December 4, 2000



Disputes between charities and watchdog groups that rate nonprofits are hardly new.

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Over the years, a number of charities - both large and small - have groused that ratings groups have "gotten things wrong."

Arguments often involve how much money actually goes to the main programs of a charity, rather than to administrative or overhead costs.

One controversy that doesn't seem to go away involves the Nature Conservancy, which has protected some 12 million acres of land in the United States since 1951.

The organization is the second-largest private owner of land in the US, says spokesman Jon Schwedler, trailing only TV mogul Ted Turner.

More important, the conservancy operates the largest private system of nature sanctuaries in the world.

The dispute involves complicated interpretations of how the group's money is spent. The Nature Conservancy reckons that the percentage of income devoted to its mission - that is, acquiring and managing land - is more than 93 percent.

But rankings published by the NonProfit Times in Parsippany, N.J., show a much smaller percentage. (See chart, page 16.)

In 1999, the Nature Conservancy reported some $704 million in income. But the amount devoted to services, according to the the NPT list, comes to about $285 million. Where did the rest of the money go? Gobbled up by huge administrative costs?

Not at all, says Mr. Schwedler. It was used to acquire or manage land. The problem is that the Internal Revenue Service does not view money for land purchases and management as expenses devoted to programs. Rather, the IRS says land purchases are capital additions, and management expenses are treated as endowment funds.

By not fully taking into account the money spent on land purchases and land management, it appears that the Nature Conservancy is somehow stinting services.

Still, some ratings organizations appear to be catching on. In recent years, some ratings groups have placed an asterisk next to the Nature Conservancy, to highlight the discrepancies.

Moreover, the organization is clearly moving up the charts in terms of size and popularity. A few years ago, the Nature Conservancy was invariably found below the Top 10 largest charities. But in the latest NPT 100 report, it is now No. 9, up six slots from the year before.

(c) Copyright 2000. The Christian Science Publishing Society