A massive summer heat dome has settled across a huge portion of the United States, putting millions of Americans under extreme heat alerts. Because extreme heat poses an immediate threat to vulnerable populations, disaster relief organizations like Direct Relief (EIN: 95-1831116) are heavily featured in the news as they distribute hydration and medical supplies.
When a crisis hits the headlines, emotional giving spikes. But at Charity Nine, we believe blind trust isn’t philanthropy. We don’t tell you whether a charity is “good” or “bad.” Our job is simply to pull back the curtain on the numbers so you can decide if an organization aligns with your personal standards for giving.
Before you decide to support Direct Relief’s heat wave response—or any emergency relief effort—here is how their financial data breaks down:
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The Program Expense Split: According to their recent filings, Direct Relief reports spending 99% of its total expenses directly on programs, leaving just 1% for administration and infrastructure.
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How to Read This Data: While some donors get excited about a 99% program spending percentage, savvy donors know that a program spending percentage greater than 90% is a reason to dig deeper.
Here’s what the Charity Nine report says about Direct Relief’s program spending numbers:
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Gifts-in-Kind Adjustment: This charity reports that the value of non-cash donations (gifts-in-kind) it received exceeded 90% of its total revenue. Treating the distribution of those gifts-in-kind items as program expenses would unsuitably inflate Program Spending. We have removed the value of those gifts-in-kind from both Total Functional Expenses and Program Spending in the following calculations. Read more about gifts-in-kind at CharityNine.org/gifts-in-kind. After our adjustment, the Direct Relief program spending percentage is 62%.
Note that the massive amount of gifts-in-kind also impact Direct Relief’s cash reserve ratio. Here’s what we say about that:
- Gifts-in-Kind Adjustment: This charity reports that the value of non-cash donations (gifts-in-kind) it received exceeded 90% of its total revenue. Treating the distribution of those gifts-in-kind items as expenses would unsuitably inflate Total Expenses. We have removed the value of those gifts-in-kind from Total Expenses. We’ve also reduced Net Assets by the value of inventories held for use or sale at the end of the year. Read more about gifts-in-kind at CharityNine.org/gifts-in-kind. After our adjustment, the Direct Relief cash reserves ratio is 5.5 (meaning it has 5.5 years of cash in reserve).
Every donor has different standards for what a healthy, sustainable organization looks like. We’ve gathered the data across nine key categories so you can examine them for yourself and make your own decision.
Link: View the Charity Nine detailed 9-part report on Direct Relief here.