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Make a Wish Foundation Financial Analysis

Info: 7982 words (32 pages) Dissertation
Published: 11th Dec 2019

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Discuss how well the State is performing financially.  Include in your discussion liquidity, performance and overall evaluation.

 

After analyzing the organization’s financial statements for years 2014, 2015, and 2016, we can observe that the current ratio (current assets/current liabilities) of the Make a Wish is 2.02 in 2014, 1.73 in 2015, and 1.21 in 2016. This continuous decreasing trend of current ratio from 2014 to 2016 indicates that the assets to be converted into cash in the next operating cycle is decreasing while the liability that are going to be due in the next year is increasing. Potential problems that may have resulted in low current ratios over time can be inefficient inventory management or lenient policies in collecting receivables. This trend can be a red flag for the organization to manage its expenditures based on the community needs and strengthen its collectability policies to not face an upcoming lack of liquidation and account for more liabilities. Another measurement of the organization’s liquidity is quick ratio. The quick ratio of Make a Wish is 0.3, 0.26, and 0.21 for 2014, 2015, and 2016 respectively. This rapid decrease in quick ratio affirms that Make a Wish has a weaker ability to pay off its current liabilities without liquidating its inventories that can be sold at very low prices. It reveals that the organization might have been relying heavily on inventory or other sources of assets to offset its short-term liabilities. Low levels of quick ratio can worry potential creditors/investors and make them aware of the organization’s short-term risks. This means that the organization faces increasing difficulties to cover its short-term debts and improving liquidity is an urgent necessity in this case. From this analysis of liquidity ratios, we can conclude that Make a Wish does not have enough liquidity that allows it to cover its liabilities and obligations.

In addition, The Statement of Activities for Make a Wish shows a change in net assets of $819,531 gain in 2014, $(411,598) loss in 2015, and $(647,207) loss in 2016. This is a very risky performance trend that should serve as a warning to Make a Wish officials to review their budgets, watch expenditures, and adjust transactions to not experience major losses in the future that can lower the organization’s ability to generously serve the community. This decreasing trend of profits is a result of decreasing revenues from $5,049,019 in 2014 to $4,964,715 in 2016 and increasing expenses from $4,229,488 in 2014 to $5,396,023 in 2016.

From a positive perspective, when we look at the changes in net assets, we can observe that there are increases in the expenditures of program services and support services from 2014 through 2016. Program services expenditures include wish granting, health and human services, and state and consumer services. Wish granting expenditures had rapidly increased by 24% from 2014 to 2015 and by 6% from 2015 to 2016. The increasing percentage of wish granting expenditures over the last three consecutive years affirms the organization’s mission and continuous efforts to create life-changing experiences for their wish children and their families. This insistence of providing high quality services and support to children was clearly reflected in the organization’s annual reports for the last three consecutive years. Financial facts about the organization’s expenditures towards wish granting services stated that in 2014, 2015, and 2016, Make a Wish had used nearly 81 percent of all contributions it receives towards grant wishes which is specifically specialized in achieving the wishes of children with life-threatening medical conditions. This is considered a good signal to investors and donators assuring that the money they contribute is thoroughly used in the purpose they aimed for which is helping children achieve their goals and have brighter future.

The second program service of Make a Wish that takes a portion of its increasing total expenditures is Training and Development. Training and Development expenditures had also rapidly jumped by 49% from 2014 to 2015 and by 9% from 2015 to 2016. According to the Foundation’s annual report, Training and Development activities contains the applications of programs that supports the identification process of wish candidates and the specifications their wish deliveries. The increasing rate of Training and Development expenditures is favorable because it proves that the Foundation is paying a great attention to choose children who really in need for their wishes to become true and focusing on the type and amount of their wish deliveries to be consistent and appropriate to children’s needs and conditions.

The last program service provided and expensed by Make a Wish is Public Information. As defined by the Foundation, Public Information are activities that the Foundation performs to deliver the mission and the activities done by the organization to the public and to all possible wish referrals. Public Information expenditures had also greatly increased by 37% from 2014 to 2015 and decreased by 17% from 2015 to 2016. The increasing shift from 2014 to 2014 is a favorable trend because it shows that Make a Wish is being more transparent about its activities and paying attention to sharing its ideas to the public to reach as many wish referrals as possible. This builds the Foundation’s public trust, improves its image, enhance its reputation, and attracts more investors and donators. The negative shift from 2015 to 2016 is not favorable because it shows that the Foundation is doing a much less effort towards transparency and reputation enhancements which might cause a discourage for investors and the public opinion towards Make a Wish Foundation.

Support services are the other segment of expenditures that played a role in lowering the change in assets over the last three years. For Make a Wish, Support services are divided into two activities: Fundraising, and Management and General. As stated by the Foundation, Fundraising consists of activities done by the Foundation to support its various programs and goals of achieving children’s dreams by generating funds and resources. From 2014 to 2015, fundraising activities had greatly jumped by 40% and it had reported no change from 2015 to 2016. This indicates that 2015 was a very special year for Make a Wish that witnessed a lot of achievements. Funds availability was at its peak in 2015 which means that the Foundation had initiated effective strategies to generate funds/aids and use resources to increase the financial opportunities of making wishes come true.

The other element of Support services is Management and General expenses. As mentioned in the Foundation’s Audit Year End of 2015, management and general expenses consist of all the costs that the Foundation pay out while performing their activities. These expenditures are not associated with a specific program/activity; however, they are necessary for the Foundation to operate and be able to perform such activities. Examples of management and general expenses include salaries, equipment, budgeting, recordkeeping, supplies, and other expenditures that are crucial to the capability of performing the Foundation’s several programs and fundraising activities. After analyzing the management and general expenses, we can note that 2015 witnessed an increased shift of approximately 22% compared to 2014. This can cause many indications that carry a lot of possible scenarios. One scenario is that the Foundation might have hired more employees or promoted existing ones which increases salary expenses. Another possible scenario is that the Foundation have spent a lot of money upgrading their existing software systems by buying new equipment and supplies. From 2015 to 2016, management and general expenses had grown by only 2%. This can be strongly connected with the decreasing trend in liquidity discussed earlier. One possibility is that Make a Wish did not have enough liquidity to increase employees’ salaries or buy new equipment/supplies which may not a favorable indication even though the reduction in support services in 2016 should have been a good sign that can increase profits if revenues increase. However, because we know from the liquidity analysis that the Foundation is not financially healthy in 2016, we can observe that the reduction in support services may not be a good indication of an upcoming profit and can be a prediction of a lack in the availability of funds in that year.

Now that we have discussed the Foundation’s programs/activities and the its expenditures to fulfill its mission, let us talk about the Foundation’s sources of revenue and its revenue recognition policies. From the financial statements, Make a Wish has three main sources of revenue: public support, internal special events, and investment income. Contributions and grants are sub-sources of revenue coming from public support.

As stated in the Foundation’s financial statements, contributions received by Make a Wish include wish related, professional services, investments, and property and equipment. Contributions received by the Foundation had increased by $547,024 or 14% from 2014 to 2015 and suddenly decreased by $257,611 or 6% from 2015 to 2016. The positive shift from 2014 to 2014 is considered to be a favorable sign because it shows that Make a Wish is a well-trusted Foundation in which people have faith in and this is why they contributed more money or property to it to encourage its steps and purposes. That negative shift of 6% from 2015 to 2016 is a risky sign for Make a Wish that may indicate that the Foundation lost some people’s support or donators are not as much interested in contributing money and property to the Foundation. This discouragement is a dangerous warning for the Foundation that should push it to find out new ways to retain contributors’ interests. For example, Make a Wish can intensify its advertising campaigns, get popular celebrities’ assistance to motivate people contributing more to the Foundation so it can have available funds for new upcoming wish activities and reach as many donators/investors as possible.

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Grants is the other revenue sub-source of public support revenue. Make a Wish received 195,735 which is nearly most of its grants from the National Organization in 2014. However, in 2015 and 2016, the National Organization stopped providing grants to the Foundation. This is why grants had greatly dropped by 46% from 2014 to 2015. This decline did not improve as much in 2016 as grants reported no material increase from 2015 to 2016. This recession in 2016 following the decline in 2015 is not a favorable trend because this shows that Make a Wish is more likely to continue facing difficulties in receiving grants from related entities to aid/fund its activities and initiatives.

Internal Special Events portray another source of revenue for Make a Wish. Internal Special Events are defined as fundraising events which are completely prepared and organized by the Foundation’s employees to increase people’s interest in the mission and the activities of the Foundation. The main purpose of these type of events is to encourage existing and new donors to contribute funds to the Foundation so it has enough liquidity for its several expenditures. Internal Special Events-in kind amounts are the donated items in that are contributed in these events. They are normally recorded at fair market value and used solely to fund these events’ costs. Example of Internal Special Events-in kind amounts are auction supplements, food and beverages, and other costs used to facilitate these events including its guests and donors. Another type of Internal Special Events is related to advertising and media. Make a Wish uses advertising and media to publicize its wish activities and deliver its ultimate message or mission to the public in hopes for positive reactions that can help make children’s’ wishes come true. Examples of the Foundation’s means of communication with the public are newspapers, radio announcements, video announcements, and others. From 2014 to 2015, total revenue of internal special events has increased by 12%, and from 2015 to 2016, it has increased by only 5%. The greater shift from 2014 to 2015 shows that the Foundation put a lot of time and effort in these types of events and had successfully received revenue out of these gatherings. This also indicates that attendees of internal special events got persuaded by the Foundation’s goals and encouraged to donate/contribute to the Make a Wish. The small shift from 2015 to 2016 can indicate that the Foundation is making less efforts in coordinating these types of events or the audience are not interested/motivated enough to raise revenue for Make a Wish.

Investment income is the last source of revenue of Make a Wish. Generally, Make a Wish records investments at fair market value. Increases and decreases of investment income gain/loss are recorded in unrestricted net assets “unless its use is limited by donor-imposed restrictions or law.” Investment income consists of dividends, interest, and capital gains. According to the Foundation’s financial statements, investment income has significantly dropped by 121% from 2014 to 2015 and experienced a more severe recession from 2015 to 2016 when its reduction was more than doubled (468%). This investment loss experienced in 2015 and 2016 indicates that the dividends, interest, and capital gains are reducing over time which is an unfavorable sign for future revenues and profits. After analyzing all sources of the Foundation’s revenue, we can assert that the major drivers of the profit reduction are investment losses and reduction in grants and contributions. The Foundation needs to pay attention to this decreasing rate of revenues since expenses keep increasing over time.

It is affirmed by the Foundation’s financial statements that Make a Wish is exempt from California income taxes and federal income because it is considered a non-profit organization under Internal Revenue Code Section 501 (c)(3). However, it clearly stated that in case the Foundation has engaged in trade or business and income has been yielded out of this business, it becomes legally responsible of paying out the income taxes calculated based on the net income generated by that business/trade. Make a Wish declares in its annual report that “Management believes that no uncertain tax positions exist for the Foundation at August 31, 2015 and 2014.”

Make a Wish has thoroughly described its revenue recognition policies in its annual reports. The organization illustrates that there are different revenue recognition treatment between unconditional promises and conditional promises. On one hand, it clearly asserts that it recognizes unconditional promises by donors at fair market value and treats it as contributions revenue at the time those promises were made. The anticipation of fair market value of the unconditional contribution promises considered future cash receipts and discounting that could vary depending on the contributor’s payment plan. Contribution revenue of Make a Wish also includes discounts amortization. On the other hand, Make a Wish recognizes revenue for conditional promises once the promises are applied or the donor has met the conditions. If the donor made restrictions on the use of the contributed assets, Make a Wish will treat grants and contributions as permanently restricted or temporarily restricted. When the organization passes the expiration date of the donor restriction/limitation, the organization will re-categorize the previously restricted net assets to unrestricted net assets. The organization reports these unrestricted net assets in its year-end statement of activities. In the case of meeting the donor’s restrictions in the same period of time as the donation/contribution is delivered, Make a Wish will automatically treat the previously restricted donation and expense as unrestricted. Generally, as long as contributions of assets are not cash, the Foundation records them at fair market value. If the contribution/donation is a service, it will be recognized if the following requirements are met:

  • Contributed services improves non-financial assets
  • Contributed services require specialized skills
  • Services donators must be personally enjoying these skills, otherwise services need to be purchased

Describe the programs and functions of the organization.  Include in your discussion how these programs and functions are funded and how successful they are in their endeavors.  Discuss their annual performance and overall evaluation.  Properly support your response.

Make-A-Wish Foundation Orange County and the Inland Empire (MAWOCIE) Inc. is a non-profit organization based in California. It was founded with the aim of granting the most heartfelt wishes to kids between 2 years and 18 years with life-threatening health conditions. In 1980, the Arizona department of public safety was concerned with the Chris Greicius, the first wish kid who wanted to become a policeman but his diagnosis with leukemia could prevent him from accomplishing his dreams. Consequently, they coordinated the whole community and asked them to help Chris become Arizona state trooper. The 7 years old boy was happy to fly a patrol helicopter and successfully maneuvering through a small motorized motorcycle.  Markedly, the most priced product for Chris was his uniform. As such, MAWOCIE was established with the realization of Tamara’s, desire to see the clear turquoise waters of Caribbean in 1983. Since then, the foundation has helped more than 5600 fulfill their life aspirations in Orange, San Bernardo, and Riverside (MAWOCIE, 2017).

Make-A-Wish established about 7 chapters across the country three years later, including MAWOCIE. Significantly, the Orange County chapter partnered with Inland Empire to manage and implement a more forceful outreach program in different counties. As a result, these chapters accomplished an approximate of 225 wishes for critically ill children and their families yearly. Since its formation, MAWOCIE has supported 5300 critically ill children in the San Bernardino, Orange, and Riverside counties to make their wishes come true (MAWOCIE, 2017). The objective of the MAWOCIE foundation is to give children joy, strength, and hope through exciting and extraordinary experience which they enjoy with their relatives and friends.

MAWOCIE’s vision is to ensure that it grants the wish of every child in the entire region with life-threatening medical condition. The company’s purpose of granting children their wishes is supported by its fundraising totals, investments, and corporate sponsorships and donations.  Besides, their staff and volunteers connect and walk with these kids through the depth of imagination to make their life dreams come true. The corporation is an independently functioning chapter of the make a wish foundation of America. The latter develops and executes national programs and fundraising functions in public relations so as to help all local chapters (MAWOCIE, n.d). Importantly, MAWOCIE is obligated to comply with the national organization’s chapter agreement including policies, guidelines, and resolutions.

Programs and Functions

Year          Cost of wishes      Other functions such as Training

2016  $3,983,569  $305,051

2015  $3,747,277  $278,828

2014  $3,773,356  $178,637

2013  $2,437,947  $158,793

2012  $3,747,277  $328,277

2011  $2,180,196  $232,321

Above are the date from every year’s financial statement of functional expenses.

So we can see that wish granting is the major program facilitated by Make-A-Wish Foundation Orange County and the Inland Empire. This kind of program aim to let children feel good and happy when they enjoy any activities. A granted wish gives children moments, days, hours, and weeks to feel loose and enjoy life. These wishes programs always bring smiles, laughter, and memories for kids. So why these granting wish programs are charge the most of the donations? Because this non-profit organization believe that every medically eligible kid should be granted a wish. These wish programs will bring hope, joy, and strength to all those joined, and are something that never can be taken away. Notably, this nonprofit firm grants wishes to the children and their families absolutely free of charge. All costs such as spending money, transportation, housing, meals, and airline tickets are covered by the contributions made to the organization (MAWOCIE, n. d).

Today, MAWOCIE grants more than 335 wishes to eligible children every year. For 2016, with the support of donations, the company established 347 life-changing moments for local kids battling life threatening medical conditions (2016 Annual Report). The company not only serve for local children, but also for kids who came from all over the world. In 2016, 664 not local kids had a chance to have their wished granted in the region. Nearly 94 percent of these children went to the Disneyland. And the company make sure that each wish experience is unique to every kid, and will make each child more confident in the future. Markedly, the corporation does not receive any funding from the state or federal government but depends on the group, corporate, and individual donations. As the organization growing up, the company still continually overwhelmed the local community to give some support. “From monetary donations to airline miles – every little bit helps the organization to carry out their mission” (2016 Annual Report). This program also depends on in-kind donations and volunteers to maintain low costs. From the 2016 annual report, we can see that our volunteers are from different place, such as Encompassing Orange, Riverside, and San Bernardino counties, they help grant a wish every 25 hours. In 2016, approximately 650 volunteers supported the organizations mission delivery, 341 of them as wish granters. So totally, in fiscal year 2016 local volunteers contributed more than 13,500 hours, and accounting for more than $334,000 of donated time. Your donation will help children. In 2016 financial year, Make-A-Wish used about 81% of the charity’s total expenses to grant children their most heartfelt wishes (2016 Annual Report).

Other functions facilitated by MAWOCIE, and which must be funded include training and development, fundraising, and management. The foundation trains the staff and volunteers on how to identify wish candidates and deliver that wish. Further, the foundation generates the funds and resources through fundraising programs to support its major initiative and operations.  In 2016, 11% of every dollar contributed was set aside to support fundraising activities. Notably, during the 2015 and 2016 financial years, the corporation did not incur significant joint costs for activities such as fundraising appeals. The other significant function in the company is management, which includes direction of the foundation, general recordkeeping, financial reporting, general record keeping, budgeting and other activities related to salaries, equipment, and supplies. MAWOCIE used 8% of the donated funds to manage the foundation in 2016 (2015 and 2016 Annual Reports).

Funding

All Make-A-Wish Foundation Orange County and the Inland Empire’s programs and functions are supported by individuals, groups, and corporations.  The foundation gets its financial support in form if in-kind donations, fundraising events, investments, and contributions (MAWOCIE, n.d). The 2016 financial reports show that largest revenue source is the public support and amounted to $4,207,378. Other sources include investment income, special events, and other earnings. Total revenue in the same fiscal year is 4,964,715 and the total expenses amount to 5,611,922 (2016 Annual Report).  The corporate sponsorship, fundraising totals, and donations have supported MAWOCIE’s goal of granting life aspirations to children with life-threatening health conditions.

Achievements

In recent years, the MAWOCIE chapter has accomplished its goal of ensuring the all eligible kids in the region are granted their most heartfelt wish. To achieve this, the foundation focuses on creating public awareness regarding what is a make a wish, where it is located and how it fulfills the desires of children with life-threatening health conditions (MAWOCIE, n.d). MAWOCIE adopts a medical outreach strategy, where hospitals, healthcare practitioners, educational institutions and community groups come together to help in identification of therapeutically eligible children to ensure their aspirations are granted. One of the capabilities of this foundation is that it has created a staff and volunteer structure which supports its outreach efforts MAWOCIE, n.d). Importantly, its board of directors and volunteers also assist in the identification process to ensure no medically entitled child is left behind.

Over the past four years, MAWOCIE has increased its revenue year after year so as to increase the number of wishes granted. The primary goal of this organization is to grant every child who is critically ill within the region his or her utmost life desire. In 2015, the company increased the number of wishes in both counties by 5.7%, which accounts to 335 local wishes (2015 Annual Reports). Further, the Orange County and Inland Empire chapter has also facilitated 560 wish assists for global children coming into its territory.

A Wish granting program has been essential in the treatment process for most critically ill children. The initiative has helped in bringing joy, restoring hope, and building strength in the lives of wish children and their families. A granted desire can have an important impact in a child’s life. Significantly, it can help them to stop focusing more on their health situation and begin to concentrate on their dreams. Kids with life-threatening medical conditions can be motivated to adhere to treatment and look towards a bright future (MAWOCIE, n.d). Besides, personal wish experience can motivate some people to help others. A recent wish impact study demonstrates that 74% of wish parents and guardians confess that the Make-A-Wish program had transformed their children’s life and have brought a positive defining moment in their battle against their disease. Equally, 89% of healthcare professionals argue that the wish experience can have positive impacts on the physical health of young ones (MAWOCIE, n.d)

Annual Performance and Evaluation

Provision of the annual financial report is necessary for understanding both short and long-term health status of the foundation. MAWOCIE is committed to giving their donors clear financial information they need so as to evaluate the firm’s performance. Markedly, it is important for funders to easily access this data so as to determine whether the nonprofit firm is managing its resources efficiently. Accordingly, the company has been recording its financial performance metrics and its achievements in the foundation’s audited annual reports and 990 tax forms filed with the IRS (2016 Annual Report). Year after year, the organization continues to impact the lives of critically ill children by granting them their deepest desires.

In the past years, this non-profit company has made lots of successful events to help children happy, and make them more confidence. In 2016, they organized holiday open houses, Bechett’s Star Wars Wish, Macy’s believe launch, evening of wishes Gala Red Carpet, Diniel’s wish, walk for wished- Irvine, and during 2015-2016, they held the program called kids for wish kids yearbook.

Additionally, MAWOCIE’s financial statements reveal that the company has experienced significant changes and growth in the past years. For instance, MAWOCIE has granted about 318, 335 and 347 wishes in 2014, 2015 and 2016 respectively to critically ill children and their families across San Bernardo, Riverside, and Orange Counties. Since 2014, the company has reported surplus budget contributed by the foundation’s conformist financial management practice. The MAWOCIE’s total assets in was 3, 432,321 and 3283,724 while the total liabilities amounted to 1889420 and 2388,030 in 2015 and 2016 respectively (2014, 2015 and 2016 Annual Reports). Notably, the survival of the foundation is guaranteed since the total assets exceed the total liabilities.

5. Discuss the financial and programmatic issues you have noticed in the Annual Reports, tax returns, and audits that will be most relevant and significant within the next 5 years for the organization from both the organization’s perspective and the donor’s perspective.  Discuss these items – explaining your reasoning for their importance.

Make-A-Wish has been around for as long as I can remember and is known for granting wishes to children with medical issues, sometimes life threatening, which makes it difficult for them to have a typical childhood life.  This is what my perception of what the Make-A-Wish Foundation did before I had done any research about the foundation.  After doing research on the foundation, I found that I was fairly accurate with my assessment of the foundation.

In reviewing the Annual reports from 2011 through 2016 the basic format has been kept the same, but of course there were some minor changes that have been made throughout the years.  The annual reports are colorful, shows amazing kids that have had wishes granted, shows a few volunteers, and gives statistics on functional expense and revenue sources by percentages, and the statement of activity for the year.  Overall, the annual report gives good basic information about the foundation with great pictures of kids with wishes that were granted.  After reviewing all the annual reports, I felt like I got to know the basics of what the Make-A-Wish Foundation was all about.

The next research step was to review the audited financial statement from the years ending in 2011 through 2015, and then moved to the tax returns from 2011 through 2014.  All the information that was reviewed seemed to be in order, normal, and informative, but something was missing.  There is a beauty to keeping the annual reports simple and to the point, but what I realized is nothing stood out about the annual reports.  I thought that this was a great foundation doing wonderful things to help kids that were medically challenged, the stories were heartwarming, but nothing stood out to inspire me to donate money or volunteer my time.  Then I realized that by just reading the annual reports, I was not sure of the specifics of their mission statement, how they were funded, and even what some the diseases were.

From a donor’s perspective, I got a sense of what Make-A-Wish Foundation does through the annual reports.  However, I have been fortunate enough to not have had anyone in my life that required regular or special medical assistance.  The pictures of the kids are wonderful and make it easy to have empathy for them and what the foundation does to bring some happiness, but there is a greater impact for people who have someone in their life who has a similar need.  In the 2015 Annual Report, a supporter was quoted saying, “After my niece receive a wish, I knew I wanted to give back to Make-A-Wish to continue to provide hope, strength and joy that we experienced as a family.  Any donation, big or small, helps impact a wish child and bring happiness to all involved.” – Greta, donor.  This is great way to get other people involved in helping the foundation grant wishes to deserving kids.  What the annual reports did not do was inspire people whose lives have not be touched by a child in need, to make a donation or volunteer time, even though this is a great cause and putting a smile on any kid’s face makes the day brighter for anyone who can see the smile.

Some changes that could help obtain new donors who read the annual report would be to give a brief description of what the actual disease does.  I was not familiar with what hematologic disorders are.  My best guess would have been something to do with the blood, but have never heard of such a disease before. According to the National Institute of Diabetes and Digestive and Kidney Disease, hematologic disease is a disorder of the blood and blood-forming organs, which afflict millions of Americans. In addition to blood cell cancers, hematologic diseases include rare genetic disorders, anemia, conditions related to HIV, sickle cell disease, and complications from chemotherapy or transfusions.  After researching what Hematologic disorder is, it gave a better perspective of what challenges Collins, who was showcased in the 2015 annual report, at only three years old has to deal with because of this disease.  A short description is all that is needed to help those who do not know what this disease have a better understanding.

Highlighting a volunteer and/or donor could also give a perspective of what people can do to help if they do not have the finances to donate money, or new ways to create funds to donate to the foundation.  In the 2011 Annual Report, there was a spotlight on Scott and Erin Ferrell, who recently got married and had all their guests donate to Make-A-Wish instead of giving them wedding gifts.  This is a truly unique way for someone outside the organization to get other people to donate to the foundations.  In the same report, there was also highlights of different schools, from a K-8, to High School, and even two different colleges and organizations that help to fund raise and donate money to grant two kids wishes.  This helps showcase all different types of people and organizations that help Make-A-Wish Foundation successful in granting children’s wishes and could hopefully help someone realize that they can help whether donating money or volunteering their time.

This is a simplicity with the way that Make-A-Wish formats their annual reports that makes it appealing to read through, but by adding a little more information could make the annual report more effective at reaching out to a wider audience and gaining more support throughout the community.  There should be a level of balance in that by adding too much additional information it could make the important point less clear making the annual report ineffective.  An example of adding a bit more information that could make a bigger impact would be to add dollar amounts to the Resource Sources and Functional Expenses that are listed as percentages.  In the 2016, Annual Report it shows 83% revenue resources came from Public Support, which would be $3,376,172 of the total Contributions from Public Support listed on the State of Activities.  That amount in percentage (83%) is a large number, but $3.4 million is more relatable to a person money influences each of us daily.  Whether it is spending or saving, money has a daily effect on us.

Formatting the annual reports to be readable on different types of applications would be something to consider as well.  Reviewing the annual reports on a website was easier to read than printing form the internet.  It was difficult to read the number and some of the descriptions once the annual report was printed for the years 2014 through 2016.  This was mainly due to pages that should have been printed out as landscape style was printed out as portrait making the printed page smaller and more difficult to read.  In these annual reports, there was a mixture of portrait and landscape pages.  The annual reports from years 2011-2013 had all pages formatted as portrait.  Also, the fonts used were larger and easier to read.  While they way the annual report was formatted may seem insignificant, if it is not readable, then all the hard work put into making the annual report ended up have no to little effect on the reader.  In this day and age of technology, people now get their information on smart phones, tablets, and other electronic devices.  The annual report needs to be readable these platforms as well, as this may be the only chance to reach the technology savvy individual.

Historically, the annual reports show revenue being received from five sources (2012 through 2016):

  • Public support: 81.6 percent average of the revenue from 2012 through 2016.
  • Other Income: 7.0 percent average
  • Special Events: 3.0 percent average
  • Investment income:  3.0 average of from 2012 through 2014 (none in 2015 and 2016)
  • Grants:  2.8 percent average

The public support in contributions has been fantastic over the last five years.  The concern would be that when the economy is in a decline, the revenues received from public support will go down.  As seen in the 2008 real estate market crash, many people lost their homes, and when money is tight people stop spending on anything other than the essentials.

Reviewing the Form 990 Tax Returns from 2011 through 2014, it shows that the cash contributions only came from a small group of entities.   The following are the total cash contributions from 2012 through 2014:

  • 2015 = $2,368,095
  • 2013 = $2,202,538
  • 2012 = $908,495
  • 2011 = $1,155,644

This is a relatively small portion of the total revenues for each year.  In 2014, it had the highest number of contributors, causing it to be the highest revenue out of the four years listed.

In 2011, there were only four contributors, 2012 and 2013 there were seven contributors, and 2014 had the most contributors at eleven.  The following were repeat contributors:

  1. Make-A-Wish of America: 2014, 2013, 2012, 2011
  2. Give Kids the Works: 2014, 2013, 2011
  3. Tax & Financial Group: 2012, 2011
  4. WL Butler Construction: 2012, 2011
  5. Car Donation Foundation: 2014, 2013, 2011
  6. Sheraton Waikiki: 2014, 2013, 2011
  7. Disney Resort: 2014, 2013
  8. Car Donation Foundation: 2014, 2013, 2011
  9. Blackbaud: 2014, 2013

Make-A-Wish of America was the only contributor all four years.  If donors could be found to committing to regular annual donations, this could help the foundation in times of economic downturn when public support decreases.

Obtaining regular support of grants could also be helpful in securing regular funding for the foundation.  Grants are typically a very small portion of revenue for most non-profit organizations.  Many organizations find it too costly to put time in effort to obtain grants.  Grants can often be available only for specific purposes; for example, a grant may be designated only to be used for education purposes making it impossible for a greyhound rescue organization to apply for it.  Grant writing requires specific training and can be very time consuming; however, if a few volunteers could be found to help find and write grant proposal, this could increase revenue substantially making more wishes come true.

Another source of income that shows on the Form 990 Tax Returns is investment income, which are generated from the investments – publicly traded securities.  The investment income is a very small part of the total revenue generated for the foundations.  The investments are also listed on the audited financial statements and have a further breakdown of how much is invested in the different types of investments.

Year Investment Income Investments
2014 $68,429 $2,527,648
2013 $37,533 $2,477,269
2012 $27,947 $1,208,793
2011 $31,268 $3,432,321

If additional funds could be obtained to increase the investment income, this would be another annually guaranteed income for the foundation.  There will always be a challenge when it comes to obtaining sources of revenue and balancing out spending verses savings will be a constant battle, but if the investment balance was able to increase over time, then the investment income will also increase and would help during the times of an economic down turn causing less income from public donations

From the Statement of Functional Expenses, the Direct Cost of Wishes program expenses totals a little over 50% of the total expenses for the year from 2010 through 2015.

  • 2015 – 52%
  • 2014 – 56%
  • 2013 – 58%
  • 2012 – 52%
  • 2011 – 51%

None of the other program expenses appear to be absorbent, but any cuts in expenses could be applied to the Direct Cost of Wishes.  If even a small cut could be made, for example, a 15% cut across the board, would increase funds for Direct Costs of Wishes by just over $250,000.  Any type of savings, small or large and help to grant more wishes.

Overall the annual reports are put together well, and simply stated.  The annual reports from 2011 through 2015 do not exceed 20 pages, which makes it easier for the reader and does not give information overload.  If there is too much information, it can cause a person to be confused about what the foundation does and possible even a complete turnoff for the person who will end up dismissing the foundation and not ever contributing to their cause.  There is a simple simplicity to the annual report that makes it easy to understand what the Make-A-Wish foundation is all about.  I believe that if a small amount of information could be added, it could have an even greater impact on a larger population of people.  The annual report has a greater impact on people who have been touched with someone in their lives that have been affected will an illness that the Make-A-Wish Foundation has helped or could help.  It is easier to get the attention of people who are sympathetic, rather than empathetic.  The people who are empathic do not necessarily care less, it is just not as easy to be so emotionally attached if the situation had never come up in their lives.  An appeal to these types of people needs to be a bit different.  Simply by adding a brief description of a disease and how it affects the child could have great impact.  The annual report also states that a majority of the revenue comes from public support; however, most people think of contributions a giving money that has been earned.  Highlighting a volunteer and other ways people have contributed to the foundation will help give insight to the general public that there are other ways to contribute to the foundation.  In the 2011 annual report, it shows a newlywed asking for donations to Make-A-Wish Foundation instead of giving wedding gifts.  This is an out-of-the box way of getting more contributions.  The same annual report highlighted three different levels of schools; K-8, high school, and two different colleges, which found ways to fundraise and give money to the foundation to make more wishes come through.  It makes me think that if an elementary student can make a difference, why can’t I?  The company I work for is very community orientated, and this helped me to think about how I can get my company involved with Make-A-Wish foundation, but this thought did not hit me until I read the 2011 annual report with the schools that were highlighted.

The source of income shown on the audited financials and the Tax Form 990, shows that the foundation tries to use as much of the revenue received to grant wishes as opposed to operational expenses.  The issue is where the revenue is coming from and can possible cause a major decline if not addressed.  Most of the revenue comes from public support.  This is fantastic to see that they do not rely on government support; however, in an economic downturn many people and corporations will not be able to donate to the foundation.  An economic downturn will happen again in the normal cycle of business, fortunately the last time this happened was in the 2007-2008 real estate bust.  If steps can be taken now to mitigate this effect, it will help make the foundation more stable. Looking at the financials and tax returns, there are three areas that could possibly help improve and increase annual revenues.  Obtaining more corporate and other sponsors, increasing investments, and finding creative ways to lower expenses even more.  In 2011, there were only four cash contributors that were not from public support.  In 2012 and 2013 there were seven cash contributors, and in 2014 it increased to the highest in this period to 11 cash contributors.  These sponsors were either corporations or trusts.  The only sponsor that was consistent all four years was Make-A-Wish of America.  There were some sponsors that were consistent over two to three years, but if more sponsors could be found to give every year this will help increase revenue and not be as reliant on public support.  Investments are another source of revenue, although small, it does help to contribute to the annual revenue.  If a plan could be made to add funds each year to increase investments and investment income, this would also help stabilize revenue even in times of an economic downturn.  Lastly, if expenses could be reduced even more, this would add more of the revenue already received and increase what is directly used for granting wishes.  The foundation already utilizes a majority of their revenue to grant wishes, but any saving for expenses would be helpful.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Works Cited

Make-A-Wish Foundation Orange County and the Inland Empire (MAWOCIE) (n.d). Retrieved 5 April 2017 from < http://ocie.wish.org/  >

Make-A-Wish Foundation Orange County and the Inland Empire (MAWOCIE) (2017). How it all started: Chris’ wish. Retrieved 5 April 2017 from < http://ocie.wish.org/about-us/the-make-a-wish-story/the-first-wish >

Make-A-Wish Foundation Orange County and the Inland Empire’s. (2017). Annual reports FY2016.

Make-A-Wish Foundation Orange County and the Inland Empire’s. (2016). Annual reports FY2015.

Make-A-Wish Foundation Orange County and the Inland Empire’s. (2015). Annual reports FY2014.

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