How much are the NFL shirts worth? World Vision isn’t saying
Posted on March 2, 2011 at 12:28 pm
So it’s been almost a month since my original post discussing the financial incentive for World Vision to distribute donated goods. And World Vision has yet to clearly state how much the 100,000 NFL shirts are worth. In their original blog post announcing the partnership, World Vision claimed the value of the donation as:
“On average, this equates to about 100 pallets annually — $2 million worth of product — or about 100,000 articles of clothing that, instead of being destroyed, will help children and adults in need.”
So $2 million divided by 100,000 articles of clothing comes out to around $20 per item. When called out on this, World Vision did not to stand behind either their press release or their blog post. Instead, they said this:
“World Vision hasn’t valued this year’s donation of NFL-related clothing because we have not received the products yet. Unfortunately, the numbers listed in the blog post and a press release shouldn’t have been released – they were rough estimates that weren’t related to each other and don’t reflect how World Vision will value the clothing.”
One commenter pointed out that World Vision could tell us how much they valued last year’s shirts at, but they haven’t done that either.
World Vision’s latest post goes into technical detail about the rules governing GIK valuation. But nowhere in that post do they state the amount these shirts, or last year’s shirts, were valued at. From their post:
“Valuation of NFL apparel
For apparel, we consider the U.S. market to be the principle market according to GAAP because we believe the U.S. has the highest volume of apparel sales. Therefore, we use U.S. market prices to value apparel, including shirts. While it is true that the NFL restricts the sale of the donated items in the U.S., that is considered to be a characteristic and restriction on the entity, and does not affect the characteristics, usefulness, or valuation of the apparel.”
So even though they know they cannot and will not distribute these shirts in the U.S., they are valuing them at U.S. prices because they can based on the letter of the law. While legal, the numbers do not represent the real value of the goods. This highlights a clear need to change the laws and standards.
In an earlier post World Vision justified handing out the donated shirts with this comment:
“A quick survey of some of our staff overseas shows that the cost for medium-quality shirts ranges between $2-$3 (Myanmar) and $3-$8 (Mongolia) each. Comparing the World Vision GIK costs shown above and the most conservative estimate for local purchase of $2, there would be a difference of $1.42 per shirt. In this case, a person in need of the shirt would theoretically save $1.42 that could then be used to purchase other needed goods in the local market.”
So Would Vision is saying that shirts of similar quality to the NFL shirts could potentially be purchased on the local market at $2. But that’s the retail value, what’s the wholesale value – because at 100,000 they’d be buying in bulk. The difference between what World Vision is potentially claiming as the value of the shirt and the actual value of a similar shirt purchased in the field could be around $18 per shirt or $1.8 million for all 100,000 shirts.
And World Vision uses those numbers in their fundraising appeals. For instance, in this fundraising appeal they ask for donations to pay for the cost to ship clothes, shoes and medicine. World Vision claims “your gift carries the impact of 11 times its face value.” But it doesn’t really, because it’s not based on the actual value of the goods. According to this World Vision post “The average cost for bringing a shirt from the door of a donor corporation based in the U.S. to the hands of a beneficiary in a destination country is about 58 cents” So if the shirts could be purchased locally for $2 retail, and even less wholesale, and the cost of shipping them is $.58 then the impact of the donation would be more like 3.5 times the face value. And frankly, at these prices you’ve got to ask why they don’t just purchase them locally and put the money back into the local economy.
This brings up another key point. Just because World Vision is following the letter of the law does not mean they’re not benefitting from those laws and being influenced by those benefits. For instance, in this post World Vision states “The provision of direct benefits is not emphasized in World Vision’s model.” Yet in 2010 World Vision claimed $251 million in gifts-in-kind, a quarter of their revenue (the previous year was even higher at $413 million dollars and one third of their revenue). Over the past three years alone World Vision has claimed $1,030,000,000 in in-kind donations.
If you were to separate out World Vision’s GIK into it’s own nonprofit, it would be the 56th largest nonprofit in the United States. It would be bigger than 99% of the nonprofits and larger than Big Brother Big Sisters of America, The March of Dimes, or Special Olympics. That’s a lot of money for something that is “not emphasized in World Vision’s model.”
The size of this program brings back the question of whether GIK are really the best use of nonprofit time and resources. Of the more than 60 posts and articles that have been written on this controversy by economists, aid workers, and others the general consensus is that GIK are only of marginal assistance at best. And at worst can be harmful to the very people and economies we’re trying to help.
Which then brings us back to the original point that started this whole debate, “While there are clearly financial benefits to shipping unsellable goods overseas, it’s not Smart Aid and it’s often of minimal benefit to the people posing for the cameras.” GIK programs continue to flourish because of the significant financial benefit to World Vision and other organizations doing GIK programs.
How much of a financial benefit? World Vision isn’t saying. And that in itself is telling.
To see all the posts on this debate read Tracking the World Vision / NFL Shirt Donation Controversy