World Vision’s Addiction to SWEDOW
Posted on February 7, 2012 at 12:02 pm
World Vision (WV) is standing by their prolific use of SWEDOW (Stuff We Don’t Want) in their development programs. According to their recent blog post in response to my previous post, they will continue to send clothing emblazoned with losing team logos from both the NFL and Major League Baseball to developing countries.
Their reasons for doing this do not stand up to scrutiny and can therefore be chucked up to an addiction to Gifts-in-Kind (GIK). The benefits of these programs to WV are so great that they are willfully choosing not to critically evaluate their work.
So let’s look at WV’s arguments.
Argument #1 – World Vision field staff request GIK.
This argument is undercut by behind the scenes rumblings from staff. They often complain that they face tremendous pressure from their headquarters to request and accept GIK. They are pressured to use GIK to keep their individual project or country overhead ratios low. They are pressured to accept GIK because World Vision benefits from their partnerships with businesses and the businesses want the positive publicity of their products being used after disasters or for development. Neither of these pressures are related to the actual impact of GIK programs and the impact of their GIK cannot be proven.
Argument #2 – World Vision is committed to continuous improvement.
During last year’s controversy, Aid Watch requested documentation proving the need for and impact of their GIK program. World Vision admitted that they had not conducted a single evaluation of the GIK program because they state that these are donations, not a program. Yet GIK makes up one quarter of their annual revenue. It would seem both prudent and professional to evaluate such a large part of their work – however you want to classify it. At $251 million per year, the amount World Vision claims in GIK is greater than the total annual revenue of most non-profits in the United States.
The documentation World Vision did provide to Aid Watch did more to refute the use of GIK than to substantiate it. Laura Freschi goes into detail on what they actually found in the documentation World Vision provided.
While World Vision did not evaluate their GIK program before last year, you would think that they would have made an effort to evaluate their massive GIK program since then, after all many professionals in the field spoke out against their GIK program. Instead World Vision’s recent blog post states:
“Some individuals knowledgeable about the effectiveness of community programs in the developing world have contended that product donations, especially shirts and other clothing, is ‘bad aid,’ and should play no role in the work of non-governmental organizations. Based on our more than 60 years of experience, World Vision respectfully disagrees.”
So in 60 years they’ve never evaluated the need, impact, or effectiveness of their GIK and they’re certainly not going to start doing that now. Where is the “continuous improvement?”
Argument #3 – They assign fair value to their donations
While the amount of value they assign to their donated goods may be legal, many would argue that it is ethically questionable and deceptive to donors.
World Vision valued last year’s Super Bowl items at the US rate of $11.65 per item even though they are not allowed to distribute them in the US. And World Vision themselves estimated that purchasing the shirt locally may cost as little as $2. In valuing them at $11.65 they are marking the items up by 482%. This makes their overhead ratio appear far lower than it actually is. And it’s not just t-shirts that World Vision is using to manipulate their overhead ratio, it’s also drug donations.
In a recent article in Forbes Magazine titled Donated Pills Make Some Charities Look Too Good On Paper, the author examined the over-valuation of deworming pills by nonprofits.
The pills can be bought on world markets in Europe, China and India for 2 cents each. But they have been valued on some nonprofits’ financial statements as noncash gift-in-kind (GIK) donations worth as much as $16.25 per pill—81,000% above that world market price.
The Article mentions World Vision as one of the organizations using these exorbitant markups.
For many years World Vision, a large faith-based charity in Federal Way, Wash., was one of the most aggressive in valuing deworming pills. In 2009 it used $10.64—the same 53,000% markup used by Crista Ministries. After studying the issue and paying for outside data, it dropped the valuation for 2010 to $2 a pill—a mere 9,900% markup.
Forbes goes on to say that:
… loose accounting rules for donated GIK goods, a questionable drug-pricing list and the drug price disparity between U.S. and foreign markets have provided charities some cover for their use of even the most egregious GIK valuations. Indeed, the biggest scandal here might just be what’s legal.
So while World Vision is following the letter of the law, they are not being honest about the value of their goods. It is the prolific use of SWEDOW and GIK to artificially inflate a non-profit’s worth and deflate nonprofit overhead ratio that led me to write a 20 page paper demonstrating how overhead ratios are meaningless and should never be used as a measure of a non-profit’s performance.
World Vision’s arguments are easily refuted and have been refuted many times in the past. Instead of taking this as an opportunity to grow and improve as a professional organization, World Vision is instead clinging on to their 60 year addiction to SWEDOW.
Guides by Good Intentions are Not Enough
World Vision and sports-related product donations - World Vision
NFL / World Vision Part II? - Good Intentions are Not Enough
World Vision Super Bowl Shirts: the Final Chapter - Aid Watch – Critically evaluates documentation sent to them by World Vision
The 200 Largest U.S. Charities – Forbes
Tracking the World Vision / NFL Shirt Donation Controversy – Good Intentions are Not Enough
The financial costs and benefits of sending a shirt overseas - World Vision
How much are the NFL shirts worth? World Vision isn’t saying – Good Intentions are Not Enough – with information in the comment section by World Vision