Kiva's Form 990 and Financial Statements for 2010

[Guest]

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[Peter S]

Kiva's Form 990 for 2010 has just been published on the site: http://www.kiva.org/about/finances  - and the audited financials were made available there in July.

Before attempting to analyse the figures with year-on-year comparatives and so on, I thought I should point out that the Form 990 has a rather glaring error, which renders it incomplete.

Part 2 of Schedule B, where non-cash / in-kind donations are required to be itemized, runs to only 3 entries on one page for a total of $88,915 (anonymous, Keen Inc, and Microsoft donating Flip videos, footware (sic) and software licenses respectively).   The equivalent section of the Form 990 for 2009 ran to 5 pages, with 25 entries, including (crucially..) donated credit card processing services from PayPal, and free online ads from Yahoo and Google.

The 2010 total for non-cash donations is shown as $2,299,617 in the audited accounts - not the $88,915 itemized in Form 990 Part 2 Schedule B.

In my view this should be put right as soon as possible (at the expense of the Form 990 preparer, SingerLewak LLP, who also audited the financials), and of course the corrected Form 990 posted on the site.


Peter

[JohnAtKiva]

Hello Peter.  I'll pass your message along to the appropriate team.  Thanks...

John

[JohnAtKiva]

Hello Peter -  I passed it along to the right person, but she mentioned that she had just answered a similar question! :-)

I got a copy of her answer, which I'll re-post here for any other interested parties:

You are correct in that there is a difference in the in kind numbers disclosed in Kiva's audited financials and its 2010 Form 990.  However, this is due to a difference in treatment between tax and financial accounting.  There were changes made to the instructions of Form 990 for the fiscal year 2010 which specifically clarify that "neither donations of services (including the value of donated advertising space or broadcast air time) nor donation of use of materials, equipment, or facilities may be reported, even if such donations are considered revenue under generally accepted accounting principles."  This change is the reason why all service related in kind donations are not specified in our 2010 990.  On the other hand, the donation of material goods including flip videos and memory sticks are included per IRS regulations.

Thanks!

Hope that helps clarify?

Best,
John

[Peter S]

yes, thanks John, it does indeed help clarify.  I was just about to post Stefanie's reply to me, after making sure she was happy for me to post it.

But...

I have to say this seems like a backward step for the transparency of Kiva's finances, or indeed any charity's finances, although one apparently dictated by the IRS.  The donated credit card services from PayPal are a very important operational cost saving for Kiva (thick end of a million dollars in 2009), and the free online advertising from Yahoo and Google is almost as valuable.

Therefore, I'd like to suggest that Kiva provides details of the non-cash donations that aren't required to be published in the 2010 Form 990.  They had to be quantified for the audited financials, so publishing these details shouldn't be too arduous.

Peter

[JohnAtKiva]

yes, thanks John, it does indeed help clarify.  I was just about to post Stefanie's reply to me, after making sure she was happy for me to post it.

But...

I have to say this seems like a backward step for the transparency of Kiva's finances, or indeed any charity's finances, although one apparently dictated by the IRS.  The donated credit card services from PayPal are a very important operational cost saving for Kiva (thick end of a million dollars in 2009), and the free online advertising from Yahoo and Google is almost as valuable.

Therefore, I'd like to suggest that Kiva provides details of the non-cash donations that aren't required to be published in the 2010 Form 990.  They had to be quantified for the audited financials, so publishing these details shouldn't be too arduous.

Peter

Sure I can suggest that.  But did want to get you a response from the right person right away, since you had mentioned that the 990 had a glaring error!

[Peter S]

right, it's not an error, it just appeared to be, and it has the unfortunate side-effect that the numbers in the Form 990 don't reconcile to the numbers in the audited financials.

I look forward to having the details on the donated (non-goods) services, worth over $2 million in 2010.  I think transparency requires it.

While I'm putting keyboard to white space, a question has been nagging me...  Keen Inc very kindly donated $5,613-worth of footwear on 14th December 2010.  I can't immediately see how this is relevant to Kiva's program - unless they were boots for departing Kiva Fellows perhaps?  I missed the blog post, if there was one.

cheers

Peter

[JohnAtKiva]

While I'm putting keyboard to white space, a question has been nagging me...  Keen Inc very kindly donated $5,613-worth of footwear on 14th December 2010.  I can't immediately see how this is relevant to Kiva's program - unless they were boots for departing Kiva Fellows perhaps?  I missed the blog post, if there was one.

Keen dedicated their shoe sales on their website to Kiva for a month:

OUR COMMITMENT TO KIVA.ORG

We are dedicating all shoes sold on keenfootwear.com to Kiva.org for a month. Our goal is to raise $100,000 to bring HybridLife Hope to communities in the Gulf Coast.
WHAT DOES THAT MEAN?

KEEN will give $5 from every pair of shoes you purchase on keenfootwear.com to Kiva.org to fund micro-loans around the world.

http://www.keenfootwear.com/us/en/hope.aspx

I'm guessing it's related to that?

More info here!
http://blog.shoptrailblazer.com/gear-guide/product-intros/keen-partners-with-kiva-org-to-change-lives-with-hybridlife-hope

[cpbailey]

When it comes to transparency and clarity...uhm, the government was involved--and the IRS at that.  WHAT were we expecting?

Colette

[Peter S]

Keen dedicated their shoe sales on their website to Kiva for a month:

I'm guessing it's related to that?

More info here!
http://blog.shoptrailblazer.com/gear-guide/product-intros/keen-partners-with-kiva-org-to-change-lives-with-hybridlife-hope

thanks John, nice guess but I don't think that's the answer.  The value of the footwear given in Part 2 of Schedule B on the Form 990 for 2010 can relate only to tangible physical goods, as we've just now had clarified by Stefanie Madrid, Kiva's Finance Director. These must be actual shoes, for actual feet.  The cash support from Keen Inc in 2010 amounted to a very handy $240,328 as revealed in Part 1 of Schedule B (page 7 of 11).

Also, the Hybridlife $5-a-pair offer seems to have happened in 2011, not 2010.  See http://www.kiva.org/about/supporters#Keen

So, I'm still wondering whose feet those $5000+ worth of shoes were for?  


Peter

[JohnAtKiva]

Sorry, just sharing what little I know... sounds like there's more to the puzzle.

I'm gearing up for a big announcement next week, so I won't be able to help out with this for now.  Let us know what you find out!

John

[Peter S]

Thanks John, yes I will indeed let you know what I find out about the mystery footwear.

. . .
I'm gearing up for a big announcement next week, . . .

Discussion / unfounded speculation / jokes / wishlists / complaints etc relating to John's big announcement have been moved to a new thread, over here: http://www.kivafriends.org/index.php/topic,5813.0.html  -- so as not to distract from them with discussion of Kiva's 2010 Form 990.

Peter

[AccountAbility]

right, it's not an error, it just appeared to be, and it has the unfortunate side-effect that the numbers in the Form 990 don't reconcile to the numbers in the audited financials.

I look forward to having the details on the donated (non-goods) services, worth over $2 million in 2010.  I think transparency requires it.

Peter

Just so I'm clear on what you are suggesting -- Are you wanting a "footnoted" version of the 990 to be posted?  I think the 990 as actually filed is important documentation, and is in fact much more transparent than the previous versions of that form.   Perhaps a simple statement as explained by the auditor could be added, explaining the differing bases of the two reports and pointing back to the financial statements.

Dan

[Peter S]

Thanks Dan.  Well, I just think that given the lack of itemization of over $2 million-worth of in-kind donations, in that respect (only..) it's less transparent than under the old 990 regime, where we could see for example that PayPal's donated credit card processing saved Kiva $895,551 in 2009, Google's donated online advertising was worth $415,324 - and so on.  These are very important components of Kiva's operating costs, and to me it doesn't make much sense to fail to itemize and indeed acknowledge those intangible in-kind donations.  Kiva doesn't have to do it, but I think they should.  Pointing back to the audited financial statements would only point to a bland figure that isn't itemized.

In what respects is the 2010 Form 990 much more transparent than the 2009 one?  Looking at the two side-by-side, I don't see it myself, but I'm willing to be guided to a correct interpretation ...

Peter

[Ali]

Hi Peter,

I just spoke with a few members of our team about Keen's donations. The Keen product donation is intended to help outfit Kiva Fellows with any Keen outdoor gear they may need while on their fellowship including footwear, bags, socks, etc.  Since the fellows are volunteers, Keen was pleased to offer what they could to help better prepare the Kiva Fellows for travel while lowering the personal costs to them of undertaking their fellowships. It's important to note that Keen also makes general support donations and (soon to be deployed) loan contributions to Kiva.

If you have any questions about this, please let me know.

[Peter S]

Thanks Ali.

That answers my question perfectly, and confirms my guess that these were for the Kiva Fellows.  Nice to know they're well shod.

Keen Inc's cash contribution is very important to note as you say, and indeed I've already mentioned earlier in this thread that this amounted to a very impressive $240,328 in 2010.

thanks again

Peter

[AccountAbility]

In what respects is the 2010 Form 990 much more transparent than the 2009 one?  Looking at the two side-by-side, I don't see it myself, but I'm willing to be guided to a correct interpretation ...

Peter

My reference to 990 transparency was more to do with the form 990 structure than to how it specifically applied to Kiva transparency.  I was just trying to get some concrete suggestions as to what Kiva might do to rectify the "deficiency" without materially altering the 990 itself.

Dan

[Peter S]

OK, let me clarify.  I'm not suggesting that the Form 990 needs to be changed to give details of the non-tangible non-cash donations - because it's been clarified by Kiva's Finance Director that the new Form 990 contains no fields in which this information could or should be recorded.  But that isn't to say that these details could not be provided elsewhere than on the Form 990.

Kiva could publish details of the in-kind non-tangible donations (from PayPal, Google, Yahoo etc) separately, as a note to the audited financial statements perhaps.  Whether they do it and if so how and where is for them to decide.  These are very important elements of Kiva's operating costs, and I just don't see how having that information for the years up to and including 2009 and not having it for 2010 can be represented as improving the transparency of Kiva's financial affairs.  The source of over $2 million-worth of value should not be a secret...

Peter

[AccountAbility]

Gottcha   

And I agree.