ARI wasting money on admin?

[simonsays]

Wikipedia on ARI:

Charity Navigator, which rates charitable and educational organizations to inform potential donors, finds that the Institute has excellent capacity for growth, but is highly inefficient, with only 62.6% of the expenses going towards the goals, the rest being consumed by administration and fundraising costs [16]. According to Charity Navigator only the 10% least efficient charities use less than 65% of their expenses on program goals.

Here is a link to the Charity Navigator page on ARI. Would this stop anyone donating to ARI? Does ARI need to improve and if so how can it improve? Any criticism of Yaron Brook earning $244,981 when ARI is in the 10% least efficient charities?

(Note: I am not raising criticism of the ARI or Yaron Brook on their job as educators, but on their job as administrators.)

(Edited to add a link to Wikipedia article.)

Edited February 11, 2007 by simonsays

[Spano]

You have to be careful about how you use the numbers. The size of the revenue is relatively small and admin costs will therefore make up a higher percentage compared to other large charities. For example, the American Red Cross is listed as having a 5% administrative cost, but that's on almost $4 billion in revenue. ARI has ~0.1% of that revenue, so the administrative cost would represent a greater share of a smaller pie.

Whether or not the operations at ARI are less efficient than they could be, I have no basis for analysis, other than that every person I've met from ARI has been very competent and focused on their mission of expanding ARI's reach as much as possible. Given that, it would take substantial evidence to convince me that they are negligently wasting money.

As for Yaron Brook's salary, I can say that having met him and seen him "in action" at OCON this summer, he brings a tremendous value to ARI. If you support ARI's mission, then he deserves every penny and more.

[aequalsa]

As for Yaron Brook's salary, I can say that having met him and seen him "in action" at OCON this summer, he brings a tremendous value to ARI. If you support ARI's mission, then he deserves every penny and more.

I agree with your assessment and would add that I understand them to be growing in size which is always going to add inefficiencies. If you have a stable income, you can get systems in place and work on improving efficiency but if the size and scope of your organization is changing up or down, you must act on shorter schedules with new policies.

[khaight]

Whether or not the operations at ARI are less efficient than they could be, I have no basis for analysis, other than that every person I've met from ARI has been very competent and focused on their mission of expanding ARI's reach as much as possible. Given that, it would take substantial evidence to convince me that they are negligently wasting money.

I also wonder about the basis on which administrative costs are assessed. If, for example, salary of ARI employees is considered 100% administrative overhead, then the salary paid to ARI's in-house intellectuals would be misclassified. The methodology section isn't entirely clear on that. It implies that salaries are considered part of administrative expenses, but doesn't provide any more detail. Interpreting the real meaning of these kinds of statistics is sometimes surprisingly difficult.

[DavidOdden]

The computations are clearly in error, though presumably this derives from them mining tax returns and mechanically plugging in values. For example, Yaron Brook is not just a paper-pushing administrator, he is on a day-to-day basis promulgating Objectivism. Printing and mailing costs, which are a large part of what ARI is about, are considered "fundraising expenses".

[joe]

Using the website's data, if you compare costs with of some of ARI's main "competitors", ARI compares favorably.

In terms of leadership salaries, Yaron Brook is a bargain (especially considering the work he does):

Heritage Foundation: Edwin J. Feulner Jr. -- $601,452

AEI: Christopher DeMuth -- $583,750

Cato: Edward H. Crane -- $396,000

Woodrow Wilson Center: Lee Hamilton -- $310,000

Brookings Institue: Strobe Talbott -- $309,060

ARI: Yaron Brook -- $245,000

In terms of administrative cost percentage, ARI is also pretty good compared to the group:

Brookings -- 18.5%

Woodrow Wilson -- 17.8%

Cato -- 17.1%

ARI -- 15.2%

AEI -- 14.3%

Heritage -- 3.0%

[FeatherFall]

In order to do a real effeciency analysis, you'd have to compare ARI to other charities that promote the ideas of Ayn Rand. There are really no other organizations that compare. I doubt the Heritage Foundation and Cato Institute encounter the same level of resistance as ARI.

While I've only seen Dr. Brook speek once, I'm 'gonna me-too Spano's assessment of his salary.