Overvaluation of Drugs Continues to Dog Nonprofit World ...

The controversy over how charities value noncash gifts such as medicine continues to attract attention from both charity leaders and their critics, reports the Tribune-Review.

Overvaluation of drugs and other noncash items, say watchdog groups, can mislead the public into assuming a nonprofit is doing more to help the needy than it actually is and can give inaccurate impressions of a charity?s revenue and overhead.

In one such case, reported in The Chronicle earlier this year, the Internal Revenue Service slapped Food for the Hungry, based in Phoenix, Ariz., with a $50,000 fine for overvaluing the medicines it distributes overseas.

Barry Gardner, the charity?s chief financial officer, told the Tribune-Review that his group continues to dispute the IRS fine and had followed ?what was then the prevailing accounting guidance.?

Regardless of what is normal accounting practices, say experts, the integrity of all aid groups is weakened by such practices.

Michael Hanlon, who leads the health-financing division at the University of Washington?s Institute for Health Metrics and Evaluation, said the?overvaluation of medicines and other supplies is bad for the long-term health of the nonprofit world and recommended that the practice be stopped.

Source: http://philanthropy.com/blogs/philanthropytoday/overvaluation-of-drugs-continues-to-dog-nonprofit-world/55222

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