Disabled American Veterans

How effective is Disabled American Veterans? It seems to be one of the oldest and largest veterans charities.

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Disabled American Veterans (DAV) was created in 1932 by Federal charter, via an Act of Congress.

AIP (the American Institute of Philanthropy) has pointed out that having a Congressional charter does NOT mean that the U.S. government approves the group's activities, nor does it provide oversight. It should also be noted that Congress has never revoked a charter once issued.

The Better Business Bureau Wise Giving Alliance (BBB) reports that other groups affiliated with DAV include the Disabled American Veterans National Service Foundation, the Disabled American Veterans Charitable Service Trust, and 1,780 chapters and departments.

The stated purpose of Disabled American Veterans is "to build better lives for all of our nation's disabled veterans and their families."

With a paid staff of 750, and an estimated 9,000+ volunteers, Disabled American Veterans is surely one of the largest and best known of the veterans charities. In Forbes magazine's list of the top 200 charities in the U.S., only the Marines' Toys for Tots program reported more annual revenue than Disabled American Veterans.

For 2008, DAV reported gross receipts of $480,042,863. Gross receipts represents the total amount received during the year from all sources. It includes membership dues, donations (cash and non-cash), investment income, sales of assets, and all other receipts.

According to its Form 990 (tax return) for 2008 (which is 99 pages long!), DAV generated the following revenue in 2008:

Contributions and grants: $117,514,051
Program service revenue (membership dues): $ 5,841,259
Investment income: -$ 9,086,098
Other revenue: $ 1,057,805
Total revenue: $115,327,017

That amount was down from $149,665,877 the previous year.

The 9-million-dollar loss reported for investment income (or loss) resulted from investment income of $9,797,829, plus royalties of $1,046,860, less a loss of $18,883,927 realized when it sold securities (stocks, etc.). The gross amount of the sale was $345,831,919, but the cost or other basis of those securities, plus the costs of sale totaled $364,715,846, resulting in the net loss. The net loss amount of $18.8 million is the amount shown as "revenue."

DAV also reported the following expenses:

Grants and other assistance: $8,746,009
Salaries and employee benefits: $46,930,385
Legal Fees: $367,279
Accounting Fees: $167,550
Lobbying expenses: $83,877
Investment management fees: $940,773
Other fees for services provided by non-employees: $4,906,510
Professional fundraising fees: $234,488 *
Advertising and promotion: $1,468,547
Office expenses: $51,332,264
Information technology: $122,728
Royalties: $1,758,661
Occupancy: $856,132
Travel: $1,910,262
Conferences, etc: $1,392,602
Depreciation: $2,568,669
Insurance: $353,362
Membership services: $4,000,000
Relocation expenses: $1,616,019
Training: $187,387
Project costs: $73,790
Other expenses: $538,577
Total functional expenses: $130,545,871

For the year, that equals a loss of $15,218,854, as opposed to an excess the previous year of $19,655,462.

* While it reported only $234,488 as "professional fundraising expenses," Disabled American Veterans reported total fundraising expenses of $32,863,062.

Total program service expenses of $90,270,306 broke down this way:

National Service Program: $50,389,570
(including grants of $8,711,009)
Publications and Communications expenses: $4,992,731
Membership program expenses: $9,917,285
(membership program revenues were $5,841,259)
Other program services: $24,970,720

DAV reported $3,231,239 in gross receipts from fundraising activities conducted by professional fundraising organizations, for which it paid those groups $234,488 (or an average of 7%). One group, Creative Direct Response, which conducted direct mail and electronic fundraising, retained only $60,000 of the $2,182,338 it raised (3%). The other group, however, First Degree, which conducted corporate fundraising, retained $174,488 of the $1,948,901 it raised (17%). These numbers are far more reasonable than those reported by some other veterans charities.

The way these numbers are reported can be very confusing. For example, of the $46,930,385 in salaries and employee benefits, only $3,655,973 was allocated to administrative expenses. There was $3,362,551 allocated to fundraising expenses (which would indicate that there are approximately the same number of employees dedicated to fundraising as to administrative positions to run the organization). But the vast majority of that figure, $39,911,861 (85%) was allocated to program expenses. That should represent the amount of salary and benefits for employees dedicated to providing direct program services to clients. In a service organization such as DAV, one would expect the majority of employees to be providing direct client services, so this seems reasonable.

Some donors, however, consider all amounts spent on salaries and benefits to be administrative or overhead costs of running the organization. If you take that view, then 36% of the $130.5M in expenses went for salaries and benefits. So the numbers you use and the percentages you get depend on your point of view.

What most donors want to know is "how much of my money went directly to supporting your cause?"

After it allocates the expenses among program services, administrative costs, and fundraising costs, DAV breaks it down this way in their Annual Report:

Program services: $127,834,629 (76.5%)
Fundraising costs: $32,863,062 (19.7%)
Administrative expenses: $6,471,730 (3.9%)
Total expenses: $167,169,421

You may notice that this number is some $37M higher than the $130M in "functional expenses" reported on the Form 990, and thus there seems to be some discrepancy. The difference is in the amount reported for program services. Because the components of this are described differently in the two documents, we do not see an explanation for the difference. We will contact DAV to request an explanation of the difference, and will update this page when we receive their response.

The numbers we've given you are from the Form 990 for the tax year ending December 31, 2008. You'll see the percentage numbers are very similar to those reported by the BBB for 2006.

The BBB report for Disabled American Veterans is based on its audited financial statements for the year ended December 31, 2006. The report expires in April 2010 (now), so a new report should be available soon.

For 2006, BBB reports DAV's total income as $169,943,292, with the following expenses:

Program expenses: $119,841,959 (77%)
Fundraising expenses: $30,546,235 (20%)
Administrative expenses: $4,592,505 (3%)

BBB reports that DAV meets all 20 of its Standards for Charity Accountability.

We hope this information will help you decide whether you wish to support Disabled American Veterans.