Charity Review

  • Issued: March 2014
  • Expires: March 2016

Diabetes Research and Wellness Foundation

Standards Not Met

  • 7
  • 13
  • 15

202-298-9211

5151 Wisconsin Avenue NW, Suite 420
Washington, DC 20016

http://www.diabeteswellness.net

202-298-9211

5151 Wisconsin Avenue NW, Suite 420
Washington, DC 20016

http://www.diabeteswellness.net

Standards Not Met

This organization does not meet one or more of the 20 Standards for Charity Accountability. Click the conclusions section below for more information.

Standards For Charity Accountability

Governance

  1. Board Oversight

    Oversight of Operations and Staff: Standard 1

    Description
    Organizations shall have a board of directors that provides adequate oversight of the charity's operations and its staff. Indication of adequate oversight includes, but is not limited to, regularly scheduled appraisals of the CEO's performance, evidence of disbursement controls such as board approval of the budget, fund raising practices, establishment of a conflict of interest policy, and establishment of accounting procedures sufficient to safeguard charity finances.

    The organization meets this standard.

  2. Board Size

    Number of Board Members: Standard 2

    Description
    Soliciting organizations shall have a board of directors with a minimum of five voting members.

    The organization meets this standard.

  3. Board Meetings

    Frequency and Attendance of Board Meetings: Standard 3

    Description
    An organization shall have a minimum of three evenly spaced meetings per year of the full governing body with a majority in attendance, with face-to-face participation. A conference call of the full board can substitute for one of the three meetings of the governing body. For all meetings, alternative modes of participation are acceptable for those with physical disabilities.

    The BBB is unable to verify if this organization meets this standard.

  4. Board Compensation

    Compensated Board Members: Standard 4

    Description
    Not more than one or 10% (whichever is greater) directly or indirectly compensated person(s) serving as voting member(s) of the board. Compensated members shall not serve as the board's chair or treasurer.

    The organization meets this standard.

  5. Conflict of Interest

    Conflict of Interest: Standard 5

    Description
    No transaction(s) in which any board or staff members have material conflicting interests with the charity resulting from any relationship or business affiliation. Factors that will be considered when concluding whether or not a related party transaction constitutes a conflict of interest and if such a conflict is material, include, but are not limited to: any arm's length procedures established by the charity; the size of the transaction relative to like expenses of the charity; whether the interested party participated in the board vote on the transaction; if competitive bids were sought and whether the transaction is one-time, recurring or ongoing.

    The organization meets this standard.

Measuring Effectiveness

  1. Effectiveness Policy

    Board Policy on Effectiveness: Standard 6

    Description
    Have a board policy of assessing, no less than every two years, the organization's performance and effectiveness and of determining future actions required to achieve its mission.

    The organization meets this standard.

  2. Effectiveness Report

    Board Approval of Written Report on Effectiveness: Standard 7

    Description
    Submit to the organization's governing body, for its approval, a written report that outlines the results of the aforementioned performance and effectiveness assessment and recommendations for future actions.

    DRWF does not meet this Standard because:

    • Although it produced a written effectiveness assessment report, it was not submitted for approval to the board of directors.

Finances

  1. Program Expenses

    Program Service Expense Ratio: Standard 8

    Description
    Spend at least 65% of its total expenses on program activities.

    The organization meets this standard.

  2. Fund Raising Expenses

    Fund Raising Expense Ratio: Standard 9

    Description
    Spending should be no more than 35% of related contributions on fund raising. Related contributions include donations, legacies, and other gifts received as a result of fund raising efforts.

    The organization meets this standard.

  3. Accumulating Funds

    Ending Net Assets: Standard 10

    Description
    Avoid accumulating funds that could be used for current program activities. To meet this standard, the charity's unrestricted net assets available for use should not be more than three times the size of the past year's expenses or three times the size of the current year's budget, whichever is higher.

    The organization meets this standard.

  4. Audit Report

    Financial Statements: Standard 11

    Description
    Make available to all, on request, complete annual financial statements prepared in accordance with generally accepted accounting principles. When total annual gross income exceeds $500,000, these statements should be audited in accordance with generally accepted auditing standards. For charities whose annual gross income is less than $500,000, a review by a certified public accountant is sufficient to meet this standard. For charities whose annual gross income is less than $250,000, an internally produced, complete financial statement is sufficient to meet this standard.

    The organization meets this standard.

  5. Detailed Expense Breakdown

    Detailed Functional Breakdown of Expenses: Standard 12

    Description
    Include in the financial statements a breakdown of expenses (e.g., salaries, travel, postage, etc.) that shows what portion of these expenses was allocated to program, fund raising, and administrative activities. If the charity has more than one major program category, the schedule should provide a breakdown for each category.

    The organization meets this standard.

  6. Accurate Expense Reporting

    Accuracy of Expenses in Financial Statements: Standard 13

    Description
    Accurately report the charity's expenses, including any joint cost allocations, in its financial statements. For example, audited or unaudited statements which inaccurately claim zero fund raising expenses or otherwise understate the amount a charity spends on fund raising, and/or overstate the amount it spends on programs will not meet this standard.

    <p>&nbsp;<span style="font-size: 12px; font-family: Verdana, sans-serif; background-color: white; line-height: 11.1pt;">DRWF does not meet this Standard because:</span></p> <p><span style="font-size: 12px; font-family: Verdana, sans-serif; background-color: white; line-height: 11.1pt;">In the Alliance's opinion, the&nbsp;2011 audit report does not provide an accurate presentation of DRWF&rsquo;s fund raising and program service expenses.</span></p> <p style="margin: 0in 0in 12pt; line-height: 11.1pt; background-color: white; background-position: initial initial; background-repeat: initial initial;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;">The Alliance reviewed DRWF&rsquo;s audited financial statements for the fiscal year ended September 30, 2012, which included an auditor's opinion that the statements were prepared in accordance with Generally Accepted Accounting Principles (GAAP). According to the audited financial statements, DRWF incurred joint costs of $1,969,317 for informational materials and activities that include fund raising expenses. Of this amount, $1,601,465 was allocated to program service expenses, and $367,852 was allocated to fund raising expenses.<o:p></o:p></span></p> <p style="margin: 0in 0in 12pt; line-height: 11.1pt; background-color: white; background-position: initial initial; background-repeat: initial initial;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;">Based on an evaluation of sample DRWF appeals, the BBB Wise Giving Alliance disagrees with the allocation of $1,601,465 of direct mail appeals to the program service category. The Alliance is of the opinion that the contents of the direct mail appeals (including the associated costs of premium items such as pens, pillows, tote bags, grooming kits, magnifying glasses, calendars, notepads, cards, and dollar bills) do not substantiate 81% of the cost to program service expenses. &nbsp;In addition, the Alliance identified one appeal that was included in the allocation of joint costs but did not include a call to action other than donating as required by the accounting guidelines in AICPA Statement of Position 98-2.<o:p></o:p></span></p> <p style="margin: 0in 0in 12pt; line-height: 11.1pt; background-color: white; background-position: initial initial; background-repeat: initial initial;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;">Depending on how one recognizes DRWF&rsquo;s direct mail expenses, its fund raising costs could be higher than the 2% of related contributions that was reported by DRWF and its program services could be lower than 96% of total expenses also reported by DRWF. Since the Alliance disagrees with DRWF&rsquo;s joint cost allocations, we are unable to determine whether the organization meets Standards 8 and 9, which address fundraising and program expenses.<o:p></o:p></span></p>

  7. Budget Plan

    Budget: Standard 14

    Description
    Have a board-approved annual budget for its current fiscal year, outlining projected expenses for major program activities, fund raising, and administration.

    The organization meets this standard.

Fund Raising & Info

  1. Truthful Materials

    Misleading Appeals: Standard 15

    Description
    Have solicitations and informational materials, distributed by any means, that are accurate, truthful and not misleading, both in whole and in part. Appeals that omit a clear description of program(s) for which contributions are sought will not meet this standard. A charity should also be able to substantiate that the timing and nature of its expenditures are in accordance with what is stated, expressed, or implied in the charity's solicitations.

     DRWF does not meet this Standard because:

    In the Alliance’s opinion, direct mail appeals sent in 2012 and 2013 included Sweepstakes appeals that use phrases suggesting that the recipient has already won a prize, but on closer inspection reveal that the recipient only has a chance to win if they send in registration forms.  Examples include envelopes and letters using language such as “Prize Forfeiture Deadline,” “Claim Your Prize Sweepstakes” with emphasis on the words Claim Your Prize, and “Major Cash Prize Guaranteed to be Awarded.” In addition, some mailings included inserts made to appear as bank statements showing “Deposits and Credits” of $20,000 and zero “Withdrawals and Debits.”

  2. Annual Report

    Annual Report: Standard 16

    Description
    Have an annual report available to all, on request, that includes: (a) the organization's mission statement, (b) a summary of the past year's program service accomplishments, (c) a roster of the officers and members of the board of directors, (d) financial information that includes (i) total income in the past fiscal year, (ii) expenses in the same program, fund raising and administrative categories as in the financial statements, and (iii) ending net assets.

    The organization meets this standard.

  3. Website Disclosures

    Web Site Disclosures: Standard 17

    Description
    Include on any charity websites that solicit contributions, the same information that is recommended for annual reports, as well as the mailing address of the charity and electronic access to its most recent IRS Form 990.

    The organization meets this standard.

  4. Donor Privacy

    Privacy for Written Appeals & Internet Privacy: Standard 18

    Description
    Address privacy concerns of donors by (a) providing in written appeals, at least annually, a means (e.g., such as a check off box) for both new and continuing donors to inform the charity if they do not want their name and address shared outside the organization, (b) providing a clear, prominent and easily accessible privacy policy on any of its websites that tells visitors (i) what information, if any, is being collected about them by the charity and how this information will be used, (ii) how to contact the charity to review personal information collected and request corrections, (iii) how to inform the charity (e.g., a check off box) that the visitor does not wish his/her personal information to be shared outside the organization, and (iv) what security measures the charity has in place to protect personal information.

    The organization meets this standard.

  5. Cause Marketing Disclosures

    Cause Related Marketing: Standard 19

    Description
    Clearly disclose how the charity benefits from the sale of products or services (i.e., cause-related marketing) that state or imply that a charity will benefit from a consumer sale or transaction. Such promotions should disclose, at the point of solicitation: (a) the actual or anticipated portion of the purchase price that will benefit the charity (e.g., 5 cents will be contributed to abc charity for every xyz company product sold), (b) the duration of the campaign (e.g., the month of October), (c) any maximum or guaranteed minimum contribution amount (e.g., up to a maximum of $200,000).

    The organization meets this standard.

  6. Complaints

    Complaints: Standard 20

    Description
    Respond promptly to and act on complaints brought to its attention by the BBB Wise Giving Alliance and/or local Better Business Bureaus about fund raising practices, privacy policy violations and/or other issues.

    The organization meets this standard.

Conclusion

Diabetes Research and Wellness Foundation does not meet the following 3 Standards for Charity Accountability:

Standard 7 - Board Approval of Written Report on Effectiveness
Submit to the organization's governing body, for its approval, a written report that outlines the results of the aforementioned performance and effectiveness assessment and recommendations for future actions.

DRWF does not meet this Standard because:

  • Although it produced a written effectiveness assessment report, it was not submitted for approval to the board of directors.

Standard 13 - Accuracy of Expenses in Financial Statements
Accurately report the charity's expenses, including any joint cost allocations, in its financial statements. For example, audited or unaudited statements which inaccurately claim zero fund raising expenses or otherwise understate the amount a charity spends on fund raising, and/or overstate the amount it spends on programs will not meet this standard.

<p>&nbsp;<span style="font-size: 12px; font-family: Verdana, sans-serif; background-color: white; line-height: 11.1pt;">DRWF does not meet this Standard because:</span></p> <p><span style="font-size: 12px; font-family: Verdana, sans-serif; background-color: white; line-height: 11.1pt;">In the Alliance's opinion, the&nbsp;2011 audit report does not provide an accurate presentation of DRWF&rsquo;s fund raising and program service expenses.</span></p> <p style="margin: 0in 0in 12pt; line-height: 11.1pt; background-color: white; background-position: initial initial; background-repeat: initial initial;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;">The Alliance reviewed DRWF&rsquo;s audited financial statements for the fiscal year ended September 30, 2012, which included an auditor's opinion that the statements were prepared in accordance with Generally Accepted Accounting Principles (GAAP). According to the audited financial statements, DRWF incurred joint costs of $1,969,317 for informational materials and activities that include fund raising expenses. Of this amount, $1,601,465 was allocated to program service expenses, and $367,852 was allocated to fund raising expenses.<o:p></o:p></span></p> <p style="margin: 0in 0in 12pt; line-height: 11.1pt; background-color: white; background-position: initial initial; background-repeat: initial initial;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;">Based on an evaluation of sample DRWF appeals, the BBB Wise Giving Alliance disagrees with the allocation of $1,601,465 of direct mail appeals to the program service category. The Alliance is of the opinion that the contents of the direct mail appeals (including the associated costs of premium items such as pens, pillows, tote bags, grooming kits, magnifying glasses, calendars, notepads, cards, and dollar bills) do not substantiate 81% of the cost to program service expenses. &nbsp;In addition, the Alliance identified one appeal that was included in the allocation of joint costs but did not include a call to action other than donating as required by the accounting guidelines in AICPA Statement of Position 98-2.<o:p></o:p></span></p> <p style="margin: 0in 0in 12pt; line-height: 11.1pt; background-color: white; background-position: initial initial; background-repeat: initial initial;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;">Depending on how one recognizes DRWF&rsquo;s direct mail expenses, its fund raising costs could be higher than the 2% of related contributions that was reported by DRWF and its program services could be lower than 96% of total expenses also reported by DRWF. Since the Alliance disagrees with DRWF&rsquo;s joint cost allocations, we are unable to determine whether the organization meets Standards 8 and 9, which address fundraising and program expenses.<o:p></o:p></span></p>

Standard 15 - Misleading Appeals
Have solicitations and informational materials, distributed by any means, that are accurate, truthful and not misleading, both in whole and in part. Appeals that omit a clear description of program(s) for which contributions are sought will not meet this standard. A charity should also be able to substantiate that the timing and nature of its expenditures are in accordance with what is stated, expressed, or implied in the charity's solicitations.

 DRWF does not meet this Standard because:

In the Alliance’s opinion, direct mail appeals sent in 2012 and 2013 included Sweepstakes appeals that use phrases suggesting that the recipient has already won a prize, but on closer inspection reveal that the recipient only has a chance to win if they send in registration forms.  Examples include envelopes and letters using language such as “Prize Forfeiture Deadline,” “Claim Your Prize Sweepstakes” with emphasis on the words Claim Your Prize, and “Major Cash Prize Guaranteed to be Awarded.” In addition, some mailings included inserts made to appear as bank statements showing “Deposits and Credits” of $20,000 and zero “Withdrawals and Debits.”

The BBB Wise Giving Alliance requested but did not receive complete information from the organization and is unable to verify the organization's compliance with the following Standard(s) for Charity Accountability: 3

Diabetes Research and Wellness Foundation meets the remaining 16 Standards for Charity Accountability.

Purpose

  • Year, State Incorporated

    1993, Maryland

  • Stated Purpose

    "to help find the cure for diabetes, and until that goal is achieved, to provide the care and self-management skills needed to combat the life-threatening complications of this terrible disease."

Programs

DRWF provides funds to researchers working towards a path to a cure for diabetes. The organization reports providing funds to researchers whose work has already provided substantial insight into the causes, early detection, or treatment of diabetes and its complications. DRWF also encourages and facilitates the development of fledgling researchers in the field of diabetes research. The organization promotes public education about the causes, prevention, and treatment of diabetes and its complications. DRWF provides services and products to people with diabetes and supports the education and training of health care professionals. Some ($1,601,465 or 88%) of DRWF's Diabetes identification and guidance program activities are carried out in conjunction with fund raising appeals.

For the year ended December 31, 2012, DRWF's program expenses were:

Medical, relief, and nutritional supplies 5,960,704
Diabetes identification and guidance 1,820,643
Global outreach assistance 1,728,215
Medical research grants 1,051,000
Diabetes self-management research and services 211,624
Educational events 136,864
Total Program Expenses: $10,909,050

Governance & Staff

  • Chief Executive

    W. Michael Gretschel, Volunteer President

  • Compensation*

    $0

  • Chair of the Board

    John Alahouzos

  • Chair's Profession / Business Affiliation

    Direct Mail Executive

  • Board Size

    7

  • Paid Staff Size

    6

*2012 compensation includes annual salary and, if applicable, benefit plans, expense accounts, and other allowances. The organization reports that its President is unpaid.

Fund Raising

Method(s) Used:

DRWF incurred joint costs of $2,189,106 for informational materials and activities that included fund raising materials. Of those costs $1,811,466 was allocated to program expenses and $377,640 was allocated to fund expenses.
Fund raising costs were 5% of related contributions. (Related contributions, which totaled $9,423,248, are donations received as a result of fund raising activities.)

Tax Status

This organization is tax-exempt under section 501(c)(3) of the Internal Revenue Code. It is eligible to receive contributions deductible as charitable donations for federal income tax purposes.

Financial

The following information is based on DRWF's audited financial statements for the year ended December 31, 2012.

Source of Funds
Contributions of medical supplies 5,833,418
Contributions and grants 3,589,830
Fees- technical and material assistance 1,727,115
Program event revenue 43,793
List rental income 37,013
Subscriptions 5,003
Investment and other income 2,758
Change in value of gifts annuities payable -1,853
Total Income $11,237,077
  • Programs: 96%
  • Fundraising: 4%
  • Administrative: Less than 1%
Total Income $11,237,077
Program expenses 10,909,050
Fundraising expenses $426,646
Administrative expenses $51,276
Other expenses $0
Total expenses: $11,386,972
Expenses in Excess of Income (-149,895)
Beginning Net Assets 1,474,420
Other Changes In Net Assets 2,895
Ending Net Assets 1,327,420
Total Liabilities 484,074
Total Assets 1,811,494

Note: For the year ended December 31, 2012, DRWF reported in-kind income of $5,833,418 for medical, relief and nutritional supplies.

An organization may change its practices at any time without notice. A copy of this report has been shared with the organization prior to publication. It is not intended to recommend or deprecate, and is furnished solely to assist you in exercising your own judgment. If the report is about a charity and states the charity meets or does not meet the Standards for Charity Accountability, it reflects the results of an evaluation of information and materials provided voluntarily by the charity. The name Better Business Bureau is a registered service mark of the Council of Better Business Bureaus, Inc.

This report is not to be used for fund raising or promotional purposes.