Charity Review

  • Issued: May 2013
  • Expires: May 2015

Children of the Night

Standards Not Met

  • 1

818-908-4474

14530 Sylvan Street
Van Nuys, CA 91411

http://www.childrenofthenight.org

818-908-4474

14530 Sylvan Street
Van Nuys, CA 91411

http://www.childrenofthenight.org

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.

    CN does not meet this Standard because its board of directors does not:

    • Review the performance of the chief executive officer at least once every two years.

  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 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.

    The organization meets this standard.

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.

    The organization meets this standard.

  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.

    The organization meets this standard.

  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

Children of the Night does not meet the following 1 Standards for Charity Accountability:

Standard 1 - Oversight of Operations and Staff
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.

CN does not meet this Standard because its board of directors does not:

  • Review the performance of the chief executive officer at least once every two years.

In addition, the BBB Wise Giving Alliance requested but did not receive complete information on the organization’s governance and oversight and finances and is unable to verify the organization's compliance with the following 2 Standards for Charity Accountability: 3 and 13.

Children of the Night meets the remaining 19 Standards for Charity Accountability.

Purpose

  • Year, State Incorporated

    1981, California

  • Stated Purpose

    "to provide intervention in the lives of children who are sexually exploited and vulnerable to or involved in prostitution and pornography."

Programs

CN is dedicated to rescuing America’s children from the ravages of prostitution. The Children of the Night home is open to child prostitutes throughout the United States, and the Children of the Night hotline (1 800 551 1300) is ready and able to rescue these children 24 hours a day. The organization provides free taxi/airline transportation nationwide for America’s child prostitutes who wish to escape prostitution and live in its home. The hotline staff works closely with law enforcement to rescue children from pimps. The home features an on-site school and college placement program. After youngsters complete a program of academic and life-skills education, caseworkers are available to provide ongoing case management to hundreds of graduates. In 2011, “Children of the Night With Out Walls” (WOW) introduced programs from the Children of the Night shelter home to underfunded and undeveloped shelters and their clients throughout America. WOW offers young people living on the streets access to birth certificates, school records, social security cards, government issued photo identification, transportation to critical social services, case management, résumé preparation, job placement, parenting support, and educational services including academic assessments, and preparation, tutoring and support services to test for the GED (General Education Diploma).

For the year ended December 31, 2011, CN's program expenses were:

Children of the Night Shelter Home 1,601,943
Total Program Expenses: $1,601,943

Governance & Staff

  • Chief Executive

    Lois Lee, President

  • Compensation*

    $238,961

  • Chair of the Board

    Janet C. Jones

  • Chair's Profession / Business Affiliation

    CEO of Elkins-Jones

  • Board Size

    5

  • Paid Staff Size

    25

*2011 compensation includes annual salary and, if applicable, benefit plans, expense accounts, and other allowances.

Fund Raising

Method(s) Used:

Direct mail, grant proposals, and Internet appeals.
Fund raising costs were 7% of related contributions. (Related contributions, which totaled $1,598,292, are donations received as a result of fund raising activities.)
CN incurred joint costs of $31,650 for informational materials and activities that included fund raising materials. Of those costs $6,220 was allocated to program expenses, $30,873 was allocated to fund raising expenses, and $777 was allocated to administrative expenses.

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 CN's audited financial statements for the year ended December 31, 2011.

Source of Funds
Individuals 763,038
Foundations 633,230
Corporations 151,879
Donated goods or services 40,145
Partnership income 23,921
Bequests 5,000
Government 5,000
Other 4,500
Total Income $1,626,713
  • Programs: 87%
  • Fundraising: 6%
  • Administrative: 7%
Total Income $1,626,713
Program expenses 1,601,943
Fundraising expenses $115,873
Administrative expenses $133,490
Other expenses $0
Total expenses: $1,851,306
Expenses in Excess of Income (-224,593)
Beginning Net Assets 1,486,492
Ending Net Assets 1,261,899
Total Liabilities 148,159
Total Assets 1,410,058

Note: For the year ended December 31, 2011, CN reported in-kind income of $40,145 including legal services, clothing, groceries, school supplies, tickets, and computers.

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.