Habitat for Humanity Silicon Valley’s FY 2010 Financials
Response to Charity Navigator Downgrade in Rating
According to General Accepted Accounting Principles (GAAP), a construction company does not recognize project related expenses until homes are sold. Habitat for Humanity Silicon Valley’s mission is to build and sell affordable homes. While construction is ongoing, Habitat Silicon Valley may only sell homes every other year. In fiscal year 2010, Habitat Silicon Valley spent over $2 million on program related expenses but those expense were not recognized because the homes were not sold in fiscal year 2010. As a result, the current year’s functional expense percentage for program services is unusually low.
Charity Navigator’s rating method is formula driven and does not take into account any extenuating circumstances or project timelines where reported finances vary from year to year. Habitat for Humanity Silicon Valley expects the percentages in program expenses to substantially increase in the following year due to the timing of project home sales.
