Is this a nonprofit group or a for-profit group?

It's getting harder to tell nowadays as more charities adopt practices -- and language -- straight out of the corporate playbook.

With growing government oversight and a faltering economy in which donors demand more bang for their buck, nonprofits must increasingly focus not only on their social mission, but also on financial sustainability.

Call it the "double bottom line."

In St. Jude's case, eyeballing the finances has paid off. For the first time in four years, the consolidated organization -- consisting of three campuses, two in Texas and one in Nevada, and a corporate group -- ended its fiscal year last summer in the black.

Christine Spadafor, an independent contractor who has been chief executive since April 2006, says her businesslike approach wasn't a hard sell.

"There was an urgency."

The place was hemorrhaging financially and in danger of shutting down.

Before Spadafor arrived on the scene in mid-2005 as a consultant to the national board of trustees, a group of outside financial experts warned that if St. Jude's didn't increase revenues or decrease expenses, by the summer of 2006 it might have only enough money to operate for a few more months.

In the fall of 2005, she presented the board with 112 recommendations on improving efficiency in operations, governance, staffing and infrastructure, even adding to the national board more voices from the governing boards at the Nevada and Texas campuses.

Not all attempts to incorporate for-profit practices in the nonprofit world are welcome. Though the trend has been taking hold for years, it still constitutes a major cultural shift in a realm where "business" has often been considered a dirty word.

Nevertheless, the line between nonprofits and for-profits is blurring.

Business practices aside, nonprofits assume the appearance of big business by the sheer size and breadth of their sector.

Nationwide, nonprofits numbered 1.48 million in 2006, up 36.2 percent from a decade earlier, according to the National Center for Charitable Statistics.

In terms of size and mission, they are a diverse collection, ranging from soup kitchens, chambers of commerce and religious congregations to hospital, educational and arts institutions.

The bulk of the entities are registered with the Internal Revenue Service as public charities. Like private foundations, public charities are classified as 501(c)(3) organizations, which means they don't have to pay federal income taxes and can receive tax-deductible donations.

In return, they must serve the public good, and operate exclusively for religious, charitable, scientific or educational purposes.

In 2006, the nation's 904,313 public charities had a combined $1.15 trillion in revenues and $2.03 trillion in assets.

During that same time, Nevada had 4,707 public charities, up 107.4 percent from 2,269 in 1996. Their combined revenues in 2006 totaled $2.65 billion; their assets, $4.67 billion.

The U.S. Government Accountability Office estimates the nonprofit sector's spending in recent years was 12 percent of the nation's gross domestic product. In a report last year, the GAO said measuring federal funding to nonprofits is difficult.

But one estimate pegged it at $317 billion in 2004.

The corporate influence within nonprofits has been gradual. For some, it migrated by way of business executives joining their boards.

It also filtered in through the Sarbanes-Oxley Act, signed into law in 2002 in response to a series of high-profile corporate scandals involving the likes of Enron and Tyco. Although nonprofits aren't legally bound to comply with most of the regulations -- the law broadened the role of board members of publicly held companies in overseeing financial transactions and auditing procedures -- many started to adopt rules on their own.

Charities, too, have had their own scandals. Over the years, reports of fraud, bloated executive salaries, insider deals, charity dollars furnishing lavish lifestyles -- even rich donors using the groups to cloak their personal expenses -- have sparked public indignation and government investigations.

In 2005, the IRS estimated that abuses by nonprofit groups and donors were costing the federal government $15 billion annually in lost revenue.

Sen. Charles Grassley, R-Iowa, has spearheaded several U.S. Senate Finance Committee investigations of nonprofit groups over the past few years.

Major players such as the Smithsonian Institution, the United Way and the Red Cross all have been under the microscope because of improprieties at either their national offices or regional chapters.

Christian ministries are among the latest crop to be associated with opulent spending. And congressional leaders over the past few years have been asking whether some nonprofit hospitals provide enough charity care to warrant their tax-exempt status.

In a matter unrelated to charity care, University Medical Center, Clark County's public hospital, was embroiled in its own scandal last year.

Lacy Thomas, then chief executive, was fired for misleading county commissioners about the hospital's record losses. Last month, he was indicted on five counts of theft and five counts of misconduct by a public officer.

He is accused of steering no-bid contracts for little or no work to associates from his Chicago days.

Historically, only charities with annual gross receipts exceeding $25,000 have had to send the IRS Form 990, the annual tax document for nonprofits. (Religious groups don't have to register or file.)

The economic threshold for reporting requirements is changing, thanks to the Pension Protection Act of 2006.

Most small tax-exempt organizations must electronically file Form 990-N, known as the e-postcard. The first filings are due this year for tax years ending on or after Dec. 31.

More important: The IRS is revamping the 990 in its first significant revision in nearly 30 years. The new requirements will be phased in, beginning with returns filed next year for the 2008 tax year.

The IRS says the changes are meant to enhance transparency, promote tax compliance and minimize the reporting burden on nonprofits.

That means the public should get a better look at the business operations of the tax-exempt groups while the government should be able to better tell if they are breaking the laws that govern them.

One schedule calls for more information on executive compensation, requiring reporting of amounts above $150,000, or more than $250,000 for totals including nontaxable fringe benefits and expense accounts.

It is also required for compensation exceeding $100,000 for former directors or highly paid workers, or more than $10,000 paid to former directors or trustees.

Still, the IRS has been criticized for softening requirements in the 990 final draft from the more stringent draft form it released in June, according to the Chronicle of Philanthropy.

Missing from the final version, according to the publication, are such revealing figures as comparisons of top officers' pay to total expenses, and of fundraising expenses to total contributions.

"The IRS easily could have done more to help donors readily understand where their money goes," Grassley said in a Chronicle report. "I plan to revisit that issue."

Meanwhile, nonprofit officials also have been finding ways to govern themselves more effectively. A national panel formed to provide principles for accountability, transparency and ethical practices released a guide last year on governance and ethical practices for charities and foundations to follow.

Local nonprofit experts agree that the smallest charities have the hardest time coping with today's new realities. For instance, those with similar missions still resist merging. But potential donors eventually might pressure them to do so.

"I think the expectations of donors have changed," says Dan Goulet, who heads the United Way of Southern Nevada. "They look for accountability and outcomes...They are asking, 'If I give you money, what are you going to do with it?'"

Nevada Women's Philanthropy does that, and more.

Among other things, the group examines an agency's operations budget and audited financial returns for the past three years. The screening process is narrowed to two finalists, who must submit written proposals and make a presentation.

Each philanthropy member, or "investor," donates $5,000 a year and gets an equal say about which nonprofit will receive the full amount. Funding is released in increments only when a project attains certain benchmarks.

Competition is keen, but the payoffs are high.

Last year, the group gave Boys Town Nevada $350,000 to help the nonprofit build a home for the siblings of children in its residential program.

Heather duBoef, the group's founder, says many nonprofits are ill-equipped to handle this level of scrutiny.

"Sustainability is the key," she says. "We have to make sure our dollars last longer. If they are to win these funds, will they be strong enough to sustain the project?"

For now, though, the average person only has access to publicly available financial snapshots of nonprofits. They show such figures as revenue and spending, and the names and earnings of the people heading them. But they don't reveal whether a particular program is working or not.

The good news for consumers and potential donors is that they can find more information about nonprofits than ever before. Many industry publications exist, as do a handful of charity watchdogs.

Charity Navigator, itself a nonprofit, evaluates the financial health of more than 5,200 of the nation's largest and best-known charities. It looks at their organizational efficiency, or how well they function day to day, and their organizational capacity, meaning how well they sustain their programs and services over time.

Of the eight charities rated in the Las Vegas area, Charity Navigator gives its highest scores to the Jewish Federation of Las Vegas, United Way of Southern Nevada and The Shade Tree, a program that gives shelter to abused and homeless women and children.

Charity Navigator also looks at executive pay.

Last August, Charity Navigator reported that the average charity's chief executive compensation nationwide was $145,270 a year, including salary, bonuses and expenses accounts.

That was up 2.34 percent from 2006.

Geography was a factor. Executives in the Northeast and mid-Atlantic states made higher than average salaries.

Closer to home, a survey last year of Southern Nevada nonprofits found their leaders -- whether they be chief executives, presidents or executive directors -- made an average of $96,500, or 84 percent of what their counterparts earned in the Southwest.

Fundraisers, called development officers or directors, made more than their peers holding the same jobs elsewhere in the region.

The study, done by Nevada Nonprofit News, was based on 93 responses representing organizations with at least one employee, minimum annual revenues of $25,000 and more than one funding source.

Slightly less than half of those groups have annual budgets exceeding $1 million.

Based on budget size, pay for leaders varies the most among organizations whose budgets range from $1 million to $5 million, the study said.

Executives in that category are paid from $45,000 to $120,000.

Without regard to budget size, the highest percentage -- 34 percent -- said they earn $50,000 to $75,000 annually.

Twenty-seven percent make more than $100,000, including 1 percent who gross more than $200,000.

Executive pay remains a prickly topic for nonprofits, which often complain they can't afford to compete with for-profits seeking top talent.

They have a point. The 20 highest-paid employees at publicly traded corporations in 2006 had average total pay packages of $36.4 million, according to a report last year by the Institute for Policy Studies and United for a Fair Economy.

That compares to the $965,698 average their nonprofit counterparts received.

"Most nonprofits will try to get by and hire someone who doesn't have the skill sets because of money," says Goulet, the local United Way leader.

Although the public usually thinks nonprofits should be spending money on programs rather than operations, he says organizations need to invest in leadership if they want to make the wisest use of their resources.

Spadafor, the executive who restructured St. Jude's, earned $325,000 for the year ending June 30. That's nearly double what the previous CEO was paid.

But Ralph Manning, St. Jude's board chairman, says a more apt comparison is the $402,630 the organization budgeted in fiscal 2006 for three positions: chief executive officer, chief operations officer and national development director.

She fills all three roles, he says, putting in an average of 70 hours a week.

Spadafor, who is 52, also deals with four boards of trustees: the national one and one representing each of three campuses.

St. Jude's, which houses abused, neglected and abandoned children, had revenue totaling $7.42 million last fiscal year.

The bulk of its $1.58 million surplus was an in-kind donation of labor and materials for an extensive landscaping and refurbishment of the Boulder City campus.

As of late February, the charity housed a total of 93 children at its three sites, including 40 at the Boulder City campus. The organization is licensed for a maximum of 120.

How much of the money that St. Jude's receives goes to the foster children in its charge? It depends on where they live.

Spadafor says the amount reached as high as 96 percent in Boulder City in fiscal 2007 but dropped to 62 percent for the entire organization. She attributes the variation to the number of staff employed at each site.

Including some part-time workers, St. Jude's employs the equivalent of 90 full-time workers, including 24 in Boulder City.

Spadafor commutes monthly from Massachusetts, where she has family ties. Manning says the arrangement comes at a nominal cost to the nonprofit: about $300 a month for airfare.

Spadafor had worked in both the nonprofit and for-profit sectors.

Before arriving at St. Jude's, she spent more than a decade as a partner at global management consulting firms.

Earlier, she was general counsel at a children's hospital and a chief executive of a mental health facility, both troubled nonprofits in Massachusetts that she helped turn around.

"She brings a great legal perspective, a clinical perspective and an administrative perspective, all in one person," Manning says. "I don't think we could ever find someone (else) who could wear all three hats."

He also credits Spadafor with brokering a deal that would allow St. Jude's to acquire a comparable nonprofit in the Southwest, "potentially doubling our census and revenue in a single transaction."

Manning would not name the nonprofit, but said the deal could close by early summer.

Spadafor says she found St. Jude's a "fractured" organization. She focused on increasing operational efficiency and effectiveness and streamlining processes and procedures.

"You can use a for-profit model but not lose your soul," she says. "We have never lost sight of the fact that everything that we do is for the children."

One of the many changes she suggested was standardizing best practices for therapeutic care throughout the organization.

Another new rule she initiated: Children are allowed inside the administration building.

"That's one thing you won't find in corporate America: children all over the office," Spadafor says.

Contact reporter Margaret Ann Miille at mmiille@reviewjournal.com or (702) 383-0401.