Chapter Two

Nonprofit profile at a glance

EIN
262915770
IRS 990 coverage
2010–2023
Forms available
Form 990 2023, Form 990-EZ 2009
Location
Los Angeles, CA, USA
Phone
3109088364
Rating
76
Verdict
SUPPORTED
Rating confidence
Moderate
Sector
Community, Neighborhood Development

Reported finances

Revenue
$2,632,797
Expenses
$2,590,317
Assets
$819,100
Liabilities
$585,796

Source: IRS Form 990. Selected filing: tax year 2023. Amounts in USD.

Leadership & pay

6 people listed

Executive titles in this filing

  • Jerald Cavitt (President Executive Director)
  • Ben Owens (Vice President)

Highest reported compensation

  • Jerald Cavitt (President Executive Director): $224,651 total reported compensation
  • Annette Cavitt (Office Manager): $104,571 total reported compensation

Source: IRS Form 990. Selected filing: tax year 2023. Names and roles reflect this filing, not necessarily current officeholders.

Overview

Mission

CHAPTER TWO INCs mission is to provide residents of our communities with healthy and positive alternatives to gang association juvenile delinquency and youth gang-related crimes. Working through a network of community agencies and with other neighborhood organizations we provide assistance to local community residents in preventing reducing and-or eliminating gang violence.

What it reported doing in 2023

Chapter Two Inc has consistently been contracted to affect change with the target population through the Los Angeles Gang Reduction and Youth Development GRYD. In 2023 the California Community Foundation and the Amity Foundation provided resources to expand our capacity to provide intervention and prevention services to areas that have different population dynamics and thus could not be effectively included in the work funded by the GRYD. We successfully serviced over 500 youth. More Specifically we have taken 250 youths through our gang reduction and youth development programs 215 or 86% of them completing the program. With the help of staff and volunteers we collected data on 175 youth and found that among the reasons that youth would not finish the program are youth refusal 30% non-attendance or inappropriate behavior sessions 30% the family moved 20% and youth criminal charges 10%. Chapter TWO Inc. has also been contracted to assist the Urban Peace Institute to provide peace keeping mentoring and food resources to 2000 disadvantaged and vulnerable youths and families in central Los Angeles.

Operating model

Revenue model
Grant-funded. 100% of the money available for current operations came from government grants.
Distribution model
Cannot be determined from the filing. The filing does not provide enough consistent spending detail to tell whether the nonprofit works directly or through others.

The verdict

SUPPORTED - A large share of available resources goes toward mission work and the filed numbers largely add up. Some filing-based governance responses are negative or unanswered and expenses are high relative to revenue.

Rating breakdown

  • Financial Efficiency: 79
  • Transparency & Controls: 84
  • Accountability: 62
  • Sustainability: 26
  • Growth: 100

Detailed rating inputs

Financial Efficiency

  • Mission deployment rate: 87.7%; rating input score 88
  • Program expense ratio: 89.2%; rating input score 89
  • Fundraising efficiency: Limited

Transparency & Controls

  • Consistency checks: 100%; rating input score 100; 62nd percentile among comparable filings
  • Pay-setting controls: 4 of 6 controls in place; rating input score 67
    • Compensation committee: Missing
    • Independent consultant: Missing
    • Other Form 990s reviewed: Pass
    • Written employment contract: Pass
    • Compensation survey or study: Pass
    • Board or committee approval: Pass
  • Foreign activity oversight: Limited
  • Grant itemization coverage: Limited
  • Major donor itemization: Yes; rating input score 100
  • Related-party transparency: Limited

Accountability

  • Independent voting board: 80%; rating input score 80; 14th percentile among comparable filings
  • Governance controls: 3 of 8 controls in place; rating input score 38
    • Conflict-of-interest policy: Fail
    • Whistleblower policy: Fail
    • Document-retention policy: Fail
    • CEO compensation review process: Pass
    • Other executive compensation review process: NotApplicable
    • Form 990 shared with the board: Pass
    • Board meeting minutes documented: Pass
    • Audit committee oversight: Missing
    • Independent financial-statement audit: Fail

Sustainability

  • Operating margin: 1.6%; rating input score 41; 41st percentile among comparable filings
  • Total-asset coverage ratio: 0.32; rating input score 10; 10th percentile among comparable filings
  • Liabilities to assets ratio: 0.72; rating input score 13; 13th percentile among comparable filings
  • Officer compensation ratio: 12.7%; rating input score 22; 22nd percentile among comparable filings

Growth

  • Program expense growth: 22% per year; rating input score 100; 87th percentile among comparable filings
  • Revenue growth: 12% per year; rating input score 100; 75th percentile among comparable filings
  • Asset growth: 15.2% per year; rating input score 100; 74th percentile among comparable filings

Details

  • Where the money goes: 87.7% of revenue deployed · 89.2% of spending went to programs
  • Governance: 4 of 5 board members independent · 3 of 8 filing controls reported
  • Programs: 3 filed program accomplishments · $2.3M in reported program spending
  • Leadership: top reported pay $225K · 6 people listed · 4 of 6 pay-setting controls reported
  • Highest-paid contractors: 1 contractor listed · $121K reported
  • Consistency: 38 of 41 current checks pass · 3 findings to review
  • Schedules: 6 filed schedules · includes major donors and executive pay
  • Filing history: 6 filing years from 2010 to 2023
  • Contacts: How to reach this organization
  • Money network: 4 filed money-flow records
  • Related organizations: Filed and resolved organization relationships.
  • Grant readiness: Federal tax and exclusion status, award history, and grant-maker relationships.
  • People: Everyone the filings name, and which of them the filings identify by more than a name.

Key Signals

Signals prioritize questions for review. They are not findings of misconduct.

Grant-readiness screening is separate from the live rating, not a measure of program quality. Review the source records before making a grant decision.

  • Moderate — Accountability: Governance controls: 4 of 7 not reported.
  • Moderate — Sustainability: Operating margin scored 41/100.
  • High — Sustainability: Total-asset coverage ratio scored 10/100.
  • High — Sustainability: Liabilities to assets ratio scored 13/100.
  • High — Sustainability: Officer compensation ratio scored 22/100.
  • Moderate — Transparency & Controls: Functional expense sum did not reconcile in the filed values.
  • Moderate — Transparency & Controls: Part IX AllOtherExpenses column sum did not reconcile in the filed values.
  • Moderate — Transparency & Controls: Schedule A contributions reconciliation did not reconcile in the filed values.
  • Review — Grant Readiness: California registration: this organization could not be resolved against the register, so the check is unfinished.