There are approximately 1.7 million nonprofits registered with the IRS today. There are countless numbers of counterfeit nonprofits that have names just like them. It’s the end of the year.
As you prepare for your gift giving, how are you preparing for the onslaught of those hoping that you’ll throw a few gifts their way?
Do you know your style of giving?
Are you a planner; one who has their whole budget for charitable giving mapped out and spread evenly throughout the year?
Are you a joiner? Do you believe in joining an organization at a level where you receive certain social benefits? (special events, exhibitions)
Have you gathered your friends and become a giving circle, hoping to maximize your contributions?
Do you give on impulse? Do you let the fundraising propaganda tug at your heartstrings and permit that cause you may have never heard of collect your hard earned dollars because this plea was just too good to pass up?
Do you rely on inspiration and will you only write a check to the cause that provides a clear path on a journey to solving some social ill?
As year-end giving amps up for a tremendous close, you owe it to yourself to make donations to those organizations that are truly worthy. But, how do you decide which ones they are?
If you do nothing else, make sure the charity is legitimate. You could examine the IRS website at http://www.irs.gov/charities/charitable/index.html and see if the group has truly been given the nonprofit status. You must know the name under which the group organized, which can at times, be different than what’s on record.
The PA Bureau of Charitable Organizations maintains registration and financial information on over 9,500 charities soliciting in the Commonwealth. Is the organization you want to send your money to properly registered to legitimately solicit funds? http://web.dos.state.pa.us/cgi-bin/Charities/creport.cgi Those organizations prohibited from soliciting in PA are also noted.
Guidestar www.guidestar.org can also provide you with the last tax return from the organization (form 990). There, on page 2, you can see the ratios of how your money will be spent. Dollars are spread across general management, fundraising and program expenses.
You may also get a sense of the chief executive’s salary (if over $50,000) and the board members compensation, if any, should be readily available.
The Center on Nonprofits and Philanthropy at the Urban Institute and the Center of Philanthropy at Indiana University found that ¼ of 220,000 nonprofits filing 990’s reported $0 fundraising expenses generating revenues of $1 million to $5 million; 13% listed $0 management and general expenses
Ratios do not necessarily tell the whole story. In the spring 2003, Nonprofit Quarterly, Jennifer A. Lammers states, "Choosing which charity to support based only on financial ratios is a little like choosing a restaurant based on how much it spends on advertising and marketing versus food."
The Center on Philanthropy at Indiana University has spearheaded additional research. From 1994 through 2004, it produced the nonprofit cost study, to better understand how funds are raised, the means for evaluations and methods for developing reports for funders and others to improve standards in this arena.
The Nonprofit Cost Study http://www.coststudy.org gives a pretty hard look at why there are so many variances in reporting styles and what makes one organization seem more financially astute than another.
To support the many nonprofit organizations that are trying to do the right thing and become more accountable, the Maryland Association of Nonprofit Organizations has created a "Standards for Excellence: An Ethics and Accountability Program" that is being replicated by the PA Association of Nonprofit Organizations (www.pano.org) and nine other states.
Other nonprofits may choose to go through the approval process being offered by the BBB Wise Giving Alliance at www.give.org.
Bottom line: it’s your money and it’s your business decision. You want to give to an organization that shares your same values. Do some investigation on where you will place your hard earned money.
If you find that the charity that you want to give to does not meet your new found criteria, perhaps the best gift you could give them is a letter explaining why you have decided to dedicate your dollars towards them improving their administration.
Or send them a link to the former sites and ask them to sign the Nonprofit Constitution which will commit them to making necessary change to live up to the right to the public trust that was given to them when they were granted tax exemption status. http://www.nonprofitcongress.org/constitution Penalizing your cause may not help it to become more fiscally responsible. Directing your money towards a specific activity, like training for governance and financial reporting, may be a better way to go. Happy giving!
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What is YOUR LEGACY FOR GIVING? Tired of giving band-aids, when a tornequet is needed? If you or your company could benefit from support in developing your giving plan, please contact me at kayte@bestprincipledsolutions.com.
