When you’re asked to make a donation to any non-profit organization
Posted Jul 07 2008 7:14pm
We can’t say it enough, there are thousands of non-profit organizations desperately looking for funds. Some are legitimate, others are less so. Some send their pitches by regular mail, others by email. Some dedicate the majority of their funds for direct services (i.e. by funding research), others are top heavy and use much of that money to pay staff.
The Better Business Bureau has an excellent guide that will help you determine if the charity you would like to support is functioning in a prudent and healthy way. They ask you to evaluate how a non profit governs their organization, how they spend their money, their truthfulness and their willingness to disclose basic information to the public.
How an organization is managed is vital. We want to know if the Board of Directors is fulfilling its role and responsibiilities. Are they evaluating the performance of the organization? Are they reviewing the budget?? Are they providing performance reviews of the Executive Director?
We want to know if that board is meeting regularly (i.e. a minimum of three times a year). In some states (i.e. California), Board meetings are also required to be open to the public and organization members or donors. One simple way to check? Do they provide a calendar of board meetings on their websites.
Most of all, we want to ensure that the Board does not have a financial bias or interest in the organization. Normally and in most organizations, board members are generally volunteers. The BBB suggests that“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.”
In addition to the governance of the group, we also want to know if they are spending our donations wisely. The BBB suggests that 65% of the budget should be directed towards program activities. Some organizations are very top heavy with 50% or more of their budget going to salaries and administrative overhead rather than programs. This is something to be aware of and to evaluate if you want to make long term donations to any group.
Last, but certainly not least, we want to make sure that this organization is functioning as transparently as possible. Conducting business behind closed doors, in my opinion, creates doubt for a publicly funded non-profit organization. We expect financial statements/annual reports to be available directly on their websites as well as their IRS form 990’s. The IRS Form 990 is the best document that you can use to evaluate an organization because it breaks down the budget indepth, provides salary figures, board members who are compensated, how much they receive etc. etc. Always remember that tax law requires that the 990 be made available to you at your request. If it is not provided, you can file a complaint with the IRS and we strongly suggest that you do so.
So, this year, as you receive yet more letters, emails, etc. asking for donations, we hope that you’ll take a moment to evaluate that organization and ask yourself if they are using your donations wisely. If not, there are plenty of other groups that may be far more deserving.
For more information on charities, please visit the National Charities Information Bureau at: http://www.give. org
To review some IRS Form 990’s related to various IC groups, please visit: http://www.guidestar.org. You’ll have to register (it’s free). To download the IRS forms, look for the “beta version” links… which give you direct access to the forms. You might find yourself surprised.
We, at the ICN, believe that your donor dollars would be the most appreciated when given directly to IC research centers, such as the University of Maryland. We offer an ICN Donation and Giving Guide that lists promising research centers and projects. http://www.ic-network.com/mgt/donations.html