CAVEAT EMPTOR. Let the buyer beware. Consumers should do their homework before hiring a home contractor or purchasing a major appliance or new car. We know that. But the same should be true for those organizations that tug at our heartstrings and ask us for help.
As we’re increasingly inundated with requests for donations to so many groups it would benefit those contemplating giving to charities to do our due diligence, advised professionals who monitor groups or offer guidance for those in the philanthropic field.
In what is planned to be an ongoing, irregular series looking at charitable giving and those organizations asking for those contributions, The Two River Times has asked for advice from those professionals as to what consumers should consider before giving to charities they may not be that familiar.
As we’re increasingly inundated with requests for donations to so many groups it would benefit those contemplating giving to charities to do our due diligence, advised professionals who monitor groups or offer guidance for those in the philanthropic field.
In what is planned to be an ongoing, irregular series looking at charitable giving and those organizations asking for those contributions, The Two River Times has asked for advice from those professionals as to what consumers should consider before giving to charities they may not be that familiar.
Currently there are roughly 1.5 million not-for-profits registered in the United States, with more than 40,000 intended to help military veterans alone. “There are so many non-profits and so many causes, on some level we get overdosed,” with requests, observed Dennis C. Miller, executive director of Fairleigh Dickinson University’s Center for Excellence in Leadership, Governance and Philanthropy and leadership coach for nonprofit boards.
And while the overwhelming number of them are reputable and doing good work, “Unfortunately, there are fraudulent organizations out there,” said Jackie Enterline, media out- reach manager for GuideStar, a nonprofit organization and database website that provides information on most of the registered operating nonprofits.
And while the overwhelming number of them are reputable and doing good work, “Unfortunately, there are fraudulent organizations out there,” said Jackie Enterline, media out- reach manager for GuideStar, a nonprofit organization and database website that provides information on most of the registered operating nonprofits.
“A lot of times we give retroactively,” Enterline pointed out, as we answer a phone solicitation or a sidewalk request for change or more. “Of course, you want to give right there when you’re thinking about it.” But Enterline advised the people should “make sure you go and do your research, know what the organization is about, understand the mission before you decide to hand over your hard-earned money.”
On the federal level oversight rests with the Internal Revenue Service, with state regulating charities and non-profits through either the attorney general’s office or the office of the secretary of state. In New Jersey the attorney general is responsible. But given the vast numbers and the government staffing limitations, unless there are glaring instances of misbehavior and public complaints, oversight is really limited, some associated with state and federal agencies said on background. “There is no way they can police that all given the resources they have,” said Sandra Miniutti, vice president of marketing for Charity Navigator, an independent, nonprofit charity watchdog organization based in Glen Rock, in Bergen County.
Many organizations tout their status as a 501(c) 3, as a designated not-for-profit by the federal IRS. As an IRS rep- resentative explained it, speaking on background, this permits the organizations cer- tain exemptions from taxes and allows the donor to claim contributions to those organi- zations as tax deductions.
“It’s not any gold standard,” Miller said, advising perspective donors to not rely on that solely as a validation of a group’s work and effectiveness.
These organizations are required to submit annual 990 tax forms, for those organizations exempt from paying federal income tax. These forms do detail some of the organizations’ finances and expenditures. But for the average person those documents can be very complicated and difficult to glean any useful information; and given groups of different sizes and responsibilities there are various lengths to the form. Some are nothing more than a literal postcard, with the E- Z form relatively brief, maybe 15 pages or fewer, and others for large national fundraising organizations can be “as big as a telephone book, practically,” Miniutti quipped.
On the federal level oversight rests with the Internal Revenue Service, with state regulating charities and non-profits through either the attorney general’s office or the office of the secretary of state. In New Jersey the attorney general is responsible. But given the vast numbers and the government staffing limitations, unless there are glaring instances of misbehavior and public complaints, oversight is really limited, some associated with state and federal agencies said on background. “There is no way they can police that all given the resources they have,” said Sandra Miniutti, vice president of marketing for Charity Navigator, an independent, nonprofit charity watchdog organization based in Glen Rock, in Bergen County.
Many organizations tout their status as a 501(c) 3, as a designated not-for-profit by the federal IRS. As an IRS rep- resentative explained it, speaking on background, this permits the organizations cer- tain exemptions from taxes and allows the donor to claim contributions to those organi- zations as tax deductions.
“It’s not any gold standard,” Miller said, advising perspective donors to not rely on that solely as a validation of a group’s work and effectiveness.
These organizations are required to submit annual 990 tax forms, for those organizations exempt from paying federal income tax. These forms do detail some of the organizations’ finances and expenditures. But for the average person those documents can be very complicated and difficult to glean any useful information; and given groups of different sizes and responsibilities there are various lengths to the form. Some are nothing more than a literal postcard, with the E- Z form relatively brief, maybe 15 pages or fewer, and others for large national fundraising organizations can be “as big as a telephone book, practically,” Miniutti quipped.
Faith-based organizations, such as the Salvation Army as one of the largest national examples, are exempt from having to file 990 forms, professionals in the field noted.
Instead of relying on those documents, “The best way donors could protect themselves is to flip the process around and be a proactive donor,” Miniutti suggested. If you’re interested in contributing, don’t wait until being contacted by mail or by phone,” (often done by for-profit marketing firms which can eat up a substantial amount of the contribution) “sit down in the beginning of the year and figure out what it is you’re passionate about and find good charities doing good work and stick with them.
“If donors did that they would avoid so many problems,” Miniutti said.
For finding a worthwhile charity that is simpatico with the donor’s expectation, “I want to know what their achievements have been,” Miller recommended. “If they don’t want to tell you their achievements and what impact they’re having then I’d be skeptical.”
Look at the mission statement and even for publications that have been asked to promote a charity ask them “Please describe in 300 words or less the social impact you’re having in the community,” Miller advised.
It’s also a good idea to look at the organization’s board and its members. “Our criteria,” for Charity Navigator, Miniutti said, “is there should be at least five independent voting board members.”
That board should be meeting regularly and “make sure it’s an ethically run organization,” said Kristen Schlatre, associated director of the Center for Philanthropy and Non-Profit Leadership, Rice University, in Houston, Texas.
When scandal erupts with a charitable organization it often occurs when board members are related, such as an executive director who is the wife of the board chair, and so on, Miniutti observed. “We want to make sure it’s a diverse board and they’re meeting regularly.” Usually it’s only acceptable to have a private family foundation board’s members closely related, she added.
It’s also unusual for board members for a public sector nonprofit to receive compensation, Miniutti pointed out
Miller offered another worthy question to ask before signing your check: “You can certainly ask for every dollar you raise where does the dollar go?” And some of that information may be obtained from 990 filings.
“You want to see that the bulk of the money is going to programs,” Miniutti added.
Instead of relying on those documents, “The best way donors could protect themselves is to flip the process around and be a proactive donor,” Miniutti suggested. If you’re interested in contributing, don’t wait until being contacted by mail or by phone,” (often done by for-profit marketing firms which can eat up a substantial amount of the contribution) “sit down in the beginning of the year and figure out what it is you’re passionate about and find good charities doing good work and stick with them.
“If donors did that they would avoid so many problems,” Miniutti said.
For finding a worthwhile charity that is simpatico with the donor’s expectation, “I want to know what their achievements have been,” Miller recommended. “If they don’t want to tell you their achievements and what impact they’re having then I’d be skeptical.”
Look at the mission statement and even for publications that have been asked to promote a charity ask them “Please describe in 300 words or less the social impact you’re having in the community,” Miller advised.
It’s also a good idea to look at the organization’s board and its members. “Our criteria,” for Charity Navigator, Miniutti said, “is there should be at least five independent voting board members.”
That board should be meeting regularly and “make sure it’s an ethically run organization,” said Kristen Schlatre, associated director of the Center for Philanthropy and Non-Profit Leadership, Rice University, in Houston, Texas.
When scandal erupts with a charitable organization it often occurs when board members are related, such as an executive director who is the wife of the board chair, and so on, Miniutti observed. “We want to make sure it’s a diverse board and they’re meeting regularly.” Usually it’s only acceptable to have a private family foundation board’s members closely related, she added.
It’s also unusual for board members for a public sector nonprofit to receive compensation, Miniutti pointed out
Miller offered another worthy question to ask before signing your check: “You can certainly ask for every dollar you raise where does the dollar go?” And some of that information may be obtained from 990 filings.
“You want to see that the bulk of the money is going to programs,” Miniutti added.
