By Marianne Alicona, Director of Development
August 31, 2016 Breaking News Report: The National Vietnam Veterans Foundation closed its doors. The zero-rated charity, that was the subject of a CNN report, only gave 2 percent of its revenue to veterans. The Foundation took in $29 million over four years, and nearly all of it went to telemarketers and fundraisers.
When I heard this news I had a wide range of emotions: outrage that a nonprofit to serve veterans lined their own pocket; victimized as a trusting donor to so many charities; and deflated as a development officer that a few rotten apples make it so much more difficult for us honest fundraisers to solicit money.
Byte Back and many other nonprofits steward donations responsibly. But how do you as a donor know this?
As we enter the end-of-year giving season, this is the time to review some simple steps donors can take when considering a contribution to a new charity or even a long-time beneficiary.
Do Your Homework
Any reputable nonprofit is happy to talk with a donor and disclose its overhead costs which includes both General & Administrative (G&A) expenses and fundraising costs. You can find Byte Back’s financial reports and audits here.
You may be surprised how leanly these charities operate! A general rule of thumb is overhead costs should not exceed 30 percent of total expenses.
Please remember some charities with gross receipts under a certain threshold may not be required to file a 990 tax form and/or undergo an audit. That doesn’t mean they’re not worthy of a contribution. It’s best to contact the charity directly if you have questions.
Other Resources to Check
- The IRS – Before you donate, make sure the charity falls under Internal Revenue Service section 501(c)(3), which means it’s qualified to receive tax-deductible donations. You can also verify a nonprofit’s charitable tax-exempt status in the searchable IRS Publication 78.
- Charity Watchdogs – There are also several charity ‘watchdog’ websites that rate or grade organizations, such as Charity Navigator and BBB Wise Giving Alliance.
- GuideStar – Known as a neutral charity resource, GuideStar gathers and disseminates information about every IRS-registered nonprofit organization. Donors can view 990 tax filings and other salient information in an easy-to-understand format.
Being philanthropic is good in so many ways – just be careful that the causes you support are using your dollars wisely.