Tuesday, June 30, 2009

How can you trust your nonprofit?

Got a call this week from a man who had money to give to Charlotte charities - perhaps $2,000 - but no confidence in whom to give it to. The places he knew best were now places that made the wrong kind of headlines. How, he asked, do you know whom to trust with your money?

Part of the shame of United Way's and DSS's management and spending issues is that they've removed the comfort many have had with giving. Before, people believed they could count on United Way, especially, to navigate Charlotte's needs and vet the agencies that served those needs.

Some find that same comfort still when they give to their churches, although nonprofit ministries also have been tainted by questions about spending. Some givers are left to investigate on their own, like our caller.

There are places to go for help. Web sites such as GuideStar and Charity Navigator provide profiles and data on the country's larger charities. The Better Business Bureau offers details on national and local agencies, including a report on the percentages of money used for overhead, program costs and fundraising.

Nonprofit observers say a good guideline for evaluating agencies is that they should spend at least three-quarters of their money on programs, with about 15 percent on salaries and other costs, plus about 10 percent on fundraising.

But, others argue, there are two problems with that rule of thumb: 1) sometimes, it takes good money to hire fine executives and personnel; and 2) agencies move money around to lessen the appearance of administrative costs.

One common accounting maneuver is to apply part of the director's salary to administrative costs and part to program management. Some might call that fudging the numbers. Some might say it's a precise representation of how work is done at an agency. The result, however, is that givers don't get a clear picture of where their dollars are going.

That puts a burden on you, the giver. Want to find out more about an agency? Go to the BBB for research and complaints. Talk to friends, colleagues, church members who might have had experience with the charity. Best yet, go to the agency, ask officials about their mission and how they get achieve it. Ask to see the nonprofit paperwork they turn in to the IRS. Their willingness to be transparent might be a clue.

With some legwork, you should get a good sense of what use will be made of your dollars, but yes, you ultimately will have to trust at least a little. Sadly these days, it's a lot more difficult to do.

9 comments:

Anonymous said...

I just send all of my money to the Inspiration Network and let Brother Cerullo invest it in his creation of a kingdom on earth. He's such a fine Christian man.

Susan said...

Habitat for Humanity Charlotte is doing excellent work, is not affiliated with the United Way, and is rated a 4-Star (highest rating) Charity on Charity Navigator. And they are hurting & could definitely use your support.

qcmami4 said...

I like Catherine's House in Belmont. It is a women and children's shelter that has been doing tremendous work in the community since 1992.

Anonymous said...

In God I trust so the h--- with the non-profits, non profit except for their BLOATED SALARIES.
I'll spend my hard-earned money, what LITTLE NOT confiscated by the d--- IRS or the N C THIEVES on MYSELF!

Anonymous said...

Habitat for Humanity in any city is a great organization.

I donate a lot of money to organizations that are helping to save our Mother Earth.

Anonymous said...

Look at the big picture. Don't focus only on salaries. At many small nonprofits, the % of salary to budget is higher even though those paid executive directors or staff work very long hard hours for low pay. It is correct to allocate a proportion of the salary to program services - services could not take place without someone doing the job. (Volunteers can do some things but it is not realistic that volunteers will do an entire job.) In no way is that fudging the numbers if the nonprofit is efficient and has a good track record of measurable results and success.

Anonymous said...

The whole United Way thing is so very sad. I continued to contribute this year because as someone who works in schools and with disadvantaged families, I see a need for an "umbrella" type agency to help distribute money. Unfortunately as more and more comes out about the extreme problems in the United Way, I cannot continue to give my money to them with any confidence.

I know that Crisis Assistance is a first line agency for many who find themselves in crisis and it has kept families from sinking into homelessness. The staff there is what you should think of when you envision a non-profit - caring, kind, and not there to get rich off of other's misery.

Dan Robinson said...

The easiest way to be sure is to get involved directly, and then donate directly.

Once you donate to an overall organization such as the United Way or ASC, you're paying for the overhead of that group as well as donating to groups you don't support. A very small portion goes to the group you would otherwise favor.

Wallis said...

I recently came across your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


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