Friday, July 13, 2007

The Ends do not Justify the Means

Do you really know enough about your favorite non-profit?

Have you been asked to join the board of a non-profit? Be sure to check whether the corporation is in good standing with the state. For Alabama, you can search online through the Secretary of State's website. If the corporation is in suspension, then the members of the board may be personally responsible for the actions of the organization.

Tax-exempt non-profits with an income greater than $25,000 are required to file form 990 with the IRS. This form must be available to the public on request. Don't assume that your favorite organization is in compliance! If this form has not been filed, your donation may end up paying penalties to the IRS.

The Better Business Bureau has developed Standards for Charitable Accountability:
"These standards apply to publicly soliciting organizations that are tax exempt under section 501(c)(3) of the Internal Revenue Code and to other organizations conducting charitable solicitations. The standards are not intended to apply to private foundations, as they do not solicit contributions from the public.

The overarching principle of the BBB Wise Giving Alliance Standards for Charity Accountability is full disclosure to donors and potential donors at the time of solicitation and thereafter. However, where indicated, the standards recommend ethical practices beyond the act of disclosure in order to ensure public confidence and encourage giving. As voluntary standards, they also go beyond the requirements of local, state and federal laws and regulations."

Read through the list of standards and then verify that your non-profit complies with some of them. DO NOT assume that the organization is doing the right thing. Request some of the information that should be readily available: the IRS form 990, an annual report or annual financial statements. Ask when the books were last audited.

Hopefully the organization won't be surprised by your request and you won't be surprised by their response.

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