014 – Doing Good Matters – Seven Warning Signs that a Charity Doesn’t Deserve Your Support

Seven Warning Signs that a Charity Doesn’t Deserve Your Support

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This is Ed Long. Each week on this podcast I talk about charities and provide actionable tips to help donors and volunteers to take their philanthropy to the next level and do good even better.

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Main topic

  • Seven Warning Signs that a Charity Doesn’t Deserve Your Support
    • We’re talking again today about the smart part of Give Smart from Your Heart.Warning Light
    • You donate your time or dollars or both to charity. You’re generous and work to make the world better.
    • Not all charities, however, are well-intentioned or well-managed. Not all charities deserve your support.
    • How do you know if a charity doesn’t deserve your support?
    • To help you know, I’ve created a list of warning signs. There are seven warning signs on my list. Surely there could be more, but the seven are a solid start.
      • In creating the list of seven, I looked at the Donor Bill or Rights created by the Association of Fundraising Professionals (AFP), the Association for Healthcare Philanthropy, the Council for Advancement and Support of Education, and the Giving Institute: Leading Consultants to Non-Profits.
      • Read the full Donor Bill of Rights. It’s © 2013, Association of Fundraising Professionals, all rights reserved. Reprinted with permission from the Association of Fundraising Professionals.
      • The AFP, for example, is a huge group of the folks who work hard to raise money for charity. AFP has nearly 30,000 individual and organizational members who raise over $100 billion annually, equivalent to more than one-third of all charitable giving in the U.S.
    • Here’s my list of seven warning signs. If a charity you support shows just one, either work with the charity to change its approach, or find another charity to support. In other words, fix it or leave. #1 through #4 relate to charity operations, #5 through #7 relate to fundraising.
    • #1 Lack of openness. The charity makes it difficult for you to know about its mission, how it intends to use donated resources or whether it’s able to use donations effectively for their intended purposes.
      • Or the charity isn’t open about who is serving on its governing board.
      • Or the charity doesn’t answer your questions promptly and truthfully.
    • #2 Lack of professionalism.
      • The governing board doesn’t use prudent judgment in governing the charity.
      • Or by any other person representing the charity.
    • #3 Tucking away financial information: not giving you easy access to the organization’s most recent financial statements and Form 990 or Form 990-EZ.
    • #4 Lack of honesty: not using donations the purposes for which they were given.
    • #5 Lack of recognizing supporters: failing to give appropriate acknowledgement and recognition (written acknowledgment of gifts and support, anonymity when requested).
    • #6 Lack of respect for your privacy: failing to make sure info about your donation is handled with respect and confidentiality.
      • Example: the charity does not give you the opportunity to exclude your information from mailing lists that it might share with others.
    • #7. Hiding relationships: as in not telling potential donors whether those seeking donations are volunteers, employees or hired solicitors.
    • If a charity you support shows just one of the warning signs, either work with the charity to change its approach, or find another charity to support. Fix it or leave.
      • There are many thousands of strong charities out there doing solid work with the dollars and resources we all entrust to them — and whose approach deserves our support. Don’t waste your time or dollars on a charity that doesn’t deserve your support.
    • Your smart and easy assignment for today
      • Select a charity you already support.
      • Look at Warning Sign #6.
        • Ask the charity whether it ever shares its list of supporters with others.
        • If it does not, your assignment is complete.
        • If it does, ask them to exclude your information from the list. If they don’t readily agree, or you are not totally comfortable with their response, fix it or move on.
    • A big part of giving smart from your heart is making sure the charities you support are well-managed and reputable. Charities that exhibit any of the warning signs are showing that they not reputable or not well managed, or both. Fix it or leave.
  • Had experiences? Have feedback? Share your thoughts  in the Reply / Comment section at the bottom of the page. Or email me at ed[@]seriousgivers.org

Episode sponsor

  • Today’s sponsor is the number 131922622. 
    • Back in episode 12 I told you that I love nonprofit and charity EINs (employer identification numbers) and so should you.
    • Among other benefits, EINs are the fastest, most precise way to research nonprofits and charities.
    • You might have noticed that the number 131922622 has nine digits — just like a nonprofit EIN.
    • Recently, with the Super Bowl coming up, there’s been a bit of chatter out there about the National Football League being a huge operation bringing in $95 billion. Some have said that because the NFL is a nonprofit, none of those billions are taxed.
    • Wanting to know more, I went to CharityCheck101.org and sure enough, I found that an organization called National Football League is a nonprofit, based in New York City.
      • CharityCheck101.org also told me that the NFL nonprofit is not a charity and donations to it are not deductible as charitable contributions. It is a nonprofit, no under section 501(c)(3) but under section 501(c)(6).
      • 501(c)(6) covers business leagues, chambers of commerce, professional football leagues and similar organizations.
      • CharityCheck101.org also told me NFL’s EIN, 131922622 — remember, because it’s a nonprofit, its EIN is public information.
      • And not only is its EIN public, so are its annual tax returns on Form 990.
    • Armed with NFL’s EIN, within 30 seconds I found its latest return by entering its EIN at the National Center for Charitable Statistics website.
    • The return’s quite interesting — and the nonprofit known as the NFL is a big business. But it’s separate organization from the Denver Broncos and Seattle Seahawks and all the other teams.
      • A few highlights from a quick scan of the return. You can look at the return yourself to learn much more. The return covers the period ended March 31, 2012.
      • The NFL organization had assets of $823 million, and owed $1.139 billion — so it has negative net assets.
      • The NFL took in $255 million and spent $333 million — so it had a loss of $78 million.
      • 99.7% of its revenues were from member dues and assessments.
      • It made a grant of $2.1 million to the Pro Football Hall of Fame, and Commissioner Roger Goodell was paid more than $29 million.
    • Quick link: You can find information on every nonprofit registered with the IRS at CharityCheck101.org — including its EIN, identity and tax status. All the IRS data, without the kerfuffle.

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  • Use the reply / comment box below.
  • Send me an email at ed[@]seriousgivers.org.

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About Ed Long, the podcaster

Podcaster Ed Long has been preparing more than 40 years to do this podcast. He knows charities and the rules that apply to them. He’s analyzed charity finances and operations.  He’s founded and run charities, and volunteered for them. He’s helped the public and law enforcement fight fake charities, and has served as a philanthropy educator and coach. Before all that he worked as a partner with a major Wall Street law firm. Ed is the founder and CEO of SeriousGivers, which itself is a charity. Ed knows the great work that strong charities can do with the resources entrusted to them, and is passionate about helping others find and support strong charities.