Wednesday, September 15, 2010

The Non-Profit Dilemma, Intentions Are Not Enough

By Lyn Twyman

Many of us enjoy giving to support causes.  Chances are that if you are reading this article, you support causes that help those affected by domestic violence and crime victimization.  As a non-profit consultant, I've seen some non-profits do great work but I've also seen non-profits practically do no work at all to help the community, plagued with poor management, misuse of funds and misrepresentations of their mission and programs.  Money is being spent but not going to help the community and staff members are just being kept employed.  Non-profits have an important duty and obligation to be fiscally responsible to the public, to spend their money appropriately and in the right manner.  There is a difference between non-profit and for-profit, between charities and businesses. 

So why am I talking about this today?  Because most of us  encounter or interact with non-profits all the time and either give our money or volunteer our time to at least one.  Bottom line, if an organization cannot put the money you give them substantially back into meeting the needs of the people they claim they serve, you are better off saving your money until you meet someone personally who needs the help  then giving to them directly. 

We often wonder why victims across the country and families are not being helped and why awareness for domestic violence and crime victimization is still low.    Do you ever wonder why awareness and programs are never enough and seem almost non-existent?  In some cases, it's because organizations are not putting their money where their mouth is.   Many of us have heard the stories.  You call an organization and someone on the other end of the phone says, 'We can't help you' or 'Why are you calling us?' and they give you another number to call somewhere else.  Here's another classic example, 'We just do research.'  That's why some  non-profits should stop the charitable talk and just become businesses because for many of them, having a dream is not enough to carry out a vision.  Some have marketing budgets out the water when there are plenty of skilled professionals and volunteers who can do the same work but for a fraction of the cost.  Instead of finding innovative ways to collaborate with other organizations to stretch their outreach, they just continue to take donations and grants until people start to notice there's something wrong.

So when dealing with a charity, don't be afraid to ask questions.  If a charity spends less than a third of its budget on the programs and services it exists to provide then it's in deep trouble and the program is not being run efficiently.  So below, I've included some helpful things you need to know when working with a non-profit.

Why non-profit work is profitable

·         The chance of collecting lots of money for a cause and getting people excited about the mission is great.
·         Job security.  Employees can stay employed for years and make decent salaries, especially paid founders or executive directors for the organization.
·          Tax shelters for founding members such as founders or executive directors. 

Warning signs your non-profit may be in trouble

·         Tax status is in question.  Ask the charity if they are a 501(c)(3) or their exact status.  If they have no status at all, they're not registered to be a non-profit. 
·         Many initiatives and programs but no evidence of accomplishing any of them.  The organization may constantly be reinventing themselves, campaign after campaign after campaign with no reported results.
·         No real evidence they are doing anything about the problem in the community.  It may seem they are exploiting the issue and using big words in their messaging but there are no numbers to show who they have helped and how.
·         Inactive board members.  Board members are the governance of the organization so find out who they are, their background and their level of involvement.
·         Lack of response to phone calls or emails.
·         Little to no partnerships with other organizations that do similar work .  A partner in this case is not a corporate or money sponsor put another organization that provides programs and services to help the community.
·         High turn over in management and staff.
·         Big on selling products especially items that are royalty producing such as books, cd's and dvd's. 

What can you do?

·         Be smart, understand and don't assume.  Ask to see results.  Know what programs the organization is offering and where your money is going.    It's not enough to be moved by the cause.  Ask yourself, 'Can I really trust XYZ non-profit to do what they say they're going to do with my money, or am I just assuming they're going to do something good with it?'.  Question whether their messaging uses hyper jargon or can it tell you exactly what they're doing.   
·         Look up your organization's tax return called a Form 990 at and see whether they're being run efficiently at .  Yes, the IRS has made available each and every most recently filed Form 990 free to the public for viewing to encourage givers to stay informed.  There are instances when organizations are not required to file Form 990 and that's discussed in the above link. 
·         When receiving items in exchange for your donation, ask yourself what percentage of sales are tax deductible.  You may be better off giving a simple donation instead of buying their products such as books, cd's and dvd's if little percentage is going back to the organization.
·         You may be better off finding someone to help directly and skip the giving to a non-profit if you cannot locate an organization you can trust with your money.

Want to start a non-profit?

·         Take classes about general management and non-profit work.   There's plenty of free and helpful information online along with paid courses.
·         Understand your social issue.  Again, take classes and get training no matter if you've been affected by the problem directly or not.  Chances are there are many things you need to know about your issue in order to identify what programs you need to develop to help your community. 
·         Take your time and strategically plan the short and long terms goals and objectives of your organization.
·         Form partnerships with like minded organizations, experts and people fighting for your cause.
Many charities and community based organizations need your support but they're being hurt by non-profit organizations that don't spend their money responsibly, too much money on marketing, sending too many people on speaking engagements and high overhead costs.  If you own your own non-profit and you're putting money into it yourself, make sure the money is going to help people and you can account for all the spending.   Non-profit work is a responsibility to the public.  Plain and simple.  If your non-profit is showing any of the above mentioned warning signs, it's time to regroup.  Every day, victims are pleading for help and we need more non-profits that will do exactly what they say they're going to do and that is help.

Lynn Twyman is the Founder of Courage Network, a community for domestic violence survivors, family & friends, advocates, professionals and organizations.

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1 comment:

  1. Great article.

    It's also a good idea to look out for organizations that appear to be 501C3 but are not. This can be checked easily online. Organizations do not have to be 501C3 to be a non profit, but verify so you know where your money is going and if you will or will not get a tax right off.

    Annual reports are great ways for non profits to show what money is being received and how that money is being spent.

    Thanks for sharing and keeping the public aware.

    R Morris


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