End of year solicitations for donations are in full swing. Nonprofits are sending out email and snail mail asking for your "generous contribution" before December 31 so you can deduct it on your taxes. But in order to ensure that your donation is going to a worthy cause that you can feel good about helping, you should exercise due diligence by checking into the organization.
From time to time we get criticized by nonprofit leaders who don't want to provide current financial information when asked. While IRS form 990s are public documents and give a good indication of the fiscal health of an agency, their internal audits are not as readily available. But one of the reasons we ask, and why we report on agencies' 990 tax returns and their independent audits, is so that you, the reader, can have some handy information when considering a donation. It's a positive sign when an agency's executive director does provide the requested information; perhaps the most important message conveyed is "we have nothing to hide." And although there are hiccups at almost any nonprofit, keys to success are good leadership, transparency, and the ability to explain problems and outline corrective action.
When those leaders won't provide financial information, it immediately raises red flags: do they have something to hide from the public or potential donors? In fact, just last month we passed on doing a story about Pets Are Wonderful Support's milestone anniversary because the executive director refused to let us see their audit.
But it's not just us, the mean old gay rag. Last week, in the midst of the David Petraeus scandal, it emerged that one of the women at the heart of that mess once ran a cancer charity that – guess what? – apparently never did what it was supposed to do. Jill Kelley and her husband formed the Doctor Kelley Cancer Foundation in 2005. According to the Tampa Bay Times, the foundation's 2007 tax return stated that the group's primary purpose was to "conduct research studies into efforts to discover ways to improve the quality of life of terminally ill adult cancer patients." Kelley's twin sister, Natalie Khawam was also a director of the nonprofit. But of the $157,284 raised that year, the Times reported, meals and entertainment accounted for more than $43,000 in expenses, legal fees more than $25,000, and automotive expenses more than $8,800. The paper also reported that while the foundation was dissolved that same year, three years later in February 2010 Kelley was soliciting contributions for the group to provide a dinner for the homeless. It doesn't appear that any research was ever done to improve the quality of life for cancer patients.
So, our advice during this holiday season is to do your homework. Check out the agency's website, see if there is financial information or an annual report. Go to Guidestar to see their latest 990 returns. While the documents give a good picture of expenditures, salaries, and other information, they are usually about a year out of date. And if your questions aren't answered to your satisfaction, consider donating elsewhere.
It's all about following the money, and these days, with the economy still in recovery mode, it's all the more important to make informed giving decisions.