Think back to the last time you donated to a nonprofit organization.
Did you ask yourself…
- Do I want to support this nonprofit’s mission?
- Where is my money going?
- What do their 990 tax returns look like?
- How much are they spending in the community?
- How can I be sure my money is actually going to the cause?
If you blindly give to nonprofit organizations as a business or individual you may never know if your money is actually going to the cause.
In my social media feed this afternoon I came across an announcement that an organization I was considering donating to recently discovered that an individual on their board of directors had been stealing funds from the nonprofit for 2 years. This board member stole over $50,000 of donated funds.
My first reaction after reading this was: “Doesn’t this organization do internal audits? Why was this not caught earlier?” I know that, particularly for smaller nonprofits, it can be difficult to have a checks and balances system in place. But when it comes to donated money, this system is a requirement.
When I donate to nonprofit organizations I try to be as informed as possible about the nonprofit’s financial statements, audits, and money handling procedures. I want to be sure my donor dollars will be handled properly and I recommend that all other individuals and businesses do the same.
Don’t know where to start researching nonprofits? You can start by looking up the 990 tax return that all 501(c)(3) organizations need to file with the IRS. Foundation Center is a great free resource for that. If you want a rating of an organization based on some nonprofit watchdogs I recommend visiting CharityWatch or Charity Navigator.
I am very involved in the nonprofit sector and know that sometimes things can fall through the cracks but nonprofits do have a fiduciary duty to their donors. Nonprofits need to be as open with their finances as they are their hearts.
After all, how can we know where our money is needed unless nonprofits are open with their finances?