“Show me the Money”
Because my Team is still deployed for another week or so in Afghanistan, I can’t write about the prisons just yet due to Opsec. I will let them come home, and then we’ll talk about the corrections system. I promise that it will be interesting. A lot of you have emailed me asking about my last post on June 17th. I would like to clarify it, so let’s just say I don’t want to hurt the support of our troops, but I would like to see the revamping of how some businesses do business.
What is the purpose of a non-profit organization? I was under the impression that a non-profit business consisted of volunteers who gave their valuable time to promoting a cause thus allowing the meager funds to be best utilized in the most efficient manner. I had no idea there are so many out there that are taking advantage of honest hard working folks out there in the US.
There are numerous “non-profits” in existence throughout the US and with the war going on for so many years now, some have been created that help out our men and women in uniform which is a good thing. Some unfortunately have succumbed to outright dishonesty like this article from the Washington Post written by Ann Tyson. The National Veterans Business Development Corp. (TVC) was formed in 1999 to help returning Vets start up a small business. They instead squandered hundreds of thousands of dollars living the good life as they travelled in first class and stayed in the finest hotels as they wined and dined their way through the years. http://www.washingtonpost.com/wp-dyn/content/article/2008/12/10/AR2008121003984.html
Sometimes, these things start with a well intentioned idea to help folks out and they thrive with the aid of thousands of volunteers around the country and sometimes around the world. I am going to give you a crash course on what to look for before you part with your hard earned money to a charity that may not be what it appears to be. First all, most of the good non profits I have seen are .org’s and not .com’s, second they post their 990’s on the website for your viewing. If they don’t post it and you have to request a copy, then ask why? What do they have to hide?
What is a 990 you ask? That is the tax form they must submit to Uncle Sam, that breaks down what they have made, what they spent donor money on and lots of other things. The company is required to provide you a copy of this document if you ask for it. I had to get a lesson from my parents, who through their years involved with non-profits were able to show me details that I didn’t notice just looking at the form for the first time. The form breaks down into about eleven different sections. Part one will show you right off the bat how much money they took in through donations or sales and down on line 25, you can see how much they list as compensation for current officers, key employees. Something to keep in mind, if they pay a person under 50K, they don’t have to list them. This will give you a rough idea where your money is going. Let’s say a company brought in $700K from the generosity of the general public and you notice that they paid out $105K in salaries in line 25, you might say, “well that’s not too bad on overhead, they must have a bunch of people there” but then you go to the next line and see on number 26 that they paid 139K to the employees which comes up to around $244K total. Going further, if you look at how much they paid in payroll taxes and say it’s about $19,000 dollars, how much money are they paying taxes on? The owner of the business pays .0765% and the employee pays .0765% so it would be an unknown amount X’s .0765 which will give you how much they are claiming. In this case around $244K went JUST TO SALARIES for as it turns out say three or four people, not including overhead of computers, office equipment, space (their house in most cases), fundraising, travel expenses, consultant’s fee’s etc.
Section five A will show you the key employee’s and the board of directors, how many hours they say they work for the company and what their compensation is. That is where you will find out if the President takes any compensation for his/her work. Looking at some of these organizations out there, you might find that the President makes around $100K or more. This is where I have a problem with giving money to those types of Non Profits…it just goes to filling their bank account. See, in some states like Maryland, a Non Profit is only required to give 10% of the money coming in to the charity and the other 90% can go to overhead, i.e. salaries, bonuses, expenses and the likes.
That is why they have a board of Directors; they are financially responsible for the direction of the corporation and to ensure that things are done right. Sometimes, it just works out that the President of the Non Profit has been doing VERY well for his family and doesn’t see the necessity of change to be not only legally responsible but ethically as well. I think that if I lose my job at the airlines, I will start up my own nonprofit outfit and that will be my business.
So for all the folks out there who want to support the troops, please do some research before you open your kind wallets and give those hard earned bucks to a company that may be using it for the betterment of their life. Watch out for the cries of “If you don’t contribute, we will have to shut down our site and you won’t be able to connect with a service member in the field.” Here are some tips if you are thinking about giving.
Is the Charity registered with the State that it was formed?
What is the full name, address and phone number of the charity?
Is your contribution tax deductible? House raffles are not by the way…
What percentage of its total income does the charity spend on its charitable purpose? What does it spend on overhead, i.e. salaries, computers, fundraising, office equipment/furniture etc?
What is the mission statement of the company and do they actually follow it?
How many employees do they have? Are they all family members or related by marriage? If they are spending a ton of money in overhead, you can figure out if they are spreading the wealth of your money or it’s going for just a couple of folks.
Donors are entitled by law to get a copy of the 990 and financial statement at no cost within 30 days.
Go to places like Charity Navigator to see their ratings. Beware of some companies that basically sell a rating to a smaller business and if you can’t find them on Charity Navigator, it may because they don’t take in enough money.
If you have any questions or I can help you out, please feel free to email me.