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How to determine the ethical standards of a 501-3 (c) non-profit organization when considering donating or responding to solicitations

Speculate before you donate………….

The basic functional structure of a non-profit organization is comprised of services, income, and expenses. The following 3 categories are a limited guide to assist you in making an informed investment.

1. 501-3 (c) services  – providing assistance, accomplishing specific objectives, (eg. research, education and support)
Issues to consider:

• What effective services does the organization provide?

• What percentage of the organization’s revenue is spent on services?

• Are the organization’s services easily accessible?

• Are the fees for services excessive?

• How and where are services provided?

2. 501-3 (c) income – money derived from ,grants,services, solicitations, etc.
Issues to consider:

• How will your money be used?
• What percentage of the revenue does the organization spend for charitable purposes (should be bulk of annual income)
• Is there excessive pressure or commercialized solicitation?
• What has the organization effectively accomplished relative to it’s mission, and in connection with it’s revenue.  
• Does the organization create confusion by using a sound-a-like or copy-cat-name?

3. 501-3 (c) expenses – the amount of money spent for services, fund raising, administration, etc. 
Issues to consider:  

• What percentage of the organization’s revenue is used for supplies? (eg, postage, printing, website, telephone)

• Does the organization’s functional/administrative expenses exceed expenditures for services?

• Who moderates, or is accountable for financial transactions?  (eg, treasurer, financial officers)

• What are the organization’s compensation policies?

•   What percentage, if any, of donated funds are used for salaries, expense accounts, allowances, or other benefits?

Non-profit organizations should disclose when and where articles of incorporation were filed, as well as the identity of the incorporator(s).

Find the answers to how organizations spend your money and much more, through these excellent sources:  

• Guidestar, Philanthropic Research, Inc. (VA) Provides national free public information about non-profit organizations, including IRS form 990 - filed financial annual report.
  Telephone: 800-421-8656 or 757-229-4631
  Website: www.guidestar.org
• Council of Better Business Bureau, Inc. (VA) Provides wise giving guide, find/file a complaint, ethical standards for non-profit organizations, and more.
  Telephone: 703-276-0100
  Website: www.give.org
• ePhilanthropy Foundation, ( Washington , DC ) Provides ethical On-line Practices guide, ethics center for non-profit’s, gives tips, resources, and more.
  Telephone: 877-536-1245
  Website: www.ephilanthropy.org
• American Institute of Philanthropy (IL) Provides charity rating guide, Charity Watchdog, inconsistent charitable self-reporting, tips for donating, and more.
  Telephone: 773-529-2300
  Website: www.charitywatchdog.org
• Independent Sector ( Washington , DC ) Provides code of ethics for non-profit’s accountability issues, publications and more.
  Telephone: 202-467-6100
  Website: www.independentsector.org