Penalties for Charities: Government Oversight or Not

There has been a lot of conversation about charities that are not charitable.  This conversation is forcing state governments to create regulations to ensure that charities are doing what they are supposed to be doing.  For instance, the state of Oregon’s Governor signed legislation that would penalize charities that spends less than 30% on programs verses fundraising and administrative expenses and California has increased penalties for the misuse of funds by charitable organizations.

I am opening the floor for a spirited debate: Should our state governments provide oversight on charities’ operations or do you think that the federal government should regulate operational spending for charities. Per the IRS, a charitable organization is an organization that is organized and operated for purposes that are beneficial to the public interest. The IRS definition does not entail what is the fiduciary responsibility towards what is offered by a charity.

I believe that the oversight of charities should be maintained by the public.  As donors, we should do the research and get involved with our chosen charities.  I donate to a variety of charitable organizations, but before I made a donation I did the following:

  1. Look up the charity on Guide Star, Guide Star provides reviews and IRS 990 tax forms on your chosen charity.  If this information is not on this website you have the right to ask the charity to provide this information to you.
  2. Check the IRS to see if organizations are eligible to receive tax-deductible contributions.  You can also verify organizations whose federal tax exemption was automatically revoked for not filing a Form 990-series return or notice for three consecutive years, or Form 990-N filings. For a more in depth conversation about a charity, call the IRS directly at 1-877-829-5500, Option 4.
  3. Volunteer with my chosen organization. I had to see 1st hand how my donations were being used.

A more official guide on making sure your chosen charity is accountable is “The Donating Guide” created by The Urban Institute and Indiana University. Forbes also gives some handy advice on choosing a charity.

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Demetria Barrett

Finance & Operations Manager at Campaign Consultation, Inc.
I have an affinity with nonprofits and small businesses. My commitment to making a change, growing small businesses and volunteering my skills are recognized throughout Baltimore City. As Finance and Operations Manager, I am responsible for managing all functions pertaining to finance, human resources, and operations necessary to maintain an effective, efficient, and sound corporate environment. Read more.

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