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NGOs: Caveat donor

ProPublica, the public-interest journalism site, is offering a Nonprofit Explorer webapp to check out non-governmental organizations in the U.S. for their spending, expenses, remuneration of officials and other financial details.

Using the app, you can search IRS 990 filings -- i.e. those with more than $200,000 in annual revenue or $500,000 in assets.

Derek Willis and Mike Tigas, ProPublica, with Sahir Doshi, also offer a good rundown of things to look out for when vetting non-profits, such as spending on professional fundraisers.

Dangerous gifts-in-kind

They also offers tips to consider in going beyond 990, such as warning against gift-in-kind donations of clothes etc. "Influxes of free, second-hand goods can undercut and destroy local industry. Indigenous manufacturers are priced out of the market, and the community is denied the growth benefits of textile and food processing industries that placed countries like Mexico and South Korea on the development ladder."

"Countries like Kenya and Haiti are having this first rung broken right under their feet by good intentions," they observe.

Non-profits can outsource staff and management, in effect hiding the salaries through an aggregate contractor payment. This happens with the second-largest non-profit fundraiser in the U.S., where all salaries are lsited as being $0.

Hidden costs

Be careful to work out how much of donations are going to programs, the researchers warn. The American Red Cross claimed 91% but ProPublica found it could be well below 75%.

Fund-raising charges come in for particular opprobrium. ProPublica reminds us that the Center for Investigative Reportiing and The Tampa Bay Times identified non-profits that "regularly give their solicitors at least two-thirds of the take." One gave nearly 90% of the $27 million it raised over a decade.

You can find the details at line 16a of the 990's first page. The label is: "Professional fundraising fees".

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