Ever wonder why your nonprofit is not taken seriously? Or why it seems such an uphill battle to raise funds for your good cause?
Some people who start a new nonprofit think that good intentions are enough. But they aren't. A nonprofit is a type of business and must act like a legitimate organization to be trusted by supporters, donors, and even the people it seeks to serve.
The Better Business Bureau helps legitimize charities through its Wise Giving Alliance, and it recently released the top reasons that charities fail to meet its standards.
If you're saying, "What standards?", then you need to read the BBB's Standards for Charity Accountability. Most of these standards involve transparency, something that nonprofits, more than ever, need to have in order to inspire trust.
Here are the top reasons that 44% of the charities that the BBB asked to provide information during the last two years flunked its minimum standards.
- BBB Standard: Have an annual report available to all, on request, that includes recommended program, governance and financial disclosures.
40 percent of charities that did not meet one or more standards either did not produce an annual report or provided one that that did not include all of the recommended information.
- BBB Standard: Have a board policy of assessing, no less than every two years, the organization's performance and effectiveness and of determining future actions required to achieve its mission.
36 percent of charities that did not meet one or more standards lacked the recommended board policy for periodic self-assessment.
- BBB Standard: Submit to the organization's governing body, for its approval, a written report that outlines the results of the aforementioned performance and effectiveness assessment and recommendations for future action.
35 percent of charities that did not meet one or more standards either had not completed an effectiveness assessment or did not provide its board with a written report on the results of the assessment.
- BBB Standard: A minimum of three evenly spaced meetings per year of the full governing body with a majority in attendance, with face to face participation. (One of these meetings can be a conference call of the full board.)
31 percent of charities that did not meet one or more standards had charity boards that met less than three times per year or lacked a majority attendance.
- BBB Standard: Include on any charity websites that solicit contributions, the same information that is recommended for annual reports, as well as the mailing address of the charity and electronic access to its most recent IRS Form 990.
31 percent of charities that did not meet one or more standards had websites that did not include access (such as a link) to the group's most recent IRS Form 990 and/or did not include other recommended information.
If you've made it through the hoops of becoming a charity, 501(c)(3), don't jeopardize your reputation, and even legality, because you've neglected to adhere to some minimum standards expected of nonprofits. Do a checkup now to make sure your organization is toeing the line.
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Comments
Thanks very much, Joanne.
We could not begin to archieve those excellent standards.
We were awarded in-kind grants and are all-volunteer-driven.
At this time, we haven’t a committed, paid staff, so we can’t solicit funds which require boots on the ground, and as a virtual organization, in large measure, it would be hard or unrealistic to expect loyal volunteers to drop what they do for us to raise funds, unless we find volunteer fundraisers.
We haven’t found as yet the specific volunteers who could carry out those board activities either.Some do much work for us, as board members, but have no financial background they wish to employ.
We rely on our pro bono accountant and ask the IRS for information to guide our decisions.
Thanks for your most helpful blog!