The best resources for a donor to utilize to help make the donating experience enjoyable, focused and take up the least amount of time are Guidestar and the National Center for Charitable Statistics.  The higher the dollar value of the donation, the more variables the donor may wish to utilize under Guidestar.  The higher subscription fee is worth it.  

In my recent analysis of Massachusetts human services nonprofits I found that capping the administrative costs of an organization resulted in savings of a minimum of eighteen million for nonprofits under two and half million dollars and one hundred and forty-three million for nonprofits over two and half million dollars in revenue.  If funding a nonprofit is going to be decided based on administrative costs, then restrict your donation to not be used for administrative costs or to a specific amount. 

Rather than lower its spending in the weak economy, government has leveled off the amount of money allocated for nonprofits.  Because of this level funding combined with an ever-increasing population, government has been forced to favor the more established institutional organization structures. 

pic from Fuffer

I challenge the myth of larger nonprofits being overall more efficient than the smaller organizations.  I do this to help donors better understand that statements and reality of the perception are not necessarily true.  The more something is stated and the more one remembers something does not necessarily make it true.  It is human nature to think it is true and to generalize.  The larger nonprofits would like funders and donors to believe it more.  The larger the nonprofit’s funding, the larger their ability to pay higher salaries, multiple layers of administrative costs and keep the administrative percentage lower. 

Questions a donor should ask of themselves: 

1. As a donor making choices within their day-to-day experiences what variables are important to me when making a donation? 
2. As a donor what purpose do you want my donation to serve?
3. As a donor who may donate constantly, periodically or almost never what is my motivation? 

The sample of the nonprofits below are those from the Commonwealth of Massachusetts who contracted in 2002 to provide human services and reported their full financials to the Commonwealth.

Out of a sample of 217 nonprofit providers with revenues under 2.5 million the administrative costs were calculated on FY ‘02 costs.
 
23 providers, 25% plus admin, average revenue $701,219  
20 providers, 20% -24% admin, average revenue $1.024M
65 providers, 15% -19% admin, average revenue $1.167M
83 providers, 10%-14% admin, average revenue $1.48M
26 providers, 8%-9% admin, average revenue $1.491M

Out of a sample of 220 nonprofit providers with revenues over 2.5 million the administrative costs were calculated on FY ‘02 costs.
 
2 providers, 25% plus admin, average revenue $8.008M 
14 providers, 20% -24% admin, average revenue $23.863M
45 providers, 15% -19% admin, average revenue $12.609M
92 providers, 10%-14% admin, average revenue $11.564M
67 providers, 8%-9% admin, average revenue $12.095M

Ask yourself what impact I as the donor would make if I required savings through outsourcing or capping administrative costs at 10%.  It was estimated that the potential savings for the entities below 2.5 million was 18 million dollars.  The potential savings for the entities over 2.5 million was 143 million dollars.  Therefore, I ask you to think about where the real savings can be realized.

Nonprofits have to think like the donor.

Photo by:  cliff1066

The FBI is looking into the spending practices at Centro Familia, a Wheaton nonprofit group that runs a bilingual preschool, trains day-care providers and receives about $450,000 annually in contracts from Montgomery County, the organization’s executive director has acknowledged.

A bureau agent visited the organization’s office last week and interviewed at least one of its staff members. Centro Familia, which is well-connected in Montgomery political circles, has also been under scrutiny by the county’s independent inspector general and the county’s health and human services department. FBI Special Agent Richard Wolf of the Baltimore field office said he could not comment.To read the entire article, please follow the hyperlink to The Washington Post webpage.

Photo by: Thomas Hawk

SBA`s Deadline for Physical Damage Disaster Loans for Private Non-Profit Organizations is November 25. 

The U.S. Small Business Administration reminds eligible Private Non-Profit Organizations (PNPs) of the November 25 deadline to submit disaster loan application for damages caused by severe storms and flooding that began September 18. PNP’s located in Carroll, Catoogsa, Chattooga, Cherokee, Cobb, Crawford, Dawson, DeKalb, Dooley, Douglas, Fulton, Gwinnett, Heard, Houston, Newton, Paulding, Peach, Rockdale, Stephens, Taylor and Walker counties in Georgia are eligible to apply to SBA.  Examples of eligible non-critical PNP organizations include, but are not limited to, food kitchens, homeless shelters, museums, libraries, community centers, schools and colleges. To read the entire article/notice, please follow then hyperlink to the Reuters web-page.

Photo by: AMagill 

A Kentucky non profit group which is funded largely by tax payer dollars was found to have been using that money on sports tickets, alcohol, and even strippers.  The Kentucky state auditor found the officials from the non profit group Kentucky Association of Counties blowing the money for their own personal enjoyment.  The total of the money spent was just over $3 million in a three year period.  After these accusations came out, one of the board members resigned his position.

To read the article, please follow the hyperlink to the WHAS11 web-page.

Photo by: tiarescott

Here’s another great article to add to the collection about non profit CEOs and their salaries.  The only thing with this story is that its actually is one with good news.  Back in early August when Jane McIntyre was a candidate for the CEO position of the United Way of the Central Carolinas, the only question they were really asking was how much would she want to be paid?  What she told them was a number a lot lower than what they would want to pay her.  She said she would ask for a salary of $150,000 a year, compared to her predecessor who received $365,000 a year plus a $2.1 million pension package.  As we can see here, not all the nonprofit CEOs are asking for and receiving such huge salaries.  I guess there is still some good left out there.

 To read the entire article, please follow the hyperlink to the Chicago Tribune page.

Another high paying salary has been uncovered in the nonprofit world. This time it comes from the all ready discussed Individual Development Inc., a Washington D.C. nonprofit that provides housing and care for many of the local developmentally disabled. It has been reported a David W. Wilmot, a well known lobbyist has been paid as much as $300,000 by the nonprofit to help turn them around. He also has been allowed to borrow an additional $300,000 from the organization. Now, IDI is funded about $12 million per year from Medicaid, a government agency that is already paying out extremely high amounts of money every year. The big problem here is that basically, Wilmot is getting his comfortable yearly salary from Medicaid, of which more of that money should be going to the individuals in need.

To read the entire article, please follow the hyperlink to the Washington Post page.

 pic by glenfairchild

Eight credit unions in Michigan for residents only have come up with a unique idea to promote savings and added a little chance. Open a certificate of deposit of $25 of more and get a raffle ticket.  It gives the account holder a chance at winning a prize of $400 for the month and enters them in an annual $100,000 drawing.   The certificate of deposit is federally insured.   Over a 25 week period it motivated individuals to save over $3 million.  

Now that’s a group of banks who have found a way to increase value for its members.  More money to loan its members and an increased savings rate during a recession. 

 pic by Kertoon

In 2007 $92.3 billion was spent on gambling and $57.4 billion saved.   A combined total of $149.7 billion.  According to the National Center for Educations Statistics in 2007 8,986,150 undergraduates were attending a 4 year college and it is expected they will have an average cumulative debt of $12,750.   A cost of approximate $114.6 billion. 

College debt is unhealthy for the economy and is approaching a rate of return that many are finding not worth it.  Most colleges and universities are nonprofits and their pricing is approaching a rate that is not sustainable. 

State run education systems are showing to be the best value for the dollar.   Congress should create a gambling and savings opportunity for individuals to bet on the future of students succeeding from a college degree they obtain at a public college.  The return on investment looks a lot brighter when graduating from these public colleges. 

pic by vinspired voicebox

The tax code has created interesting incentives for all businesses to expand benefits over salary, regardless of whether they are a for-profit or nonprofit.  These benefits may include health, dental, vision, retirement,  adoption and legal.

Unemployment, Medicare and Social Security taxes are tied to the payroll. Payments for benefits lowers the cost for the employer and the employee.

The other aspect to using benefits over salary is the ability of a business to make changes to control the cost.  The taxes are nonnegotiable and it is harder to reduce a persons salary.

The congressional move to tax health benefits just might hurt nonprofit employees more since many chose the benefit route to compensate employees.