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Failure to communicate – Issue of accountability

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Some nonprofit groups in Minnesota are not disclosing the administrative costs of fundraising on their taxes, raising questions about accounting accuracy and the government’s documents, the Star Tribune in Minneapolis reported Sept. 12.

An analysis by the newspaper found that 110 nonprofits reported raising a total of $900 million without spending a dime on fundraising.

That list represented roughly 9 percent of the groups registered to raise money in the state and that raised $500,000 or more nationally in the past two years.

The discrepancy could mean that some charities are spending money on administration and not reporting it, the newspaper said.

In some cases, the charities did actually raise the money with little or no expense, while others appear to be violating Internal Revenue Service rules by filing inaccurate and misleading reports, the newspaper said.

People who contribute to nonprofits often depend on public information the groups file with their taxes on Form 990, which includes the percentage of the nonprofit’s total donations that are spent on administration and other expenses not related to the group’s actual purpose.

“We’re very concerned about it because the 990 is an excellent communications tool that can help build public trust in nonprofits,” Rich Cowles, executive director of St. Paul-based Charities Review Council, told the Star Tribune.

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