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Nonprofit reporting flaws

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More than a third of nonprofits with donations of $50,000 or more report no expenses associated with fundraising or special events, a new study says.

The “Nonprofit Fundraising and Administrative Cost” study also found that almost two in 10 nonprofits raising $5 million or more report no such expenses.

The study, a joint project of the Center on Philanthropy at Indiana University and the Center on Nonprofits and Philanthropy at the Urban Institute, says it is “implausible that so many nonprofits would have zero fundraising costs since organizations must almost always spend money to raise money.”

The study suggests several reasons for the reporting flaws, including a lack of understanding of accounting rules, weak management and lack of incentives for accurate reporting.

Public expectations of low fundraising and administrative costs may also encourage underreporting, the study says.

The report notes, however, that there can be valid reasons for having no such expenses, including relying on volunteers or board members for fundraising.

Additional finding will be released in coming weeks, the report says.

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