Charities merit review

Agencies create lists to track spending, inform public about actions of philanthropic organizations

Web posted Sunday, December 24, 2000

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By Vicky Eckenrode and Robert Pavey
Staff Writers

There are bell-ringing Santas at the grocery store, telemarketers calling at dinnertime and countless mailouts mingled with holiday cards.

They all want one thing - your money.

William Evans, with the Salvation Army, greets shoppers outside the Kmart in North Augusta. Groups such as secretary of state offices and the IRS maintain financial files on charities. JENNIFER FULLER/STAFF

Philanthropy is growing in America at a staggering rate, as are charities hoping to further those goals. In the past year alone, the Internal Revenue Service has authorized more than 750,000 new charities.

``Philanthropy is big business, and it's getting bigger,'' said Ken Hunter, president and CEO of the Virginia-based Council of Better Business Bureaus, which maintains offices in hundreds of cities, including Augusta.

They use financial records and tax forms that also are available to the public.

The IRS requires financial reporting from charitable organizations. Those reports often yield clues to the legitimacy of the organizations and the path donations take.

In South Carolina and Georgia, charities must register with their respective secretaries of state. Both offices use the information to keep tabs on charity spending.

Each holiday season, the South Carolina secretary of state's office releases a list of charities statewide that officials find acceptable.

This ``Angels and Scrooges'' list examines how much of the money a charity solicits is actually spent on its causes. Most of the ``scrooge'' charities spend less than 10 percent of donations directly on programs.

Information from the secretary of state's office shows none of the 111 charities registered in Aiken County fall under the category. In fact, 42 Aiken ``angel'' charities spend 80 percent or more on their intended causes.

Some groups - The Midland Valley Band Booster Club, North Augusta Yellow Jacket Club Inc. and Aiken Symphony Guild - actually spend 100 percent on program expenses as opposed to fund raising or administrative costs.

A few groups in the county showed lower percentages of program spending. Among them were the North Augusta Cultural Arts Council, 37.3 percent; Jacksonville Community Commission, 35.6 percent; and the Historic Aiken Foundation, 35.4 percent.

But they are not required to file a nonprofit tax form with the IRS because they raise less than $25,000 annually, and the state does not hold them to the same level of expectations as charities that raise large sums of money each year.

The Georgia secretary of state's office was unable to provide a full listing of charities registered in Augusta. However, a random research of several charities by The Chronicle showed that return rates on program spending can range from 54.4 percent - by the Greater Augusta Crisis Pregnancy Center - to 91.8 percent - by the Augusta Training Shop for the Handicapped Inc.

A good general rule is that half - and preferably much more than half - of all money raised should go directly to the stated cause.

``We want at least 50 percent to go directly to the charity - and to the cause,'' Mr. Hunter said. ``Some money can go to rent, employees and administration, but certainly not all of it.''

But that amount is not regulated by law, said South Carolina Secretary of State Jim Miles.

``The law states that unless a charity is committing fraud to raise money, the group is free to spend donations any way it sees fit,'' he said.

``The way that the present state of law is, you have to fend for yourself. You have to decide whether or not you're going to write that check.''

Watchdog groups warn that some organizations that use professional solicitors may not give a large portion of the money collected to the charity.

For instance, the Georgia Police Officers Association retains only 5.95 percent of donations, and made the state's ``uncharitable charities'' list this year. However, groups such as the Fraternal Order of Police, the CSRA Lodge 6 in Aiken County, which doesn't use professional solicitors, give 100 percent of funds collected to programs.

``If they claim to be raising money for the local fire or police department, it's best to just contact the local fire or police department,'' Mr. Hunter said.

The Georgia Secretary of State office releases its own warning about charities that funnel donations to the telemarketers they hire.

For example, the American Association of the Deaf-Blind, which is registered in Maryland, spent more than a million dollars last year on a professional solicitor and gave only 8 percent of donations to program expenses, according to the list.

Despite the dangers, consumer experts say there are ways to make sure donations go to the promised cause.

``First of all, you want to know they're being run efficiently - and effectively,'' Mr. Hunter said. ``You can ask questions about how much money they spend on salaries and how much on fund raising. You can ask if they have an independent governing board, and whether those board members are paid.''

More information can be found through the national Better Business Bureau, which maintains a broad database on most large charities.

The Council of Better Business Bureaus routinely reviews major charities through a complex set of financial and accounting standards. Organizations that refuse to open their books to such scrutiny are so noted.

Mr. Hunter says groups that refuse to open their books to the Better Business Bureau - or anyone from the public who wants the information - should be treated with suspicion.

``I wouldn't give to a charity that won't disclose or share their information with the Better Business Bureau,'' he said.

There are several ways to get information about charities. A database accessible through the Internet is www.guidestar.org, which publishes tax returns, financial statements, personnel information and other data on more than 600,000 registered charities, including 489 in the Augusta area.

And secretary of state offices offer regulatory advice for donors, providing tips and fielding complaints when a consumer feels they've been scammed.

``We can make sure that if someone tries to defraud you, we will prosecute them,'' Mr. Miles said. ``But the bottom line is this: If you write that check, that money's gone.''

Reach Vicky Eckenrode at (706) 823-3227.

Reach Robert Pavey at (706) 868-1222,Ext. 119.

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