Saturday, December 13, 2008

California Nonprofit Spends Zero on Charitable Purpose in Two Out of Four Years of Operation

Yesterday's Los Angeles Times reported that a nonprofit organization founded by California’s largest union local reported spending nothing on its charitable purpose –- to develop housing for low-income workers –- during at least two of the four years it has been operating. 

According to its filings with the Internal Revenue Service, the charity, launched by a Los Angeles chapter of the Service Employees International Union (SEIU), had total expenses of about $165,000 for 2005 and 2006.  All of the money went to consulting fees, insurance costs and other overhead; nothing went to the organization's core program.

Charity watchdogs say that nonprofits should never have zero program expenses in two successive years and that well-performing charities typically direct at least 70% of their annual spending to their charitable purpose.

According to Sandra Miniutti, vice president of Charity Navigator, an online rating service, “Of the 5,000-plus charities we’ve looked at, I don’t think we’ve ever seen one that didn’t spend anything on its charitable programs.”

The Los Angeles Times report (L.A. Nonprofit Spent Zero on Charity Work in Two Years) details other alleged missteps by the nonprofit organization.  The news article present a sad commentary on the missteps -- make that misdeeds -- of some nonprofit organizations. 

VEJ 

http://lawprofessors.typepad.com/nonprofit/2008/12/california-nonp.html

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