Tuesday, July 6, 2010

Gulf Oil Spill Continues to Raise Issues Affecting Nonprofits and Donors

Nonprofits' Losses:  An article in the Nonprofit Quarterly raises BP's responsibility for nonprofits' decreased funding due to the disastrous oil spill in the Gulf of Mexico.  The funding crisis has arisen not due to a reduction of BP's charitable giving, but because local residents are not presently able to afford giving to local charities and churches.  Because they rely heavily on the regular tithing of their members, churches in the affected areas of the Gulf region are suffering due to the evaporating income of their regular members.  The article mentions the Anchor Assembly of God in Bayou la Batre, Alabama, which has filed a claim with BP of $50,000 to reimburse its congregation for the $12,000 loss in contributions over the past weeks and the $38,000 of anticipated losses in the next year. The church filed its claim on June 18th, but has not yet received a response from BP.  According to the article, BP is not certain how to address "a claim based on charitable giving losses attributed to the economic devastation of the spill."

Donors Beware:  As usual, a natural disaster is ripe for fraud, especially in the charitable sector.  An article in The Bradenton Times (Florida) reports that the Florida Department of Agriculture and Consumer Services issued a “Consumer Alert” to raise awareness as to potential charitable giving fraud associated with the gulf oil crisis.  Regardless of the method of solicitation, donors should consider two primary issues when considering a donation to a purported charity:  (i) is the charity legitimate or a scam - do research to determine a charity's legitimate existence and tax-exempt status; and (ii) would my donation be better spent or used by another established charity?  As linked above, the Florida government has set up both a helpline and website to assist donors in answering these questions.



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