May 22, 2012
Nonprofits' Failure to Report Fundraising Costs is Widespread
As reported by the Nonprofit Quarterly, a Scripps Howard News Service new study (utilizing data reported to the IRS and available through Guidestar) revealed found that 15,389 nonprofit groups, or 41% of all domestic nonprofits with annual receipts of $1 million or more, report on their annual Forms 990 that they expended no dollars on fundraising. While this may be possible with respect to certain nonprofits, Scripps Howard did a further investigation, including interviews, which further revealed that a number of these zero-expense organizations actually do incur fundraising expenses but choose not to report them. The percentage of nonprofits with zero reported fundraising costs varies greatly by state, with 60% or more of the nonprofits in the following states reporting no fundraising expenses: Alaska, Arkansas, Idaho, Mississippi, and West Virginia (see a state ranking here). As the study states, some nonprofit executives that were interviewed admitted that fundraising costs are nonreported or underreported to lower their nonprofits' overhead rates, which donors and funders use to rate nonprofits' efficiencies and effectiveness in achieving their purposes.
[See also an article in the Chronicle of Philanthropy]
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