There's something beautiful about people caring about the other people around them, and stories about nonprofits describe an impulse that's truly special. But if well-meaning contributors are being exploited by crooked charities, it's an important civic duty to probe and investigate. At the same time, remember that nonprofits exist solely on the donations of others. This makes them especially sensitive to negative stories, since they could be damaged or even destroyed by an implication of wrong-doing. As with all journalism, insist on a comment from the organization before publishing. And then trust, but verify.
Nonprofits are subject to different laws than any other organization, so covering a nonprofit is very different than other journalism. First check their statements against tax filings. (All nonprofits in the U.S. are required to file yearly records of their finances and contributions - either a form 990-N, 990-EZ or 990.) Nonprofits must also list every officer, direcor and trustee, as well as their five highest-compensated employees. Basically, they're accountable for showing how contributor money is being spent, so this first step is crucial, but do some fact-checking of your own to verify that the money was actually distributed!
Any incoming money is supposed to be furthering the nonprofit's mission - but there's a catch. Employees are allowed to receive a salary to fund their ongoing work. Usually the salary is competitive for the position, and nonprofits are sensitive to charges that they're overspending contributors' money on themselves. Still, it's worth trying to determine how much money is being spent on salaries - and to calculate its percentage of their total annual income. Nonprofits are required to list these salaries on their tax records, and salaries have been discovered that were exorbitantly high. The charities were simply hoping that no one noticed!
It's a double-edged sword, because a large portion of the money charities raise is spent on trying to raise even more money. But one Washington newspaper actually discovered a charity where only 8% of the money actually reached its intended benefactors. According to the Seattle Post-Intelligencer, "Most of the dollars were eaten up by high professional fundraising fees, consulting and management fees, travel expenses and payments to the husband-and-wife team who run the organization." Its two co-founders extracted $155,000 just for their salary each year - or nearly ten cents out of every dollar raised. Watchdog groups recommend charities spend less than 35% of their money on fundraising.
Investigate the ratio for charities in your area, but remember that the biggest charities handle the largest sums of money. Here's a handy shortcut for assessing the size of a U.S. charity. If they're filing a 990-N, then their yearly contributions were less than $25,000, but if they're filing a simpler 990-EZ, then their contributions fell between $25,000 and $1 milion. Charities receiving more than $25,000 could also file the complete 990 form, but they're required to file it if their contributions exceed $1 million (or if they have assets greater than $2.5 million). These three forms are the key to understanding any charity.
The 990 forms will not only provide the total contributions, but also break down how much the charity made from the dues paid by its members and even how much they spent on their rent! For nearly 50 years the best source for this information has been the Foundation Center, which offers a definitive searchable database online that's available for free. Is the charity shrinking, growing - or growing dramatically? Check this year's tax filings against those for the previous year (also available online through the Foundation Center). The trend of the charity's growth is the single best clue to its overall health.
A million-dollar donation could be big news, so try to determine a charity's largest donors. Are they propped up by a single "angel" contributor, or are they funded from the pennies raised by schoolchildren? Rich donors often publicly announce their donations, hoping it encourages even more contributions. The biggest corporate donors usually have a statement already prepared, and a spokesperson will gladly discuss why they're supporting this particular cause. As with any news story, it's the people that make it interesting.
There are good charities and bad charities, but each one should have intriguing personalities. Determine who's on the board of directors, and see if it includes any "stars" who are famous in other areas. Often celebrities or business leaders will lend their name to a worthy cause. Writing about their pet charity may be your best chance of landing a big interview!
And understand the history of the organization you're covering. When the staff changes at a nonprofit, it can move in a new direction. Readers will want to know the original mission that the nonprofit was serving, and it's always useful to ask the founder how their present compares with their history. History creates a context for the nonprofit's status today.
But there's other ways to identify people who've been affected by the charity. Always check for complaints with the Better Business Bureau. Founded in 1912, it's a useful resource for investigating whether nonprofits have received any complaints. Their web site even offers tools where you can search for comments about a particular charity's practices. Nonprofits actually benefit from the site, because they can be certified as meeting the bureau's "Wise Giving Alliance Standards for Charity Accountability". But the bureau also provides a handy way to determine if a nonprofit's donors have been complaining.
Covering a nonprofit requires mastering specific technical details, but it's indispensable to providing context to the warm feeling behind their mission. Finally, remember that people place a great value on their charities, and be mindful of how strongly they feel. In 1997 Van Jones launched a nonprofit in his closet, and within 10 years built it into a full-time operation. In 2007 he spoke at a nonprofit conference, and shared his story to inspire the audience. "I want you to know that looking back on it, you know what it looks like? It just looks like a series of miracles.
"Just miracle after miracle after miracle after miracle."