Be Careful Where You Donate Your Money

It is rare for me to write two blogs on the same subject so close together, but the IRS just published their massive list of 275,000 nonprofits that have just been revoked and not only does Orange County have it’s share- so does Newport Beach.

Of the 2,222 in Orange County (vs 3,481 in Los Angeles) that are no longer able to do business, a surprisingly high 6.6%, that is 146 charities, just in Newport Beach, are now terminated per the IRS.

They include just noteworthy names as the National Safety Foundation, United States Junior Chamber of Commerce, Real Estate Securities and Syndication Institute, National Endowment for Hospitals, and California Do Not Call List. Impressive titles, don’t you think? But the reality is, the names may be more image than a true representation of what they are all about. I cannot speak from personal experience since I do not know these organizations or the people involved and have difficulty finding out much more than cursory information.

The only reason I bring this to mind is that if you contribute to any charity that is not IRS approved your donation will not be tax deductible. In this time of need there are still organizations like this being formed and I’m sure that the vast majority are legitimate with valid business designs and pure intentions.  The reality is that it is way too easy to start a non-profit and use it for less than charitable purposes. We have seen in the media many examples of sham charities or those that spend very little on programs and the majority on administration, payroll and salaries.  The general rule we suggest is that only 15% of the income that a charity receives should be for admin and the rest should be to help those that they are founded to serve. If you want to donate this information is able to be found as well as the status they have with the IRS.

Not to make this sound too dramatic, but there is a chance that many of the terminated agencies are solid and committed in their cause but just got sloppy in filing the proper forms. To support the 30-50% that we estimate DO wish to remain in business though they were revoked, we will be conducting free workshops throughout Southern California on HOW it happened; WHY it happened; the options they now have, and how to avoid it happening again.

If you know any such organizations, please have them contact me.