How should a "non-profit" be judged?

How should a "non-profit" be judged? For legal / tax status.

1) The work they do?
2) The percentage of income they distribute to the actual charity/organization?
3) Charitable organizations only?
4) Size (i.e.: smaller being better than bigger)
5) Disqualify any where anybody takes in more than $X in salary and/or benefits?
6) Other?
7) No changes from the current status?

Please note that this question is NOT regarding the current definition / standards. This question presumes that changes need to be made, but Option #7 is included for those who feel the status quo is perfect.

You may vote for more than one.

radcen said:

How should a "non-profit" be judged? For legal / tax status.

1) The work they do?
2) The percentage of income they distribute to the actual charity/organization?
3) Charitable organizations only?
4) Size (i.e.: smaller being better than bigger)
5) Disqualify any where anybody takes in more than $X in salary and/or benefits?
6) Other?
7) No changes from the current status?

Please note that this question is NOT regarding the current definition / standards. This question presumes that changes need to be made, but Option #7 is included for those who feel the status quo is perfect.

You may vote for more than one.

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Well, certainly their mission statement enters into it -- what are they doing that's charitable? I think they should be judged ruthlessly by what percentage of their total income they use in direct support of their mission statement.

MaggieD said:

Well, certainly their mission statement enters into it -- what are they doing that's charitable? I think they should be judged ruthlessly by what percentage of their total income they use in direct support of their mission statement.

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Agreed. There are some who give something like only 10% to the actual work/charity that they claim to support.

Sports athlete charities are notorious for being inefficient at giving back. They're a.k.a. places where their idiot family members can get paid for doing very little work as they sit on the board of directors and they organize one event a year.

radcen said:

How should a "non-profit" be judged? For legal / tax status.

1) The work they do?
2) The percentage of income they distribute to the actual charity/organization?
3) Charitable organizations only?
4) Size (i.e.: smaller being better than bigger)
5) Disqualify any where anybody takes in more than $X in salary and/or benefits?
6) Other?
7) No changes from the current status?

Please note that this question is NOT regarding the current definition / standards. This question presumes that changes need to be made, but Option #7 is included for those who feel the status quo is perfect.

You may vote for more than one.

Click to expand...

As an FYI, not all non-profit organizations are "charitable." Some are like the Red Cross, churches, homeless shelters and Habitat for Humanity. Some are not like credit unions, the NFL, college fraternities and sororities, the PTA and the American Petroleum Institute TV: Let's Put America's Oil & Natural Gas Resources to Work for Americans - YouTube .

I prefer being neutral on judging the validity of a non-profit based on what it does, its effectiveness, budget and how they operate. As long as they're obeying the law, I'm happy. I'm for freedom and don't think its right in principle to set up special punitive rules for some just because they're they're more effective, influential or have a bigger operating budget than a soup kitchen that can't pay its bills.

Smeagol said:

As an FYI, not all non-profit organizations are "charitable." Some are like the Red Cross, churches, homeless shelters and Habitat for Humanity. Some are not like credit unions, the NFL, college fraternities and sororities, the PTA and the American Petroleum Institute TV: Let's Put America's Oil & Natural Gas Resources to Work for Americans - YouTube .

I prefer being neutral on judging the validity of a non-profit based on what it does, its effectiveness, budget and how they operate. As long as they're obeying the law, I'm happy. I'm for freedom and don't think its right in principle to set up special punitive rules for some just because they're they're more effective, influential or have a bigger operating budget than a soup kitchen that can't pay its bills.

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I get what you're saying, but I don't think having some standards is necessarily punitive.

For example, of the choices I listed, I chose only #2 and #3. I think a non-profit should contribute a vast majority of the money it takes in on its stated purpose. When I say "vast majority", I'm thinking 80%+/-.

I would also prefer that non-profits be restricted to charitable-like endeavors. Helping a kid's sports league is great, but it's a societal luxury. Helping the homeless, or helping the mentally disabled, for example, are charitable endeavors that qualify in my mind.

radcen said:

I get what you're saying, but I don't think having some standards is necessarily punitive.

For example, of the choices I listed, I chose only #2 and #3. I think a non-profit should contribute a vast majority of the money it takes in on its stated purpose. When I say "vast majority", I'm thinking 80%+/-.

I would also prefer that non-profits be restricted to charitable-like endeavors. Helping a kid's sports league is great, but it's a societal luxury. Helping the homeless, or helping the mentally disabled, for example, are charitable endeavors that qualify in my mind.

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If I'm not mistaken 100% of a non-profit's revenue has to be either spent on its stated purpose of donated to charity. Salaries, families, travel, etc. are considered legitimate expenses toward te goal of fulfilling it stated purposes as without qualified staff it cannot do its wrk, etc. In fact I met with a grant writer for non-profits when the White House Faith Based Initiative first started and he said unless a non-profit had a respectable payroll budget its likely NOT to get grants because it would be seen as not a serious organization.

How much church spending is charity and how much is pushing the invisible sky wizard?

Smeagol said:

If I'm not mistaken 100% of a non-profit's revenue has to be either spent on its stated purpose of donated to charity.

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That's not entirely correct. A non-profit does not have to spend all of its revenue annually. And in many ways you don't necessarily want them to do that either. They're hit with a very low tax rate (think 1~2%) on excess. Non-profit often saving money for a big capital expenditures which would result in multi-year failure to spend 100% of revenue.

Salaries, families, travel, etc. are considered legitimate expenses toward te goal of fulfilling it stated purposes as without qualified staff it cannot do its wrk, etc.

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Sort of. The IRS will come down on you (or they should) if employee expenses become unreasonable. 990 returns have requirements to publicly name those employees making over $100,000 as a form of checks and balances against abuse. If your non-profit exists to pay your family, you will get audited and likely revoked.

In fact I met with a grant writer for non-profits when the White House Faith Based Initiative first started and he said unless a non-profit had a respectable payroll budget its likely NOT to get grants because it would be seen as not a serious organization.

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Depends what they do. If you have a huge volunteer list and relatively small payroll, that's a way to get around that. Showing that you have a big staff, but small employee expenses but funnel most of your money towards stated purpose, you'd likely get a bigger grant.

radcen said:

How should a "non-profit" be judged? For legal / tax status.

1) The work they do?

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Yes, political stuff should be grounds for revoking, as fluffy stuff that doesn't actually result in any charity. I'm not real keen on some of these "educational" charities.

2) The percentage of income they distribute to the actual charity/organization?

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This really should be key. Any non-profit that doesn't hit 70% is a red flag to me. Some of these political ones that are now filing seem to not even get close to that. United Way tends to be in the 80%s for comparison.

4) Size (i.e.: smaller being better than bigger)

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Depends on what they do. Some things are better with scale, somethings are not.

5) Disqualify any where anybody takes in more than $X in salary and/or benefits?

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Not necessarily. Sometimes you need certain key people. I think it's a more relative scale factor. If every other group is paying people much less and you have this one guy being paid millions, that's a huge red flag. CEO of Non-profits tend to be around the $200k to $400k for the larger size ones. I saw the Clinton one and their CEO is underpaid, especially for the size of the organization.