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9. Complaints filed with the Secretary of State

The Secretary of State’s office receives approximately 20-30 complaints about charities per year.  Over the past five years, the most common reason for a complaint filed with the Secretary of State was misrepresenting to donors how their donations would be used or what percentage of the donation makes it to the charity or both.

Many of the other complaints that we received were the result of an organization’s failure to adopt basic best practices, especially in the areas of governance and transparency, prompting insiders or donors to file complaints.  Several of the organizations named in these complaints simply did not understand the legal requirements to:

1. provide corporate records to members upon request;
2. provide copies of state and federal disclosure forms to anyone upon request (e.g. state registration forms filed with the Secretary of State and copies of the IRS Form 990 and Form 1023); and
3. follow the rules set out in their own bylaws or in the Colorado Revised Nonprofit Corporations Act, especially as regards the appointment, election, and removal of directors.

Corporate records include minutes of all meetings of its members and board of directors; a record of all actions taken by the members or board of directors without a meeting for the past three years; a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the nonprofit corporation; a record of all waivers of notices of meetings of members and of the board of directors or any committee of the board of directors; appropriate accounting records; a list of the names and addresses of its members in alphabetical order, by class, showing the number of votes each member is entitled to vote; articles of incorporation; bylaws; resolutions adopted by the board of directors relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members; all written communications within the past three years to members generally as members; a list of the names and business or home addresses of its current directors and officers; a copy of its most recent periodic report pursuant to part 5 of article 90 of Title 7, C.R.S.; and all financial statements prepared for periods ending during the last three years.  The organization’s financial statements must show in reasonable detail its assets and liabilities and results of its operations.

An organization with a strong, independent board that regularly consults best practices and adopts those best suited to its size and mission can largely avoid missteps that generate official complaints.  

The chart below summarizes complaints about charities received by the Secretary of State over the past five years.  Bear in mind that the Attorney General’s office also receives citizen complaints and referrals from this office when allegations fall within the Attorney General’s jurisdiction.

99 total complaints; with each complaint potentially containing multiple themes.