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In addition to the information provided in this report, the Secretary of State’s electronic charities database contains annually updated disclosure information filed by charities, paid solicitors, and professional fundraising consultants. These registration statements include basic identifying information about each registered entity, such as its location, legal entity status, place and date of formation, and executive personnel. Each charitable organization describes its charitable purpose, lists the composition of its board of directors, discloses its federal tax-exempt status, and files an annual financial statement listing revenues and expenses. Consumers are strongly encouraged to review these filings and to check an organization’s current status before deciding whether a particular organization is worthy of support.
Additional information can be requested from a charity directly. For example, the organization may publish its own annual report containing a detailed financial statement and other educational material concerning its mission and program services. Most charitable organizations registered with the Secretary of State also file a federal Form 990, 990-EZ, or 990-N annual information return with the Internal Revenue Service. If so, they are required by federal law to provide a copy of such forms as well as a copy of their IRS tax-exempt application upon request. More specific information regarding the federal public disclosure requirement is available at the IRS Public Disclosure Overview.
Collectively, these sources of information help answer one of the most frequently asked questions among potential donors - "Where does my donation go?"
Evaluating results of solicitation campaigns
A charity’s total fundraising costs might not resemble those of a particular campaign run by a paid solicitor, so it is important to view any solicitation campaign in context. As long as the solicitation campaign results are considered alongside the overall financial information in a charitable organization’s annual registration statement, the information in the Secretary of State’s Annual Report on Charitable Solicitations can provide valuable insights. Consistently high fundraising costs may be a cause for concern and warrant a closer look by donors.
Here are some questions a person might ask that could provide more perspective to an individual fundraising campaign:
- Is the purpose of the campaign simply to raise as much money as possible, to acquire new donors for the future, to reinstate lapsed donors, or is it for some other purpose, which is merely a part of the overall fundraising strategy?
- Does the solicitation campaign directly serve some other program purpose of the charity beyond the raising of funds in this particular solicitation campaign?
- Are there other sources of revenue?
- Has the organization conducted similar campaigns in the past? Is this a newly-created organization?
- Are there donor restrictions on the use of funds, exceptional bequests, or a stigma associated with a cause and environmental or political events beyond an organization’s control?
The information in the Annual Report on Charitable Solicitations provides important clues as to whether or not donations solicited by professional fundraisers are being used as donors intended. While most donors understand that fundraising entails costs, many are not aware of the amount of those costs for a particular solicitation campaign, nor do they have an objective standard in mind regarding appropriate fundraising costs. States are not permitted to legislate limits on fundraising costs, but donors may consult industry standards established by charity rating services to evaluate the amount of a charity’s fundraising expense and other overhead costs.