When Taking Legal Action against a Nonprofit

What steps can you take when you discover something about an organization that doesn’t pass the smell test?

Recently we received a letter in the mail from a concerned donor.  His issue was with a specific nonprofit that he knew (and had evidence) was carrying out activities not in line with the organization’s bylaws. On a daily basis we get many calls from donors looking to find out more information about this or that nonprofit. Some inquiries are very generic, some only concerned if the organization has earned our Meets Standards seal, and others with very specific questions or concerns that need more investigation.

In the case of our letter-writing concerned donor, we knew and agreed with the man that an organization should not be doing activities counter to what the bylaws dictate. But ultimately, the best course of action we could recommend to the man was:

·         First, to call/write the organization and have a discussion with them about the concern. Try and find out the reasoning behind their actions and let them know why you, as one of their constituents, are concerned about that action.

·         Second, if that doesn’t get you any closer to a solution, the next step would be to contact the Attorney General's office. Third party reviewing organizations, like the Charities Review Council, have no legal jurisdiction over nonprofits and it’s best to take those concerns to the AG’s office.

In cases that are less serious, or when you’re first researching an organization, we have a list of questions all potential donors should ask charities before making a donation. And of course, we always recommend finding out whether or not an organization is on our list of Most Trustworthy Nonprofits, and if not, asking the organization why.

Questions to Ask Charities Before Giving

1. What is the exact name of the charity? Many organizations have similar-sounding names. It’s easy to assume a charity is the community organization with which you’re familiar, but this may not always be the case.
2. How does the charity use your contribution? The Council recommends that at least 70 percent of a charitable organization's total expenses should be used for program services. Although fundraising and administrative costs are necessary to a well-managed organization, donors should expect that a substantial amount of their contributions are used for program services.
3. What are the organization’s unique mission and programs? Different charities attack the same problem from different angles. Three cancer charities may have three very different programs:
1. making research grants to scientists
2. publishing pamphlets on a healthy lifestyle
3. providing free mammograms to low-income women.

Your desire to fight cancer might coincide with one mission more than others.

Read the remaining questions on our website, and be sure to keep them in mind when making donations during this season of giving.