WWAY INVESTIGATION: What Gives? The business of charities
WILMINGTON, NC (WWAY) — 5k’s, auctions and galas are just a few of the many ways non-profits raise money in our area.
Those charity balls and galas are a big part of Wilmington social life. The Muscular Dystrophy Association held its first “Toast to Life” gala in October.
“The funds that we raised at the 2015 MDA Toast to Life Gala were specifically earmarked for local research efforts, for families that live in New Hanover and surrounding counties,” said MDA of Eastern NC Executive Director Melissa Sinclair.
Black tie events can be expensive to host and many question whether they’re an efficient way to fundraise.
“We were able to work with a lot of our community partners and get in-kind donations, which helps us cut the expenses on these types of events,” Sinclair Said.
Sinclair says donations from the community allowed the organization to raise more than $160,000 from the event, while also giving them a chance to showcase their charity with little upfront costs.
“Those things help to drive down our expenses and therefore increase our net profit and what we’re able to provide to families,” Sinclair Said.
Natasha Davis is the director of “QENO” Quality Enhancement of Nonprofit Organizations at UNCW. She says keeping overhead costs minimal is a key ingredient for a successful non-profit and they should be treated as any other business.
“If you want to invest in any business, you have to make sure that if they have a bad month, they’re not going to close their doors,” Davis said.
The percentage of money spent on operations and fundraising versus programming is helpful in determining how reliable an organization is. Davis says most funders want to see an organization’s overhead cost at below 30 percent of expenses.
United Way of the Cape Fear’s President Chris Nelson, says his organization is much lower than that.
“Our overhead costs here are below the United Way average, and the last two years they’ve been 11 and 12 percent respectively,” Nelson said. “That includes both the fundraising expenses and the administrative expenses.”
Many smaller organizations in our area prefer to keep things local.
“Anything where we can have people come and donate, they get to know what we do, and they get to support us,” said Tom Russell who founded the organization Step Up for Soldiers.
Russell said less than 5 percent of the organization’s income is for overhead.
“We’re all volunteer. There are no paid employees. We have no overhead, and as far as structure, we run it out of my truck and my phone,” Russell said.
But not all non-profits are as transparent.
“There’s very few non-profits that start with any kind of ill-intention. You start because you want to solve a problem and you’ve got that passion to solve that problem,” said Davis.
Watchdog groups and informational websites about charities provide everything from customer reviews and mission statements, to impact and tax returns. As we were combing through these watchdog websites and hundreds of tax forms, we came across the Cape Fear Volunteer Center. In 2014, the organization brought in around $84,000 but spent $103,000 — nearly $70,000 of that went to employee salaries.
WWAY tried calling the director, Annie Anthony, several times to help us understand this discrepancy. We also stopped by their office on Walnut Street and each time, no one was there.
UPDATE: Friday afternoon, we talked with Anthony about the story. Anthony says the numbers on the tax forms can be confusing and have a lot to do with the way the accounting is handled. She says in 2014, the Volunteer Center transitioned to a new bookkeeper and accountant, and she believes some costs were categorized differently than they had been in the past. She also says the figures on the ledger don’t tell the whole story.
“These 990s are not asking about all the in-kind donations we get,” Anthony said. “They’re just asking about dollars and cents, and we don’t have a lot of that.”
Anthony says in 2014, the $70,000 in salaries covered at least six people, who represent the largest resource for various programs the center runs, including Big Buddy. She said some of the agency’s positions are funded by government programs, which allow people to work for the Volunteer Center instead of collecting welfare. Other costs include administrative things, like rent.
“All of that you want to keep as low as possible,” Anthony said. “As close to 15 percent.”
So whether you decide to donate online, attend a gala, or run a race, experts we talked to say you need to do your homework first, in order to really help.
“Volunteer. Get involved with charities. See what they’re doing before you give them money,” Russell said.
“Do the research and participate as a volunteer,” Nelson said.