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Too Much Donor Anonymity?


One of the joys of living in the Washington area is that while watching the news on television, we get to see the strangest advertisements urging Congress to do such-and-such sponsored by some supposedly high-minded, publicly spirited organization. I always think to myself, who are these people and where is their money coming from? Maybe it’s my cynical side coming out, but I usually assume that behind the scenes there are a bunch of organizations fighting over market share and a pile of money.

Most discussions about the nonprofit sector usually focus on the needs of traditional donors, whether they are individuals or professionals, and charities that are providing public services.

But there are thousands of nonprofit organizations that are organized to serve very narrow subjects. One of my pet peeves, for example, are the nonprofits organized by elected officials, a subject that I think doesn’t get nearly enough attention. Some of these charities do terrific work, but many serve little purpose other than to attract donations which ultimately serve only the interest of the elected official.

I’m not talking about advocacy groups per se. I support the right of 501(c)(3) nonprofit organizations to advocate for their points of view and the passage of legislation to benefit their cause, within the guidelines of the IRS. We all need to be ever vigilant so that our rights aren’t watered down. We also have the 501(c)(4) category for those nonprofit organizations that want to undertake major, sustained lobbying efforts.

No, what I’m speaking about are those nonprofits where the funding source is nebulous, executives are overlapping, the activities are unclear, and—worst of all—the names of the organizations are misleading. I think these types of nonprofits breed public mistrust and have a negative effect on charitable giving in general.

The Washington Post had a front-page story yesterday looking at organizations lobbying for changes in health care titled “How interest groups behind health-care legislation are financed is often unclear.” The first two paragraphs of the piece lay out the premise:

Many of the Washington interest groups that are seeking to shape final health-care legislation in the coming weeks operate with opaque financing, often receiving hidden support from insurers, drugmakers or unions.

The groups, some newly formed and others reappearing with different sponsors, have spent months staging noisy protests, organizing letter-writing campaigns and contributing to a record $200 million advertising blitz on health-care reform.

I asked Chuck McLean, GuideStar’s V.P. of research, and his assistant, Carol Brouwer, to dig into the GuideStar database to see what we could learn about the organizations mentioned in today’s article. They found that most of them are either charitable—501(c)(3)—or lobbying—501(c)(4)—organizations and in the GuideStar database. But the 990s and other tax documents available from the IRS don’t really tell you very much about the funding sources of these organizations. This is an obvious case where going beyond the IRS data is absolutely essential.

These organizations are not required to disclose to the public the sources of the contributions they receive. So if the fictional Society for Compassionate Care for the Elderly is a nonprofit that is lobbying for the Congress to pay for nursing home care for any senior who needs it, we have no idea if the money that pays for the lobbying comes from thousands of concerned individuals or from the business interests that stand to make a fortune if the lobbying efforts are successful. It isn’t clear to me that anonymity of donors is fair to us in instances like these. What do you think?

Bob.jpgThe preceding is a guest post Bob Ottenhoff,  Chief Executive of the Center for Disaster Philanthropy. With an entrepreneurial spirit, strong technology focus, and a quest to make an impact in the world, Bob has the ability to take an organization and lead it into strong performance, sustainability, and industry leadership.

Topics: Policy Donors