December 17, 2007
It's the end of the year. This is the biggest income month for tax-exempt organizations. The money comes in because people want to cut their tax bill for this year.
Tax-exempt organizations by law are run by a committee. The members do not own the assets. They may be paid, but they must be paid for services rendered. They must not be paid too much. The IRS may investigate.
Why set one up? Because you don't think anyone will pay for services rendered to them. The services must be rendered for others -- people who cannot or would not pay unless the service is subsidized. Donors give to The Cause.
Organizers act on behalf of the donors. How? By acting on behalf of the recipients. He is like a banker who makes his living by bringing together people with money and people with ways to make more money. But money-making is not the goal.
If the founder is a true believer in The Cause, he serves well at a reasonable salary. But his successors do not look at the organization as their baby. They look at it as a low-competition career meal ticket. They do things conventionally, by the book. They don't make waves, take risks, or ruffle the feathers of large donors. They know where there bread is buttered and by whom.
Here are classic marks of an organization going conventional:
1. No new programs unique to the organization -- the copy-cat factor
2. No new ideas unique to the organization -- the mainstream factor
3. No new senior staff employees under age 40 -- the good old boys factor
4. No recruiting programs for teens or young adults -- the sclerosis factor
5. No growth in the mailing list -- the stagnation factor
6. A shrinking mailing list -- the attrition factor
7. The departure of the president every 36 to 48 months -- the board paralysis factor
8. More than 35% of the budget going for salaries, except in "think-tanks" -- the retirement factor
9. No numerical success indicators -- the fudge factor
If more than two of these factors are apparent, don't send the outfit any money. It is coasting. Let it coast on somebody else's nickel.
For information on how much bang an organization gets for its buck, use the excellent site, Charity Navigator.
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