Posted on Dec 28, 2013
What's an acceptable expenses:operations ratio for nonprofits supporting the military?
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Many nonprofits and veteran's service organizations (VSOs) have come under close scrutiny recently for having a skewed ratios of expenditures vs. costs associated with the services and the operations they provide. During the Combined Federal Campaign (CFC), these expense percentages are listed clearly. What are your thoughts on this matter?
Edited 11 y ago
Posted 11 y ago
Responses: 13
80% / 20% should only be used as a guide. I'd love to see past violations as well as well as complaints or investigation past and ongoing included. As well as if any "rumors" have been vetted as false. Education is the key!
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LTC Jason Strickland
Matt, you're tracking! Nonprofits that are dedicated to transparency are listed in GuideStar and Charity Navigator. These two watchdog groups keep nonprofits accountable.
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LTC Jason Strickland
Matt, you're correct there as well. 501(c)(3) and 501(c)(9) organizations operate with some similar characteristics, but are very different. The point is that we all do the research when we're donating to worth "military-friendly" nonprofits!
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It goes without saying that both good and bad (yes, even on the CFC) charities exist. Take the time to do your due diligence by researching the charities that interest you. Should you choose to donate, remember to assist only those charities of which 80% or greater of the monies go directly to supporting the said cause. Personal plug...One can never go wrong by investing in our youth.
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LTC Jason Strickland
Tyler, thanks for your response. I agree that nonprofits should maintain an 80%/20% ratio in order to be viable and demonstrate that the money we are donating is going to those intended.
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If an organization is a legitimate 501c3 it's Form 990 (provides financial data) should be readily available. Non-profits are required to file it to maintain their status. As to your question--I have been told by someone that has worked in the industry for a long while that an 80/20 ratio or better is the "gold standard". Having worked in non-profit for almost two years now, it should not be the only measure, and maybe not even your first. What is more important, and is difficult to express objectively is the impact or effect the organization is having on its constituents. The ratio, senior officer salary, etc. may be important indicators, but the big questions should be: Is this organization effectively fulfilling its stated mission? Are they making efforts to objectively illustrate it? Not just using anecdotal success stories and emotional testimonials. I could go on about this and efforts of some organizations to provide measures--such as non-profits claiming medical rehabilitative benefit, etc.
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LTC Jason Strickland
David - we're in complete agreement. With both of us working in this industry, it's good to hear your perspective. My organization, Project Sanctuary, is a Gold Participant in GuideStar Exchange, one of two industry watchdogs for nonprofit transparency.
Additionally, I agree that there is a shifting of the tide towards results-oriented impact instead of just the operations/admin %. A good balance of the two will keep nonprofits like ours accountable and our results will demonstrate to donors how their contributions are being used.
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