According to a recent article in The Chronicle of Philanthropy, there are now nearly 800,000 charities on the Internal Revenue Service’s official roster – twice as many as there were in 1990. The economic boom of the mid-1990s, changes in governmental programs and concerns about legal liability for board members of informal not-for-profit groups are all contributing factors in the charity boom. But what are the repercussions of such rapid growth – and how will it affect your organization?
The growth has met with mixed reactions from all sides. The majority of new groups are very small, with budgets under $25,000. Some advocates praise the virtues of smaller organizations, citing their more personalized, concentrated services and innovative ideas. Others, however, worry about duplication of services and inefficient management.
With increasing numbers of organizations claiming charitable status comes increased scrutiny from regulatory agencies. The US Senate, for example, is considering measures to keep closer tabs on charities, such as an increase in the number of audits they must undergo. Other policy makers believe organizations should have to periodically prove that they still qualify for their tax-exempt status.
Increased competition for funds among charities with similar goals and constituencies is also a factor of concern for many organizations. Unfortunately, the pool of donors does not necessarily increase with the number of nonprofits seeking their contributions. Many organizations will have to devote more time to fundraising, and pursue more aggressive tactics.
Donors will also demand more transparency from their charities before they decide how much and to whom to give. Already independent groups are scoring the effectiveness of charities and releasing reports naming those which they deem most effective. Angling for a good score may eventually have an affect on the way some nonprofits report on their budget.
How does this growth affect your organization?
Accurate reporting and audit-friendly accounting is more important than ever to prove the value of your organization. Grant management software and easy-to-use fundraising tools will give you an edge when it’s time to make an appeal to foundations or donors.
MIP Fund Accounting and Fundraising solutions make it easy to track and report on the costs associated with raising funds and running your nonprofit. From the smallest nonprofit to the largest foundation, MIP has simplified, streamlined reporting to make your accountability tracking more efficient.
Visit The Chronicle of Philanthropy Web site for more information on the recent growth of charitable organizations in the United States. http://philanthropy.com/Published by Best Software Nonprofit and Government Division
Managing
Editor: Megan Hair, megan.hair@bestsoftware.com