For ye of little faith, it’s not easy to learn how most of these charities spent their money. Half the states take a laissez-faire stance toward heaven, generally exempting religious groups from charity-registration laws. The Internal Revenue Service requires independent religious organizations to disclose their finances annually on 990 forms, but not churches, synagogues or their auxiliaries.
Not that 990s do donors much good-written, as they are, in Sanskrit. For a second opinion on a charity’s finances and fund-raising methods, you have to rely on private watchdog organizations like the National Charities Information Bureau. But many church-linked groups decline to submit to that sort of scrutiny. One such: Feed My People International, an arm of the Don Stewart Association (a church). Prospective donors get heart-rending letters on behalf of starving children, with few or no facts about how the money is distributed. Three watchdog groups have asked for details and been turned down.
Privacy makes sense, in the complex relationship between a house of worship and its congregation. But things change when churches ask the public to finance a social-service program. “In that case,” says Gary Wolfe, executive director of the Charities Review Council of Minnesota, “they should provide financial information, so they can be evaluated like any other charity.” Don Stewart’s lawyer, J. C. Joyce of Tulsa, Okla., sees it differently. “The people who are interested in the organizations don’t want the financial information,” he says. “The idiotic [groups] that want to harm the organizations want it.”
Sorry, J.C., but this idiot begs to differ. Anyone who cares about feeding the people wants to give her dollars to whoever provides the most bites for the buck. Plenty of splendid charities accept, even welcome, outside scrutiny. If Don Stewart doesn’t, why should I send him any money?
Even a group OK’d by a watchdog might use controversial accounting methods. Take Larry Jones International Ministries (Feed the Children), which raised $110 million in 1991 and met the standards set by the Council of Better Business Bureaus’ Philanthropic Advisory Service.
In 1990 and 1991, Penguin Books USA gave Larry Jones 83,000 cases of damaged or otherwise unsalable paperback books, which Penguin says were worth around $25 a case. Jones, however, valued the gift at $234 a case in 1990 and $195 in 1991. Defending the higher valuations, Larry Jones says, “I say to my accountant [from Coopers & Lybrand], ‘Stay within the law,’ and he says the law is fuzzy.”
As part of his charitable program, Jones donated the books to at least two other charities, which passed them through five more charitable groups-each time at inflated values, according to Connecticut Attorney General Richard Blumenthal. A total of four groups in this book deal have been sued by Connecticut or Pennsylvania. The charities have denied the charges. Larry Jones wasn’t required to register in either state and isn’t a defendant.
When tangible gifts can be given a high value, charities benefit in two ways. They report a higher level of donations, so their program looks bigger. And compared with those donations, their management and fund-raising costs look lower. A layman isn’t likely to dope that out.
So you need help. For information on conservative Christian charities, try the 13-year-old Evangelical Council for Financial Accountability (ECFA), which requires member groups to meet reasonable standards of ethics, governance and disclosure. ECFA sets no ceiling on fund-raising costs (although it may question expenses exceeding 25 cents for each dollar raised). It does, however, scrutinize fund-raising appeals, require independent audits and make periodic onsite reviews. Seven groups were terminated this year, says president Clarence Reimer-one for violating standards, six for failing to provide requested information. For a free list of its 715 members, write to ECFA at P.O. Box 17456, Washington, D.C. 20041 (or call 800-323-9473); you can also get up to three short “member profiles,” summarizing each charity’s most recent financial statement. Billy Graham belongs to ECFA; TV evangelists Oral Roberts, Jimmy Swaggart, Paul Crouch and Robert Schuller don’t.
There’s no ECFA equivalent for Jewish charities. But they’re separate from synagogues so they file 990 forms, says Harold Adler of the Council of Jewish Federations in New York. Catholic charities are subject to general standards known as the “bishop’s guidelines,” but no independent body keeps track of how well that works in practice.
The National Charities Information Bureau in New York City (212-929-6300) publishes a free list of organizations that do and don’t meet its standards; a handful of them are religious groups. The Philanthropic Advisory Service in Arlington, Va., offers a similar list for $2 (703-276-0100). Of the two, the NCIB is more skeptical of charity accounting. “The accountants are part of the problem today, not part of the solution,” declares NCIB head Kenneth Albrecht flatly. The profession is debating new accounting guidelines; in the meantime, some practitioners earn a handsome living by working the edges of every loophole.
Before giving to a charity, ask for a copy of its IRS 990 form-not to analyze the data (who can understand it?) but to see if the group will send it out. Although, by law, 990s must be open to public inspection at headquarters, many charities refuse to mail them-maybe because they disclose the salaries of the organizations top people. Even if you do understand the numbers, you cant always trust them. The National Association of State Charity Officials says that 990s exhibit “a consistent high level of error and abuses” yet the IRS is able to audit only 1 to 1.5 percent of them. I do believe that the majority of religious charities function in good conscience. But conscience gets a boost from that still, small voice that warns us someone just might check.
