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Nonprofit scrutiny

Nonprofit scrutiny

Winston-Salem Journal, N.C.

December 30, 2009

We are all responsible for deciding which charities we will, and will not, support. But we also need some government help that we aren’t getting.

McClatchy Newspapers recently reported that a small number of nonprofit organization executives in other areas of the state are paying themselves ridiculously high salaries. And the government agencies that should be catching these parasites aren’t doing their jobs.

Using a database, McClatchy reporters scoured nonprofit financial statements and found one executive making $5 million a year, almost everything that his nonprofit generated. Other leaders make six-figure salaries but produce little community service.

Some of the high salaries are legitimate. Major nonprofit hospitals must pay large salaries for their leaders. So must colleges and universities, although the UNC system is eliminating some highly paid administrative positions in an efficiency move. And, we must stress, the great majority of nonprofit leaders make little or nothing as they operate on a wing, a prayer and a shoestring.

But too many nonprofit salaries clearly are not legitimate and betray the trust contributors place in these organizations. Nonprofits are tax-exempt. Federal and state laws govern how these organizations can spend their contributions, but the Internal Revenue Service and other agencies don’t have the staff to enforce them.

Two steps should be taken immediately.

First, the Congress must adequately staff federal agencies so they can catch the offending nonprofits.

Second, the N.C. General Assembly must take greater care in reviewing the nonprofits it supports through the budget. McClatchy found several extraordinary salaries paid by organizations that receive state grants.

Legislative leaders should immediately implement closer audits of all nonprofits under grant consideration. And, as the Journal has said, there must be better public accounting of the state money nonprofits spend.

Finally, all of us might want to exercise more care before we write our donation checks. “Buyer beware” is wise advice. So is “contributor beware.”

Coming as it did, right in the middle of the holiday season and at a time when many of us make end-of-the-year contributions to our favorite charities, this report is truly disappointing. In tough times like this, we’d all like to think that what we can contribute is being used as wisely as possible.

The great majority of charities and nonprofits are doing just that. We hope all North Carolinians will continue to contribute what they can afford. But, first, we should all do a little checking to be sure the organization we’re supporting is what it says it is and not just some mechanism for making a scoundrel rich.

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