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May 21, 2012

4 in 10 Charities Claim No Fundraising Costs on Tax Forms

Thousands of charities do not accurately report to the Internal Revenue Service how they raise money, according to Scripps Howard News Service.

Of the nearly 38,000 nonprofits that garnered at least $1-million in gifts, 41 percent reported to the IRS that they spent no money doing so. In total, those groups raised $116.7- billion

"It is ridiculous to think an organization could raise significant amounts of money without spending money to do it," said Robert Ottenhoff, head of GuideStar, which provided data for investigation.

Charity leaders say they are under pressure from donors to minimize overhead costs, which include fundraising. However, several organizations said they will re-evaluate how they report those costs in the wake of the study, which examined charities’ most recently available informational tax returns.

For example, among Goodwill Industries International’s, 127 major affiliates, 48 reported no fundraising costs to the IRS. "We are going to have a dialogue within the Goodwill network so that each Goodwill and the boards of directors can become very aware of this issue," said Jim Gibbons, the charity’s leader. "It is important to be clear and transparent."

See a previous Chronicle article on how charities report fundraising costs.