I-Team: Dozens of Tampa Bay area nonprofits raise millions without incurring fundraising expenses

Charity experts say most "zeros" on 990s are wrong

TAMPA - From the assembly line work of the job skills program at the MacDonald Training Center in Tampa, to the high level of artwork that hangs on their gallery walls, CEO Jim Freyvogel stops to admire it. 

But just for a moment. There is too much work to be done behind the scenes.  "It's becoming more competitive. Every year there are more and more non-profits looking for dollars," says Freyvogel. 

Whether it's packaging SunPasses or the latest "As Seen on TV" product, it's all done by the developmentally disabled adults who use MTC's services every day. It's a place with on-the-job training that can turn into real world employment for these disabled adults who want badly to be a productive member of society.

It's all possible thanks to government grants and public donation dollars for this nonprofit. Dollars that are getting harder to come by in a tighter economy. 

Freyvogel knows to get donors to keep coming back, MTC needs to maintain the highest level of transparency. "The only way you can be accountable is to be transparent and to report the truth," he says. 

Every year, nonprofits like MacDonald have to stay transparent by filling out the IRS's 990 tax form. In that form, they must report every penny they get either through grants, donations, and fundraising. Then it must be signed accurately just like your tax return "under penalties of perjury."

But with the help of our partners at the Scripps Howard News Service and charity watchdog Guidestar, The I-Team uncovered more than 140 Tampa Bay area charities, in their most recent publicly-available 990, show they raised at least a million dollars or more, but they may not have accurately reported expenditures to raise those funds.

In many cases, they reported zero costs associated with their fundraising. That's questionable, according to several charity experts, including Guidestar's President. "I've been raising money for many years for nonprofit organizations and I've never seen it growing on trees," says Robert Ottenhoff.

A "zero" on a 990 means not a single solicitation letter or phone call. Nothing spent for advertising or grant applications. And not a single staffer made a face-to-face plea for contributions on the clock.

MORE: Tampa Bay charities with $1 million in contributions and no fundraising expenses - http://wfts.tv/KgVjIO .

"This is just outrageous," said Marion Fremont-Smith, senior research fellow at Harvard University's Hauser Center for Nonprofit Organizations. "If they say zero -- and it cannot be zero -- then that is a misreported tax form. And there are penalties for that."

Dr. Maureen Butler teaches the nonprofit certification program at the University of Tampa. "In some cases it could be a mistake. In some cases it could be intentional. And in some cases it could be lack of education," says Butler, who teaches non-profits how to fill out their 990.

Nonprofit groups are under enormous pressure to report low overhead costs -- the total they spend on administration and fundraising -- in the often-fierce competition for donations.

Some charitable groups, like United Way, recommend against contributing to nonprofit organizations that report overhead expenses greater than 25 percent of donations. 

According to the Scripps Howard News Service findings, thousands of nonprofit organizations in the United States misreport how they solicit billions of dollars in donations, making it impossible for Americans to know how their gifts are used. 

Forty-one percent of all 37,987 charities and other nonprofit groups that collected at least $1 million according to their most recent report to the Internal Revenue Service made what experts agree is a ridiculous claim: They raised significant amounts of money without spending a dime to do so. 

On their annual tax forms, these 15,389 nonprofits said they spent nothing. Even so, these groups reported that they managed to raise a total of $116.7 billion while reporting zero fundraising expenses, according to a study of federal tax records. By law, nonprofits do not owe federal taxes on any funds they raise.

The I-Team called around to Tampa Bay area charities to ask them about their "zeros."

Some, like the Polk Education Foundation said it was unintentional, adding that many charities find the 990 confusing.

Others like Goodwill Manasota said it didn't see its solicitation for donated-goods as fundraising, but it will look into the issue. A spokesperson said staying "clear and transparent" is what Goodwill stands for.

When informed that 48 of Goodwill Industries' 127 major affiliates reported raising $387 million at no cost, Goodwill Industries International President and CEO Jim Gibbons said the charity will rethink how it calculates its overhead costs in reports to the federal government and the public. "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.

Susan Forbes, spokeswoman

for Florida Blood Services Inc., says the St. Petersburg-based nonprofit does its fundraising through the affiliated Florida Blood Services Foundation Inc. Fundraising expenses are recorded on the foundation's tax return filed with the IRS.

A foundation associated with St. Joseph's Hospital Inc. picks up the fundraising expenses for the Tampa medical center, according to spokeswoman Lisa Patterson.

Michael DiBrizzi, president and chief executive officer of Camelot Community Care Inc., says the vast majority of funding for the Clearwater-based child welfare organization comes from government contracts and grants. DiBrizzi says the nonprofit doesn't solicit donations.

Hillsborough Kids Inc. is in a similar situation. The Tampa-based child protection agency is so completely dependent on funding from the Florida Department of Children & Families that it is going out of business in six weeks after losing its state contract, says spokeswoman Jeanine Bedell.

Back at the MacDonald Training Center they agree, the IRS needs to bring better transparency to the places where we all donate our hard earned dollars. "Anytime there's not a level playing field, I think there's a concern for everybody," says Freyvogel.

To check on your favorite charity, here are some resources:

www.guidestar.com

www.charitynavigator.com

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