6
in other words
january16
2014
Voice’s From the Crowd: Have You Hugged a Nonprofit Today?
By Jim Tierney
A recent post on the Voice web
site suggested: that with Bill Haack out
of city government it was time to audit
CAT (Community Action Team.) This
appeared to me to be an appeal for a final
flood recovery report, with some scrutiny
to be certain that large sums of public
money have been handled correctly. As
for the flood report, Dan Brown and I
have done a number of interim reports
to the City and County. We have also
been planning a final, celebratory report,
but are waiting for a couple of final work
items to fall into place. The highlights
of that report will be $30 million of
completed projects flowing from the
partnerships forged in the first weeks
after the 2007 flood. It will describe the
courage and leadership shown by our
elected leaders, the state staff, County,
City and CAT Boards/Council.
As for accountability for the
vast majority of the funds, CAT was
actually the hired program manager for
the County and the actual funds did not
flow through our accounts. However, the
appeal for accountability is a familiar
one, making this an opportunity to help
the writer and others know what scrutiny
already occurs for nonprofits like CAT,
and what resources are out there for the
curious to learn about specific nonprofits.
Since nonprofits are the fastest
growing segment of our economy, it is
important that the public have a way to
know they are not abusing their public
trust. Unfortunately, this “Third Sector”
of the American economy is poorly
understood. When most of us talk about a
nonprofit, we typically mean a charitable
nonprofit. The usual stereotype is a
group of volunteers coming together
to meet a specific community need. In
Vernonia, good examples of this type of
nonprofit are Vernonia Cares, the Senior
Center or the Grange.
In addition to these locally
important nonprofits, America has
evolved an entire class of nonprofit
businesses, some of them very large, to
efficiently deliver a wide range of critical
regional, state and even nationally
needed services. Great examples of
this class of nonprofit would be the Red
Cross, Habitat for Humanity or the last
hospital you entered. Other examples
are art museums, many colleges and
research institutions. Collectively
these nonprofits contributed almost a
trillion dollars to the economy last year
making up more than 5% of the US
Gross Domestic Product. More than
10% of American workers are employed
by nonprofits. This does not include the
more than 28% of American adults who
provide volunteer labor for at least one
nonprofit every year. 1 These mostly
mild mannered nonprofits control $2.7
trillion in wealth. To put that huge
number in perspective, it is roughly
3 ½ times the wealth of all American
billionaires, combined.
All or most of these nonprofits
are “charities.” Not all nonprofits are
charities. The difference is whether
donations are tax deductible. That is
why the IRS designates an organization
charity under its Section “501(c)3.”
It is easy to form a nonprofit – a set of
incorporation papers off the internet,
three friends, a computer and $50 is all it
takes. It is the IRS designation which is
hard to get, and harder to maintain.
Simply forming a nonprofit under
Oregon law by itself brings scrutiny. It
means that the Oregon Department of
Justice will require financial reports and
exercise oversight intended to assure
that your nonprofit does not generate
profits and that neither the executives
nor the board are looting the corporation.
This scrutiny includes adherence to
the requirement of the Sarbanes-Oxley
legislation passed after the Enron and
Global Crossing scandals. For those of
you with an insatiable appetite to learn
more about this wonky stuff, surf the
website of Hurwit & Associates, a law
firm with a specialty in nonprofit law. It
will give the inexperienced a flavor for
the regulations and hoops nonprofits
routinely negotiate, especially if they
use state and federal funding: http://
www.hurwitassociates.com/l_s_annual_
or.php
All nonprofits above a minimal
size are required to make their financial
statements available to anyone who
asks. The website of the Foundation
Center provides an online search
tool that will find the 990 (the “tax
return”) for virtually any nonprofit in
the country: http://foundationcenter.
org/findfunders/990finder/. For the
larger nonprofits, this 990 is the final,
condensed product of an audit, typically
performed by an outside, independent
CPA firm. In CAT’s case, we must hire
an independent auditor which owes its
allegiance to our board and the state, not
to CAT’s management. Such auditors
are heavily regulated themselves,
including the same Sarbanes-Oxley
legislation, among others. These
auditors systematically (over time) dig
into all the programs in an organization
and are looking for exactly what the
Voice comment suggested. They
examine programs and spending for
compliance with funder requirements
and the law. The auditors also examine
an organizations accounting and
procedures, looking for compliance and
needed improvements. Just as it sounds,
these audits are not quick. These audits
take weeks of CPA time to complete,
and if they must be as detailed as CAT’s,
easily cost $40,000.
At their best, nonprofits provide
needed services that government and
the private sector cannot. Sometimes,
like Goodwill Industries, a particularly
entrepreneurial nonprofit has found a
way to provide employment to a class
of people that have been historically
unemployable. Other nonprofits are
single-purpose entities which act as
holding companies for real estate used
for charitable purposes. Working for a
nonprofit is typically a lot like working
for a school. The pay is low, people
often show us their worst sides and it
often feels like we are “sweeping back
the sea.” On the other hand, most of us
manage to see the change we have made
in the lives of people we serve. For me,
that has always been the reward.
On my office wall is a bumper
sticker I was given by Burlington
Northern more than 30 years ago. It
says, “HAVE YOU HUGGED A 501
(c) 3 TODAY?” Large or small, these
nonprofits are out there, every day trying
to make America a better place. Think
about it.
1. The Urban Institute: http://www.urban.org/
nonprofits/
Jim Tierney is the Executive Director at
Community Action Team.
Throughout the holiday season many contributions were made to
our community out of the generosity in the hearts of others.
Vernonia Cares Food Bank would like to recognize
the loved ones of our generous friends who made
donations as part of our “Caring Tree” project.
In Memory of:
In Honor of:
Gary Dinger
Frances Lentz
Carolyn Keasey
Kari Titus
Shawn G. Ostrander
Vicky Crowston
Betty L. Holsey
Virgil Hiveley
Steve Grady & Rick Grady
Roberta “Mama” Wamboldt
Oso, Robin, Smudge,
Baby Pinky, Honey,
and Lou Lou
Faye Sword
Chris and Kala Cota
Rosie McCoy
Sandy Welch
Dick Light
May this New Year bring peace and health to all in our great community!
Happy New Year from Vernonia Cares Food Bank
