Charity Accountability

Charity Accountability in the United States

Charity Governance in General

For information on governance of charities in the U.S., see here.

Anti-Terrorist Financing Guidelines for Charities: Financial Accountability and Transparency

Note: These Department of Treasury Guidelines are designed to assist charities that attempt in good faith to protect themselves from terrorist abuse. For more information on Anti-Terrorist Financing Guidelines for Charities, see here.

Budget

The charity should have a budget, adopted in advance on an annual basis and approved and overseen by the governing board.

Financial/accounting officer

The governing board should appoint one individual to serve as the financial/accounting officer who should be responsible for day-to-day control over the charity’s assets.

Auditing

If the charity’s total annual gross income exceeds $250,000, [1] the governing board should select an independent certified public accounting firm to audit the finances of the charity and to issue a publicly available, audited financial statement on an annual basis.

Solicitations for Funds

  • The charity should clearly state its goals for and purposes of soliciting funds so that anyone examining the charity’s disbursement of funds can determine whether the charity is adhering to those goals.
  • Solicitations for donations should accurately and transparently tell donors how and where their donations are going to be expended.
  • The charity should substantiate on request that solicitations and informational materials, distributed by any means, are accurate, truthful, and not misleading, in whole or in part.
  •  The charity should fully, immediately, and publicly disclose if it makes a determination that circumstances justify applying funds for a charitable purpose different from the purpose for which such funds were contributed or solicited.

Receipt and Disbursement of Funds

  • The charity should account for all funds received and disbursed in accordance with generally accepted accounting principles and the requirements of the Internal Revenue Code. The charity should maintain records of the salaries it pays and the expenses it incurs (domestically and internationally).
  • The charity should include in its accounting of all charitable disbursements the name of each grantee, [2] the amount disbursed, the date, and form of payment for each disbursement.
  • The charity, after recording, should promptly deposit all received funds into an account maintained by the charity at a financial institution. In particular, all currency donated should be promptly deposited into the charity’s financial institution account.
  • The charity should make disbursements by check or wire transfer rather than in currency whenever such financial arrangements are reasonably available. Where these financial services do not exist or other exigencies require making disbursements in currency (as in the case of humanitarian assistance provided in rural areas of many developing countries, or in remote areas afflicted by natural disasters), the charity should disburse the currency in the smallest increments sufficient to meet immediate and short-term needs or specific projects/initiatives rather than in large sums intended to cover needs over an extended time frame, and it should exercise oversight regarding the use of the currency for the intended charitable purposes, including keeping detailed internal records of such currency disbursements.

Mechanisms for Public Disclosure of Distribution of Resources and Services

  • The charity should maintain and make publicly available a current list of any branches, subsidiaries, and/or affiliates that receive resources and/or services from the charity.
  • The charity should make publicly available or provide to any member of the general public, upon request, an annual report. The annual report should describe the charity’s purpose(s), programs, activities, tax exempt status, the structure and responsibility of the governing board of the charity, and financial information.
  • The charity should make publicly available or provide to any member of the general public, upon request, complete annual financial statements, including a summary of the results of the charity’s most recent audit. The financial statements should present the overall financial condition of the charity and its financial activities in accordance with generally accepted accounting principles and reporting practices.

Resources

Notes

  1. The $250,000 figure is drawn from the June 2005 final report to Congress of the Panel on the Nonprofit Sector, convened by Independent Sector. This report, which offers a comprehensive approach to improving oversight and governance of charitable organizations, recommends independent financial audits for charities that have more than $250,000 in total annual revenue.
  2. The term “grantee,” as it is used throughout the Guidelines, means an immediate grantee of charitable resources or services. To the extent reasonably practicable, charitable organizations should also apply or ensure the existence of applicable safeguards (as described in Sections III, IV, V, and VI) in any downstream subgrantees or recipients to protect charitable resources from exploitation by terrorists, terrorist organizations, or terrorist supporters. Charities should not enter into a relationship with a grantee where any doubts exist about the grantee’s ability to ensure safe delivery of charitable resources independent of influence by or association with any terrorist organization.

Posted

in

,

by

Tags:

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *