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To what extent do the practices of charitable organisations comply with charity laws and standards?

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INVESTIGATION SECOND DRAFT Research Topic: Charitable Organisations Research Question: To what extent do the practices of charitable organisations comply with charity laws and standards? INTRODUCTION The charity sector has been in the limelight of late - but for a negative reason. Over the past few years, numerous cases of charity fund misappropriation made headlines including the high profile Hale House scandal and recent court settlements involving the associates of United Way, Easter Seals and Red Cross (Waide 2003). Consequently, public trust dwindled; validating Donna Childs', the president of the Miami Valley Better Business Bureau, statement that almost half of the public believes that charities lack disclosure of information (Mulgrew 2003). Among primary concerns include the amount of funds going to beneficiaries and total fundraising and administration expenditure (National Council for Voluntary Organisations [NCVO] 2004, p. 4). This situation implies that certain charities are deficient in maintaining their level of accountability and transparency. All charities are regulated by law and sometimes; they also adopt standards to gauge their performances. Therefore, a charity that has high compliance to both charity laws and standards will have better accountability and transparency. This serves as the basis of the research question: "To what extent do the practices of charitable organisations comply with charity laws and standards?" This paper will evaluate compliance to charity laws and standards in three areas: * Administration and oversight * Means of raising funds * How funds are distributed The charity laws and standards used will be given followed by evaluation of the degree of compliance of charities' practices to them. ...read more.


In order to acquire the money needed to carry out programs and provide services, charities engage in various activities to gather funds especially by soliciting donations from the public. Firstly, authorisation is required before a charity can fundraise legally. Charities must report to state and federal authorities which monitor all public fundraising activities, as well as adhere to the Codes of Practices stipulated by the Institute of Fundraising and Professional Fundraising Regulatory Association (NCVO 2004, p. 23; Pratten 2004). Meanwhile, at Give.org (2003), BBB advises charities to solicit truthfully, provide accurate information to the public including the exact profit ratio for sales or services conducted, and present their annual report upon request. In practice, the majority of fundraising campaigns are operated truthfully although the methods employed by some may tend towards manipulation. One such example can be seen in a British charity, Shelter, which was criticised for having deceptive campaign literature (Plummer 1996). In this case, information given to the public tends to be biased in order to gain sympathy for the charity's cause and therefore, generate monetary support. To further exacerbate the situation, Pratten (2004) reports of emerging bogus fundraisers and under-regulated face-to-face solicitations. However, little of these alleges can be proven and are usually results of negative publicity. The inference here is that charities are, in general, amenable to both charity laws and standards in the process of advocating and campaigning for their cause. However, the public tends to be skeptical due to uneven media coverage of charity campaigns where bad or scandalous campaigns are highly publicised compared to commendable ones. ...read more.


On the whole, reporting levels though complying with laws, barely meet standards. This suggests that charity boards have insufficient financial expertise and resources in handling monetary matters as not all charities, especially smaller scale ones, are capable to hire financial firms or professional staff. With the rising call for accountability and transparency, charities' reputation might be further undermined if this situation persists. CONCLUSION To sum up, the charity sector is currently performing reasonably well if looked at in broad terms. Charities have proven to be competent in critical areas including governance, trustworthiness when raising funds and informing the public, recording of collections as well as reporting their financial activities. However, they too have their weaknesses particularly when it relates to the capability of members and acknowledging donations. Thus, charities need to strive to maintain their level of efficiency and simultaneously, put more effort into analysing and subsequently, alleviate their shortcomings in areas mentioned above. Charities should always bear in mind the fundamental reason of their existence - to serve the cause they pursued so passionately - and not sidetrack from that. Likewise, the public needs to understand the workings of a charity and the problems that they encounter to be both transparent and accountable. It is unjustified to simply assume that charities are inefficient and worse yet, deceitful. On the part of charitable organisations, they are more cognizant of charity laws and are eagerly adopting available standards to reverse the trend of public mistrust. Hence charities are constantly upgrading and equipping themselves with the necessary skills to adjust to these changes. Hopefully, charities will be able to learn from past mistakes, ameliorate their performance and thus, continue serving for the greater good. ...read more.

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