HANO responds to Advertiser's 'Unguarded Giving' Series

The Hawaii Alliance of Nonprofit Organizations responded to the Honolulu Advertiser series, "Unguarded Giving: Who's regulating Hawaii nonprofits?," in an op-ed article published by the Advertiser in the Tuesday, Sept. 25, edition.

The guest column by John Flanagan, HANO president and CEO, noted that thousands of Hawaii nonprofits with less than $25,000 in annual revenues have in the past not been required to file with the IRS once they were granted tax-exempt status. That all changes beginning in 2008, when these smaller organizations will be required to file a form 990-N "epostcard" return with the IRS with current contact information and certification that their revenues are still less than $25,000 annually.

This action "is reasonable, fills a significant gap, will generate useful information and won't be an undue burden," Flanagan wrote. "Other proposals to increase nonprofit accountability would, however." He noted, for example, that a proposal to require nonprofits with as little as $250,000 in annual revenues to have annual audits, which cost as much as $10,000 or more, could significantly impact program services by increasing administrative overhead.

"Nonprofits, especially large ones, are held to account already by their boards of directors, members, funders, donors, contractors, volunteers, auditors, accrediting organizations, professional licensing boards, the IRS, the news media and the community at large," Flanagan wrote. "They live or die on their reputations for honesty and the contributions they make to the community."

On Sunday, Sept. 23, Advertiser Editor Mark Platte's column also included comment on the series from HANO. Platte noted Flanagan's observation that "most of our readers probably came away with the impression that charities were ripping people off."

Platte said Flanagan "believes the stories were largely built on the false assumptions that telemarketers shouldn't be raising money for charities, that those with the lowest administrative costs are the most well-run nonprofits and that registration and reporting to the state are essential to making sure charities stay honest. In fact, he said, nonprofits with income of $25,000 or more are highly regulated by the IRS."

"The stories were told from the attorney general's point of view and not the nonprofit sector's point of view," Flanagan said. "There are some bad cases involving nonprofits and some serious cases, but those are isolated, and what the nonprofit community does for Hawai'i has not been told."