It's that time of year again. The election is over. Our thoughts are turning to the upcoming holidays and the promise of a new year. It's also a time when many Minnesotans, influenced perhaps by seasonal generosity and the end of the tax year, make charitable giving decisions.
Our annual support of nonprofits is essential to fill the voids in our community, cultural and environmental fabric that government and the private sector can't. It really is up to us.
Individual donors constitute 70 percent of all nonprofit funding in the U.S. But there is uncertainty this year about the impact of new federal tax provisions on public giving.
Experts differ about Minnesota generosity, our level of charitable giving and how it compares with other states. One thing is evident — we have a large number of charitable, nongovernmental, tax-exempt organizations in our state. The Minnesota Council on Nonprofits currently counts 2,200 in its member network and, in 2016, estimated that there were approximately 3,300 nonprofits in Minnesota with paid employees. Because these figures do not include many of the nonprofits that are solely volunteer-based, the actual number may be closer to the listing of 54,291 tax-exempt organizations in Minnesota that is maintained by the online source TaxExemptWorld.
The large number of nonprofits, and dramatic, recent change in the charitable giving terrain, adds complexity to our contribution decisions. We receive more direct solicitations and nontraditional fundraising appeals. Web-based philanthropy is rapidly growing. Workplace giving, once widespread and largely channeled through the United Way to organizations that they vetted, has declined, and other umbrella groups like the State of Minnesota Combined Charities, Community Health Charities and the Minnesota Environmental Fund have entered a more crowded, but less prevalent, workplace arena. Nonworkplace-giving requests regularly arrive via social media, e-mail and text messaging, as well as regular mail.
With all the choices, how do we ensure that our contributions go to those we can trust? We want to donate with confidence to nonprofits that will use the funds wisely. But it doesn't always happen, as evidenced by press coverage of fraudulent GoFundMe campaigns, scam disaster relief organizations and financial shortcomings at large, national charities.
Organizations that we can trust should have good governance, public disclosure and transparency, sound financial management and responsible fundraising practices. Unfortunately, these traits may not be easily discernible, and few of us have the time or ability to thoroughly research organizations in advance of giving.
To make the task easier, a number of national organizations evaluate nonprofits, among them Charity Navigator and GuideStar. They rely on information gleaned annually from IRS 990 forms filed by nonprofits. Using this information, the organizations develop listings on their websites of those nonprofits that meet some very basic financial health and accountability expectations.