Jackson — With so many charities and nonprofits out there, how’s a person to know the legitimate ones from the charlatans?
The regulation and enforcement division of the Mississippi Secretary of State’s Office keeps a well-tuned eye focused on separating the good ones from the bad. Since 1992, the law has clearly stated that any group that solicits money from citizens must be registered as a nonprofit.
Jim Nelson is assistant secretary of state for business regulation and enforcement of securities, charities and funeral homes. He says it isn’t difficult to register but is difficult for those that are not legitimate.
“We’ve put the message out to all charities to let them know if they solicit donations from our citizens, they must register,” he said. “The registration process is simple and costs $50. The legitimate ones want to register and have their financial information on file with us. Others don’t and those are the ones we shut down.”
In good standing
Registrations are usually turned around in 24 hours. The certificate is valid for one year and financial information must be filed each year to remain in good standing. The list of registered organizations is published every year and goes to every library and sheriff’s office in the state. It is also available online.
Using guidelines from the Better Business Bureau, registered organizations must spend at least 65% of their funds on their charitable purpose and no more than 35% on administration overhead. “We want to see that organizations are well managed,” Nelson said. “We have six staff members who are examiners and they are constantly in the field doing routine exams. We examine organizations that don’t have the 65/35 % ratio and any that we receive calls about.”
If these enforcers find a group soliciting that’s not registered and it’s not a mistake, they issue a summary cease and desist order to shut down the operation immediately. “We might impose an administrative order for a hearing and they are told they must register,” Nelson said. “Typically, the unlawful ones will skip out in the dark of night.”
Fines can rack up fast because the law provides for penalties up to $25,000 for each separate solicitation. Violations rising to the criminal level are referred to the proper authorities for prosecution. There are about 100 enforcement cases each year and usually two or three organizations are shut down.
“There are con artists out there, and we rely on citizens reporting them to us,” he said. “It’s important to pay close attention, especially after disasters like the one we’ve just had and September 11.”
There are exemptions for schools, fraternal organizations, volunteer fire departments, humane societies, organizations that solicit less than $4,000 per year and persons requesting funds for relief of individuals.
However, these groups must contact the Secretary of State’s Office and obtain a certificate of exemption. There are currently 2,130 organizations registered, 1,554 exemptions and 29 charitable bingo operations. Churches are a different category.
“In Mississippi, religious institutions are excluded. They don’t have to do anything with us, but we ask them to please contact us and let us put them in our database,” Nelson said. “That way we can say they’re legitimate if people call and ask about them.”
He says the Secretary of State’s Office has disagreed with some organizations that claim to be churches. State statute provides certain guidelines including that churches must have a place of worship and hold regular services.
Nelson has a few simple words of advice for anyone thinking of making a contribution. “Check to see if the organization is registered and evaluate them,” he said. “Never give money over the phone — ask them to send you written information — and give in the local community where you can see the benefits and how your money is spent. Don’t allow people to come to your home to pick up a check. Be very suspicious if the organization is sending a runner to pick it up rather than let you mail it in.”
Citizens call Nelson’s office to request information on charities and to report suspicious ones. There have also been many requests for the publication and lots of hits on the Web site. “I think we’ve been fairly successful in informing our citizens,” he said. “People in Mississippi are becoming more sophisticated and hopefully they won’t give to organizations that are not registered.”
This office works closely with the Mississippi Center for Nonprofits to co-sponsor workshops and help get out the message about informed giving. As a result, Nelson says residents are tuned in and are skeptical of anyone soliciting.
The Secretary of State’s Office is being very vigilant in the wake of Hurricane Katrina. “What we had in place is working well,” Nelson says. “We are tagging in our database those groups doing Katrina-related relief work. Six months later, we will make sure the money is being spent because we had that criticism after 9/11.”
He says so far things are pretty much on the up and up, although there are some consumer scams the State Attorney General’s Office is investigating. There has not been a rise in the number of complaint calls, but there have been a number of calls wanting to register relief organizations.
“Some very good charities have been set up to help with Katrina relief,” he said. “They’re legitimate and know they must register. The bottom line for organizations is: they must register, renew and file financial statements every year, and must cooperate if we do an exam. That’s in return for the privilege of soliciting our citizens.”
Contact MBJ contributing Lynn Lofton at email@example.com.