Are there laws governing what percentage of donations must go to the cause?

It’s probably something that is in the information from IRS.

Another related issue is how much is not OK for the CEO and others to make. I think of the Girl Scouts, who, if you look at Charity Navigator, you’ll see that the CEO and former CFO make almost a million dollars between them.

A good friend of mine has a daughter who is now a young adult, and in discussing it with her, she said she felt resentful after realizing her daughter and all the little girls were standing outside in the cold, outside supermarkets, trying to sell cookies while the CEO makes almost half a mil a year.

http://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=6551#.VrdQ_vkrLIU

Add to the above that CEO’s and other officials often get large bonuses, housing paid for, etc.

I believe that regulations for charities are on the state – not the national – level. California and NY have some pretty stringent registration regulations, while some states have very weak, or no regulations at all.

I don’t believe there are percentage rules, as you asked. First, because of what I said above (state control) but second, because there are a LOT of charities that are religion based, and there is the US constitution that says “there shall be no laws with respect to controlling religion” or something similar.

If there were laws, there would be no need for groups like Charity Navigator.

I established, and am a director for a not-for-profit. We state in our charter that 100% of our funds go to the cause. Directors are not reimbursed for their services. Nobody is doing it for the money.
Before we got approved we had an interview with an assigned IRS agent. He looked at previous activities and minutes and followed up with his positive determination about 2 weeks later. I still include him on the annual activity report.
Our income and expenses are below $50k so our tax filing is very simple – they cal it a postcard. I do it for free, of course.
It is a not-for-profit – and we do that very well. ;-)
But it is worth it!

Non-profits are often called “501cs” because the rules are found under IRS code 501©.

There is not a specific number for charitable spending vs. internal overhead like salaries, office expenses, etc.

But there are rules like the organizations work cannot be serve private interests and the funds can not go to a person related the to organization.

Here’s a short overview:
How to Lose Your 501©(3) Tax Exempt Status

Thanks everyone.

@jca $500k isn’t that much for such a huge organization compared to what many CEO’s make. As far as girls standing out in the cold, no matter what the CEO makes in salary the moms could unite and change that BS. As a group they could insist on a different time of year, or they could refuse to do it in the cold, or whatever else. Teaching their girls to be obedient to unreasonable conditions isn’t a good thing in my opinion.

@JLeslie: My mom said the same thing about the 500k not being that much. She said for having to live in NYC, it’s not huge.

She (the CEO of GS), also gets free housing, which is not too shabby.

Good idea about the girls not being obedient. I think the troops individually push for “sell sell sell” and so do whatever they think it takes to get the sales up. I don’t conform to that, as I buy a bunch a boxes myself (about $100 worth) and that’s it. As far as standing in the cold to sell boxes, that will never be us.

Our organization pays the organizers and staff nothing – zip, zilch, nada! That means everyone working on it is doing it because they love and believe in the cause. I have no trouble finding retired (prostateless) guys willing to help out with the work.

Does this mean the top dog at GS needs $500k to perform? Does she not believe in the cause? Would she walk if offered “only” $400k? Would someone more dedicated be a better fit? I’m guessing there are plenty of extremely competent and dedicated people out there who would be honored to do that job for a year – for free.

Well, there is something to be said for having some continuity in leadership in an organization so large, so having the CEO change every year or two, because they do it for free, might not be the ideal situation. Plus, an organization that large is easily a full time job plus. My aunt ran the epilepsy foundation in NYC many years ago for several years, and it was a full time job, and I feel she was very underpaid.