This study will investigate the governmental oversight and exemptions that allow for the unchecked misuse of surplus funds within non-profit organizations. For the purposes of this study, surplus is defined as money not earmarked for future projects, or capital projects, unrestricted funds and endowments. This study is significant in that while it can be difficult to ascertain precisely how much surplus money is going to personal gain, one can document income and thereafter, the percentage of income going to compensation and the rate of increase per year. Therefore this study will rely on quantitative data regarding 100 medium (100-249 employees) to large (over 250 employees) non-profit organizations. Data will be acquired regarding percentages of surplus monies available in each of the years 2004-2005, and this data will be compared to the percentage of salary increases given to principles in each of those years. This figure will then be compared to the level of government intervention ascribed to each of these organizations in the form of the number of external audits performed. This will allow for an analysis of the correlation between government management and the proper use (as opposed to the misuse) of surplus funds.
[...] Ott (2001) makes it plain: In an event injurious to the credibility of charities in the spring of 1992 it was revealed that the head of the United Way of America was receiving a salary of almost$500,000, traveling about the world first-class, and setting up subsidiary organizations run by his friends and relatives. When the millions of small donors to local United Ways found out that a portion of their gifts were going to support a lavish life-style for an executive of a charitable organization, most were again outraged. [...]
[...] As Glaeser points out, is that significant portions of the nonprofit sector are largely informal in governance and therefore difficult to capture in empirical terms, and provides leeway for establishing a network or systems, where surplus dollars are directed and redirected. Although an important approach to assessing the truth of what is done with surplus. This organizational governance informality is, in fact one of the prized features of this sector, while enabling groups of individuals to meet together to pursue a common purpose without having to seek any official approval or even acknowledgement. [...]
[...] Chapter Methodology/ Research Questions/Hypotheses This study will investigate the governmental oversight and exemptions that allow for the unchecked misuse of surplus funds within non-profit organizations. For the purposes of this study, surplus is defined as money not earmarked for future projects, or capital projects, unrestricted funds and endowments. This study is significant in that while it can be difficult to ascertain precisely how much surplus money is going to personal gain and other inappropriate uses (e.g., for profit spin-offs, extensive administrative costs, etc.) one can document income and thereafter, the percentage of income going to compensation and non-mission specific expenditures and the rate of increase per year. [...]
[...] The only enduring characteristic of the nonprofit corporate form has been the fact that its legal personality includes a license for a group to operate with some central times, it has offered an opportunity for securing private donations; for gaining access to categories of governmental funds and contracts; for attracting and retaining employees more highly motivated by charitable impulses; for price discrimination enabling the corporation to receive a willing premium from many customers; for more effectively immunizing officers and directors from suit; for garnering greater public goodwill and loyalty among regulators; for increasing the acceptance of its objectives among the public; for creating a membership concerned about the purposes of the corporation; for shedding reporting responsibilities; and, not least, upon exemption, for reducing exposure to taxation or the imposition of costs, fees, and regulations. [...]
[...] Consequently, increasing their surplus and the main difficulty is that the IRS accepts nonprofits contention of increases operating costs and administrative consumption, while the reality is that the money is redirected for personal gain. The Role of Grants With resources from categorical grants programs, community organizations have gained new power. Between the two of them resources can be channeled to areas and populations that are political weak. Community organizations have become an important vehicle for bypassing those political jurisdictions that lie between the federal government and localities in distributing resources. [...]
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