Scripps Howard News Service has taken a look at the data reported by nearly 38,000 charities (with at least $1 million in revenue) on their Forms 990 (informational tax returns charities file annually with the IRS) and found that 41% of them reported zero fundraising costs. In fact, there were 16 states in which more than half of the charities (with at least $1 million in revenue) reported that they spent nothing to raise money. Idaho is the worst offender with 63.7 % of the charities in the study reporting that they incurred no fundraising expenses.
Of course, it is absurd for a charity to claim that it incurred NO expenses in generating contributions. And that is why at Charity Navigator we do not rate charities that make such claims. And, for those charities that historically reported fundraising expenses (and thus qualified for us to rate), but inexplicably report $0 fundraising expenses on their most recent Form 990, we revoke their rating and issue a Donor Advisory (here’s an example). We will only reinstate a rating for such charities if they amend their Form 990 to report their fundraising costs (go here to see an example).