When Sharing the Wealth, Let the Donor Beware : * Consumers: Following United Way’s troubles, charitable organizations fear a possible givers’ backlash, plus a recession, will dampen donations.

A fund-raising specialist, Judy Levy knows charities. She and others who track them believe the recession has had a major impact on nonprofit organizations, as has the United Way scandal.

“People are picking and choosing charities,” says Levy, who has been producing fund-raising events for some of the best-known local and national charities since 1980. “Contributors are saying they used to give to six (charities), now they’ve cut back to four.”

Donors “are asking tougher questions,” she says. “People should do more investigative work to see what they are putting their money into.”

In late February, United Way of America president William Aramony resigned after allegations surfaced that he had used charitable donations to finance a lavish lifestyle that included overseas trips on the Concorde, limousines and an expensive condominium on New York City’s Upper East Side. Disclosure of his $463,000 annual salary provided another direct hit.

“Consumers and donors are very upset about a national charity being in the spotlight like this,” says Bennett Weiner, vice president of the Council of Better Business Bureaus and director of its Philanthropic Advisory Service (PAS).

“This touches on issues of interest to all donors--salary issues, as well as other management ones. It’s too soon to tell whether consumers are being more careful (with donations).”

Charitable organizations large and small are worried about a givers’ backlash. Will the public just get mad? Or will it get even, and put away its pocketbook?

“The crisis is not over, either for United Way or the charitable community,” says Brian O’Connell, president of Independent Sector, a Washington-based national coalition of more than 850 nonprofit organizations, foundations and corporations with giving programs.

O’Connell foresees increased public scrutiny of charitable groups “about salaries, perks, conflicts of interest and other aspects of their operations.”

As a direct result of the unfavorable United Way publicity, he also thinks it is “possible, bordering on likely, we will have new hearings in Congress and state legislatures to examine behavior in the sector.”

The Internal Revenue Service, which views unreasonable compensation of executives of nonprofit organizations as a serious problem, has an interest as well.

Under federal law, the IRS can fine charities that fail to provide adequate financial information to the public. In a worst-case scenario for a charity, such as misappropriation of charitable funds, the IRS can remove the organization’s tax-exempt status.

A study published by the Chronicle of Philanthropy, a biweekly Washington paper that keeps tabs on the nonprofit world, may increase the public’s ire.

The Chronicle’s survey disclosed that more than 25% of 117 of the nation’s largest nonprofit organizations pay their top executives $200,000 or more a year. That’s all George Bush makes as President.

Although executive compensation at charities varies widely, most charity personnel historically have been paid less than their for-profit corporate counterparts. Top salaries have increased in many nonprofit organizations in the past few years in order to attract and keep skilled management.

“It’s important that charities have boards of directors who really do oversee and scrutinize what’s going on,” says Independent Sector’s John Thomas. “There may be some good to come from all of this, that the boards will see they need to be on top of it from a governing position. Being a board member (of a charity) is not just something you add to your resume. It should be taken seriously, not lightly.”

But since the United Way difficulties surfaced, some observers believe that many charities’ board members may put a lid on executives’ pay.

“If you’re the head of a big organization and haven’t had a salary increase this year, you’re probably not going to get one, and that’s not right either,” says Kenneth Albrecht, president of the National Charities Information Bureau in New York.

The NCIB evaluates national not-for-profit organizations and reports on which do or do not meet its code of nine standards for charities. Those standards include disclosure of financial structure, detailed use of funds, program activities and board governance, and are available to the public.

For its part, the Chronicle also chided some of the charities it surveyed for grudgingly providing their financial statements, even though federal law says they’re supposed to.

Several charities required a Chronicle investigator to make appointments with their general counsels to obtain financial information; others refused access to copying machines, insisting the detailed reports be copied by hand. Among those requiring the reporter to hand-copy the material were the Council on Foundations, the Girl Scouts of the USA, the National Urban League, the National Gallery of Art and the Los Angeles County Museum of Art.

The Council of Better Business Bureau publishes an Annual Charity Index, which includes financial and other information on more than 200 of the nation’s charities. The yearly index offers advice to consumers on charitable giving, tax deductibility and how to file a complaint against a nonprofit.

The 1992 Index, notes Weiner, found that “23%, almost a quarter of the most popular U.S. charities, do not fully meet the CBBB voluntary standards for charitable solicitations.”

Traditionally, Americans have been generous givers. Even during the Great Depression donations to charities did not fall.

In 1990, U.S. donors gave $122 billion to the nation’s charities, but there are no national figures available yet for last year.

“It is yet to be seen what the ’91 total will be,” says Weiner. “But there are continuing concerns that the dollars that do come in will not cover the programs at the social services level. There is more need for the poor, the homeless. So there are increased requests for assistance.”

In light of the United Way troubles, national and local organizations that monitor charities are urging them to run, not walk, to the public with full financial and managerial disclosure.

“United Way and other organizations have to release the information--their annual budget, amount they’re spending, program services, management and fund-raising costs--to maintain the public trust,” says Dan Langan of the National Charities Information Bureau.

“The only way the public can find out about first-class air fare and other similar things is from a disgruntled employee (of the agency). But people can and should ask to see the IRS 990 form (of financial disclosure). That should show the five highest salaries--not board members, they shouldn’t be paid. And payments to the five largest vendors and the five largest sources of income.”

Ninety-eight of United Way’s 1,400 local affiliates, according to the Chronicle, are waiting for the national office to finish its investigation before deciding whether to send in their dues. Those affiliates include Greater Los Angeles, Orange and Ventura counties, New York, Washington, Philadelphia, Denver, Seattle and San Francisco, according to a United Way spokesman.

Independent Sector officials say charities shouldn’t wait for trouble before conducting in-house investigations. The group’s recent report “Ethics and the Nation’s Voluntary and Philanthropic Community” offers a set of guidelines for all nonprofit organizations, including a recommendation that each conduct an internal ethics audit or self-evaluation every year and an external one every few years.

In Los Angeles, the city’s Social Service Department registers and regulates charities and can withdraw its approval. In 1990-91, the department issued orders to 121 persons and organizations to stop conducting illegal solicitations in the city.

Charities holding fund-raising events are required to include a Social Service Information Card with each invitation. It includes information about the activity, purpose of the event, expenses and financial information about the previous year’s gross receipts, how much of that went to expenses and how much the charity retained.

After fund-raising events, charities also are required to make detailed financial reports to the state attorney general’s office, Registry of Charitable Trusts.

The Social Service Department publishes an “Ethical Standards for Charities” booklet, as well as a “Charitable Donor’s Bill of Rights,” which outlines what prospective donors should expect of a city-registered nonprofit organization.

Robert Burns, SSD general manager, says people shouldn’t be afraid to ask questions or check out charities:

“People need to give wisely. There are too many causes and not enough money. A dollar misdirected to a fraudulent or disorganized group is a dollar that could have been spent by a legitimate charitable organization that’s delivering service to the community.”

For information on charities:

* The Council of Better Business Bureaus’ Annual Charity Index ($9.95, plus $1 shipping and handling) is available by writing: Index, Philanthropic Advisory Service, Council of Better Business Bureaus, Department 023, Washington, D.C. 20042-0023.

* The National Charities Information Bureau’s “Before You Give” pamphlet, a checklist on how to scrutinize nonprofit organizations, and its “Wise Giving Guide,” a rating of national charities it has evaluated, are free and can be ordered by sending a self-addressed, stamped business envelope to NCIB, Department 152, 19 Union Square West, New York, N.Y. 10003.

* The City of Los Angeles Social Service Department will send consumers a “Charitable Donor Bill of Rights,” free. Call (800) 77-DONATE. Prospective donors also can request information on individual charities that are registered with the city.

How Philanthropy Pays

The Chronicle of Philanthropy, a biweekly newspaper for nonprofit organizations, surveyed 117 of the nation’s largest charities, foundations and cultural groups and found that more than one-fourth of them paid top executives $200,000 or more for 1990 or 1991. They include:

* National Geographic Society, Gilbert M. Grosvenor, president: $343,701

* Heritage Foundation, Edwin J. Feulner Jr., president: $319,367.

* Los Angeles County Museum of Art, Earl Powell III, director: $275,482.

* Lincoln Center for the Performing Arts, Nathan Leventhal, president: $275,000.

* Muscular Dystrophy Assn., Robert Ross, executive director: $284,808.

* American Heart Assn., Dudley H. Hafner, executive vice president: $246,000.

* National Wildlife Federation, Jay D. Hair, president: $231,577.

* Boy Scouts of America, Ben H. Love, chief scout executive: $223,375.

* Art Institute of Chicago, James N. Wood, director: $236,642.

* KCET (Los Angeles), William H. Kobin, president: $220,470.

The lowest annual salary--$20,000--for a nonprofit executive was for the Rev. Val Peter, executive director of Father Flanagan’s Boys’ Home in Nebraska.