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Be careful with caring

guest commentary by David Potts

Editor’s note: David Potts is a certified public accountant with more than 33 years experience. Although every effort is made to provide you accurate and timely tax information, it is general in nature and not specific to your facts and circumstances. Consult a qualified tax professional to discuss your particular case. Feel free to e-mail topic suggestions or questions to davidpotts@potts-cpa.com

Opinions, commentary and other essays posted in this space are wholly the view of the author(s). They may not represent the opinion of the owners of The City Wire.

On May 20 a Fort Smith convenience store, Mr. Jiff, was robbed. The lady working in the store at the time, Ms. Henry, was thrown to the floor by the robber resulting in a broken hip.

The account was reported in the Times Record on May 22. On June 15, the paper published a follow-up article as a human interest story. The story let Ms. Henry tell about her frightening experience in her own words. Her story was interesting and sincere. And fortunately Ms. Henry is recovering well. 

Here is where my accounting mind kicks in and I veer off the expected course. The newspaper story of June 15 included the following two paragraphs:

“Joyce Henry, a retired bus driver with Fort Smith public schools for 24 years, accrued substantial medical expenses as a result of the injury and currently is unable to work in order to make ends meet.

A fundraising page has been set up at YouCaring.com to raise money for her and her family’s expenses. The family also was hoping to be able to offer a reward for anyone with information leading to the arrest of her assailant, who is still at large, Jennifer Henry said.”

I recently looked at the Joyce Henry Recovery Fund fundraising page at YouCaring.Com. It stated, “We found out yesterday that under Arkansas law, Joyce is not eligible for any compensation except for medical bills and partial wages. She will need help with living expenses and transportation expenses to various appointments.”

What the site doesn’t say is that her employer is paying Ms. Henry any additional lost wages that workers compensation doesn’t cover because they want to take care of their employee. How do I know this? Because my father-in-law owns Mr. Jiff. Intentional or not, the Joyce Henry Recovery Fund fundraising page is misleading possible contributors by misstating Ms. Henry’s needs. While she is recovering she is getting paid full wages. The person setting up the site should either take it down or be truthful about why the money is needed and how it will be spent.

If you think I am picking on Ms. Henry, I’m not. Besides, she didn’t set up the site. If you disagree and think I am wrong in using her fundraising page as an illustration, then click here and make a donation to Ms. Henry and her family. Contribute if for no other reason than no one, especially a 65 year old woman who pays her bills through honest work, should have to experience the fear of a robbery and being injured by some creep that belongs in prison.

The focus of our discussion should not be about Ms. Henry’s fundraising page. My focus is on the lack of transparency and accountability in fundraising campaigns, especially one without a formal organization backing the campaign. Ms. Henry’s situation is just one where I know the back story and illustrates my point. 

A person’s money is their money to spend anyway they want. I also believe people who raise money for a cause have a fiduciary responsibility to spend that money for the stated cause. But giving money to support a cause can be a lost cause if there is no accountability.

Let me pick on YouCaring.com for a minute. YouCaring.com is a free online fundraising site. Their site says, “In just 3 steps, easily create your own site to raise money online for personal causes & life events. No fees, easy & secure.”

The creep that robbed Mr. Jiff was obviously in need for money. I’m sure he has a sad story. He would have been smarter to go to the Fort Smith Library, surf over to YouCaring.com and “in just 3 steps” set up a fundraising site telling a heart pulling story about how he was going to lose his house through foreclosure and he and his three kids would become homeless if he didn’t raise $10,000 before the end of next month. Since the internet gives a person or cause worldwide exposure, I would bet before long money would start to show up in his account. Why rob convenience stores?

Granted my example is extreme. But let’s ponder a few questions. YouCaring.com has several sites where a soldier has given his life in service for this country and a fundraising page has been setup to raise money for his or her children’s education. That’s about as honorable a cause as you can have. Some of these causes have raised tens and even hundreds of thousands of dollars. Has anybody considered what happens to this money if the children of the soldier don’t go to school? If the children won’t go to school for ten more years, will this money be invested conservatively or will the money be invested in Uncle Joe’s new startup business that fails miserably? Seeing human behavior from CPA’s perspective for over 30 years, I would easily bet there are a lot of leaks in the system and that significant money is spent where it wasn’t meant to be spent.

I am glad that I live in a society that values and honors generosity. I also believe most people work hard for their money and try to be good stewards. My concern is will the organizers responsible for the funds be good stewards of your money.

Is YouCaring.com misguided? No, it’s a probably great service. It doesn’t make claims about holding anybody accountable. It is just a service financed by donors trying to give those in need of fundraising a tool that is easy to use. If I was a sponsor of a youth group wanting to raise money for mission trip, I would quickly set up a fundraising page on YouCaring.com, and would also accept a fiduciary responsibility over those funds and not spend a penny on anything other than what was described on the fundraising page. Hopefully the great majority of people fundraising for their cause on YouCaring.com feel the same way.

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For me the real question is would I donate to a fundraising campaign on a site like YouCaring.com if I wanted to support the cause? My answer is it depends. I would at least ask a few questions first. For example I might ask:
• Who will control the money? (I would feel more confident if more than one person controlled the funds)
• If you are contributing to an educational fund, how the funds will be invested?
• How and when will the money be spent? Do you have a budget?
• How will the person or organization account for these funds?
• Will you provide me a statement of how you spent the money in the future?
• Are you paying any administrative type expenses with my contribution? If so, how much?
• What happens if there are any funds left over?

In the end it’s your money. If you are not concerned with how your money is to be spent by the organizers of the cause, then give away. If you are concerned, the only thing you can really do is ask questions and look for sensible answers.

One more thing. Be aware that since the fundraising causes posted to YouCaring.com and other fundraising sites like YouCaring.com are generally not a church, government entity, or a 501(c)(3) organization approved by the Internal Revenue Service. Therefore, your contribution is most likely not tax deductible.

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