The Secretary of State’s office receives roughly 40
complaints about charities per year, mostly from concerned citizens. Many of
the complaints that we receive are the result of an organization’s failure to
adopt basic best practices, especially in the areas of governance and transparency. Several of the organizations named in these complaints
simply failed to understand or appreciate the legal requirement to provide
corporate records to members upon request, to provide copies of state and
federal disclosure forms to anyone upon request (e.g. state registration forms
filed with the Secretary of State and copies of the IRS Form 990 and Form
1023), or to follow the rules set out in their bylaws or in the Colorado
Revised Nonprofit Corporations Act, especially as regards the appointment,
election, and removal of directors. An
organization with a strong, independent board that regularly consults best
practices and adopts those best suited to its size and mission can largely avoid
missteps that generate official complaints.
Directors and officers that merely defer to the
leadership of a strong-willed president or board chair fail to appreciate the importance
of their own fiduciary duties and the delicate state of public confidence in
their organization. When they withhold
basic information from their members or the public that should be made readily
available, such as copies of their annual reports and audited financial
statements, or when they fail to diligently review the financial statements
themselves, they risk damaging that public faith and invite official complaints
from aggrieved parties.
Incorporating best practices into the
organization’s culture and understanding the regulatory environment in which
they operate can help strengthen their ability to pursue their missions with
the transparency and efficiency the public expects.
The chart below summarizes complaints about
charities received by the Secretary of State over the past five years. Bear in mind that the Attorney General’s
office also receives citizen complaints and referrals from this office when
allegations fall within the Attorney General’s jurisdiction.
Text version of this chart
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