Not even close to a finance guy but got the annual finance report for a scholarship fund I have donated to and seems a bit off to me.
Very small scholarship fund

Scholarship fund in total is $1.4 million
Spent $83K for annual expenses. No indications of what those expenses are specifically.
Distributed $51K in scholarships

Operating expense seems quite high to me.

I’m involved in a couple of scholarship funds and that seems high.

Is this a 501c3? and is the report you got their 990? If the answer is yes on the first and no on the second, request the 990 which will have some detail for you.

I think the question you are really asking is are the expenses reasonable for the amount of work being done to manage the fund. There’s not enough information being given to know for sure, but I’d want to know more about the expenses and operations before I gave them anymore money.

That expense comes up to 6%. It's not too far off from other charities. But I doubt you received a charitable gift receipt?

I bet most of the expenses are for fundraising followed by salaries of paid staff.

As I learned a long time ago, non-profit is just a tax classification; it has nothing to do withhow the organization is run.

Your note doesn't have enough data for a judgement. But with a 1.4M fund balance and 134K in expenses this would be pretty negative cash flow spending.

That’s all the info that they put in the annual report and can’t find anymore info on their website.

Not sure what sort of non-profit they are. They don’t list any specifics just call themselves a non-profit.

I’m beginning to see some red flags on the horizon.

Most of these charitable funds make their annual report very accessible and tout their tax status..

Expenses may (or may not) be an issue, but lack of disclosure sure makes it sound potentially shady.

Does this entity claim to be a deductible 501(c) charity so you can deduct donations?

You may want to see how they're rated by searching for them in the Charity Navigator charity navigator website.

If it a tax exempt charity, you can find their filings here and look at their 990 form to see what they took in and what they spent. Should be broken down as to source es of funds and categories of expense.

IRS Tax Exempt Search Tool

Those expense numbers don’t sound insane for a charity with a (or more than one) full time employee(s).

However, I’d much rather see more than 90% of the annual spending go to program expenses (in this case scholarships). The scholarship programs I’ve had any connection with were run by non profits that were either all volunteer (a private foundation board doing all the work themselves, or a service club, ie Rotary, Kiwanis) or a Community Foundation. The Community Foundation does have paid staff, but their cost is spread across multiple programs and they leverage community volunteers to do most of the work associated with the scholarships.

I guess the shorter answer is I doubt what your asking about is illegal or even deliberately suboptimal, but the organization doesn’t sound efficient enough that I would have any interest in supporting them.

Charity Navigator rates them at 43%

Last tax listing in that search is from 2022 according to that tax form they employ one person and the $83k is for salary and benefits.

I did/do not think they are illegal or shady just seems low to me for the amount of scholarship they give annually compared to the money they have in reserves and bring in a year.

How many are granted, how many active scholarships are being tracked, how does the fund raise money, and how many applications does it process?

Could there really be enough work to employ a person 2,080 hours a year? I'm thinking 100-200 hours a year for the bookkeeping and managing of the scholarships themselves.

quote:

I did/do not think they are illegal or shady just seems low to me for the amount of scholarship they give annually compared to the money they have in reserves and bring in a year.

Right. It's not illegal or shady, but very inefficient.

quote:

Could there really be enough work to employ a person 2,080 hours a year? I'm thinking 100-200 hours a year for the bookkeeping and managing of the scholarships themselves.

Many charities are run this way... more for the benefit of the people running them than the beneficiaries. So are most public school districts.