Banyan Tree Foundation

As a follow-up to previous posts on the Banyan Tree.  Last week the Foundation lost its appeal to CRA and its charitable status has been revoked.  The impact of this decision will not only be felt by its donors (who were dupped, though there is something to be said about Buyer Beware), it will also be felt by the organizations who were promised funding in the millions of dollars over the next few years.

For a copy of the legal text regarding the revocation of their charitable status, click here.

My father always said, "You never get something for nothing."  That motto holds true for philanthropic investments.  In the news the past couple of days there has been discussion around the ethics of the Banyan Tree Foundation.  At the time of this posting there were no notices on their website indicating the charges laid against them and their donors.  There was a series of correspondence between the Foundation and the Canada Revenue Agency on the topic of donation filing.  Click here to view the correspondance.

It is up to you, the donor to do your due diligence when it comes to making donations.  Questions should immediately arise when you make a donation for $1,000 and you get a tax receipt for more than that.  CRA is pretty clear on what constitutes a charitable donation and it is not on the accrued amount over time (i.e. principal plus interest earned until donation was disbursed).

Another thing that I find especially unnerving is the fact the BDO Dunwoody LLP were the auditors for 2004, 2005 and 2006.  The cover letter of all three audited statements reads, "We conducted our audit in accordance with Canadian generally accepted auditing standards.  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  In our opinion, these financial statements present fairly, in all material respects..."

If the auditors were doing their job they should have found some discrepancies between what was being receipted, what was being donated to the Foundation and how much was going out of the Foundation to charitable organizations.  The other item that caught my eye was in the 2004 audited statements there were some fundraising fees that went to corporations which are, "...under the common control of the directors of the Banyan Tree Foundation."  The way I am reading this is that board members are getting financial kick-backs for donations brought into the foundation.  Besides that not being ethical, professional fundraisers (of which I was one for 15 years) would not accept compensation that was directly tied to the amount of donations brought into the Foundation.

So what are some questions to ask.  As I have said in previous blogs a donor should ask the following:

1. Are you a member of the Association of Fundraising Professionals (AFP)?

2. Do you hold by the code of Ethical Fundraising either through AFP or Imagine Canada?

3. Go to the CRA charities section and see if the organization has ever been flagged.

4. How are you going to spend my money?

Your receipt should NEVER be more than what you have given.  

I hope that this negative experience will not preclude you from making your donation to any of the thousands of reputable organizations.  Just ask questions.  If you would like some more guidance on how and what to ask, please drop me a line.  I look forward to hearing from you.

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