LINDA WERTHEIMER, host:
Things are not going well for Greg Mortenson, the author of the bestselling book "Three Cups of Tea." It's more than two weeks since "60 Minutes" raised questions about his books and his charitable work in Pakistan and Afghanistan. Groups have canceled speaking engagements. Even a planned honorary degree has been canceled. And Mortensons's doctor says the author is resting up for heart surgery.
In the meantime, the rest of the nonprofit world is trying to figure out how to assure donors that their money is in good hands. NPR's Pam Fessler has our report.
PAM FESSLER: The big question for many people is this: How do I know if my charitable dollars go where I think they're going? Not easily, says Daniel Borochoff, president of the American Institute of Philanthropy. He was one of the first to raise red flags about Mortenson's charity, the Central Asia Institute.
Mr. DANIEL BOROCHOFF (President of the American Institute of Philanthropy): It ought to be legally required, that if you're raising money for a cause, you have to be specific about what exactly that cause is.
FESSLER: He says some charities are vague. Central Asia Institute notes on its website that it spends 85 percent of its money on programs - such as building schools in Pakistan and Afghanistan - a mission Mortenson wrote about in his best-selling books.
But as "60 Minutes" noted, the charity failed to mention that its programs also included promoting Mortenson's books. The charity said it did so to educate the public about its cause, although Mortenson got the royalties.
Mr. BOROCHOFF: So as a donor, you've got to find out what is the charity's program because they're not clear about it.
FESSLER: Borochoff says donors can do some checking on their own. All charities file tax forms that are public.
In its latest filing, Central Asia Institute clearly states that it spent more on what it calls domestic outreach than it did on overseas schools.
Leslie Lenkowsky, with the Center on Philanthropy at Indiana University, says it's not clear at all that Mortenson's group did anything illegal. Charities have a lot of leeway by design. But he says there are broader issues.
Dr. LESLIE LENKOWSKY (Director of Graduate Programs, Philanthropic Studies, Center on Philanthropy, Indiana University): One thing I would certainly encourage all donors to look at are things like composition of board of directors and turnover in key staff.
FESSLER: Central Asia Institute has only a three-member board, including Mortenson himself. That's allowed, but it's not considered a very good model for oversight.
Dr. LENKOWSKY: And then there's always the lesson that we all learn from our parents at a young age, if it seems too good to be true, it probably is. And the notion that an organization in short period of time could build as many schools as this one claimed to build in very difficult parts of the world, you know, would strain one's credulity.
FESSLER: So many experts warn, don't get carried away by celebrity-driven causes. A big name doesn't necessarily mean a well-run charity. So what's a donor to do? They're often directed to rating sites, such as Charity Navigator.org. But even Charity Navigator's CEO, Ken Berger says the system falls short. So he's revamping it next year to focus more on a charity's actual impact.
Mr. KEN BERGER (CEO, Charity Navigator): And provide data on what kind of meaningful changes they're providing in people's lives. What kind of statistics do they have that corroborate the stories that they tell.
FESSLER: Berger hopes this will provides a more complete picture than the financial reports his site now relies upon. In fact, Charity Navigator gave Mortenson's group its highest rating, four stars, because it's financially sound, although the site now advises donors that the charity is the subject of an inquiry in Montana where it's based. Central Asia Institute says it will cooperate fully, it denies misspending any funds.
Some watchdogs, including Daniel Borochoff, think more government oversight and regulation would help. But there's resistance from charities.
Tim Delaney, president of the National Council of Nonprofits, says the overwhelming majority already do a good job.
Mr. TIM DELANEY (President, National Council of Nonprofits): The answer is not to play gotcha at the back-end. The answer is getting in front of the problem and preventing situations in the first instance.
FESSLER: He says this means providing more training for those who run charities on how to be transparent and more accountable to donors, so there are no unpleasant surprises.
Pam Fessler, NPR News, Washington.
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