Friday, May 24, 2013

Checking Out Charities for Wise Giving

In the wake of Sandy, Newtown and now Oklahoma, we all have opened our hearts and hands to help as quickly as possible, but there can't be enough emphasis on how important it is to take a little time to do some basic research on a charity before you part with hard earned dollars.  Until we have a perfect society, there will always be scammers.  Further, while most charities are well-intentioned, even amongst that group, there are those best suited for using your donations effectively.  Check out the BBB's tips for disaster giving and check our Wise Giving Alliance list of national charity reports.  A May 22nd KCTV5 story featured the importance of checking out charities:  Give, but give wisely to Oklahoma tornado relief efforts   

The Better Business Bureau of Greater Kansas City's Charity Information Service is expanding to evaluate local charities for BBB accreditation.  This is a voluntary program and upon our requesting participation, some charities choose to move forward, others express interest but do not follow-up, others decline.  However, if we receive an inquiry from the public about a charity, contact the charity and they choose not to provide information, we publish a non-disclosure report.  The more inquiries we receive, the more reports will be available.

Many donors don't know they can check with the BBB about charities.  We will continue working to inform donors and to encourage charities to use our program as an avenue to prove transparency and accountability.  The BBB does more than list information, we report charity information against a framework of 20 accountability standards.  Reports show what standards are met or not met and why, making giving decisions easier. 

Below are 4 infographics that hopefully make it easier to digest basic principles of the BBB standards of charity accountability.  Click the images to get a better view.  Donors should understand enough to have a holistic view and make fair judgments.

Conflict of interest policies, CEO review and board meeting attendance are a few things BBB governance standards address.  A charity might be in the public eye garnering support or have been around for many years, but may have issues in the boardroom that limit adequate oversight.

The success that a charity has in fulfilling it's mission should be measured regularly.  The BBB does not evaluate the quality and content of assessment, but accredited charities must prove that regular assessment takes place.  Charting Impact is gaining acceptance as a resource for donors and charities in the area of results.  This tool was developed by the BBB Wise Giving AllianceGuidestar and Independent Sector.

"Donors don't support a cause because of its efficiency; they support a cause for the impact that it secures for society - for all of us.  Charting Impact will help to focus nonprofits - and their boards - on how to communicate who they are, what they achieve and how they achieve it, skills that all of us need to develop."
Andrew Watt, president and CEO, Association of Fundraising Professionals 
Financial ratios are important but should not be the deciding factor for making donations.  A charity that spends only 60% on programming instead of 65%, may in fact have phenomenal results.  A charity that spends more than 35% of related contributions on fundraising may be doing more education and advocacy or may be in the earlier stages of operation.

If you are interested in some of the finer points of nonprofit financial accounting, the current issue of Wise Giving Guide delves into joint cost allocation, an accounting term that refers to activities, such as direct mail, that might combine fund raising with another function such as education or advocacy.  The BBB Wise Giving Alliance publishes The Wise Giving Guide three times a year.  The guides summarize the results of the Alliance's latest national charity evaluations and features a cover story, usually with giving tips, on charity accountability issues or other topics of interest to donors.

With tightened economic conditions, charitable appeals are beyond numerous.  The BBB reviews not only the truthfulness of appeals, but the accuracy and availability of charity information, protection of donor information and the sale of products / services that imply a charity will benefit.

The basics of charity review for accreditation at the BBB are governance, effectiveness, finances and fundraising & informational materials.  At the risk of a little sensationalism, it could be said we look at the control, success, dollars and buzz of nonprofits so we can publish reports for the public to check out charities.

According to the Fall / Holiday 2012 Wise Giving Guide "a recent survey by Hope Consulting confirms [that]... with all the sources of information -- information that state agencies, watchdogs, and the charities themselves produce -- only 30% of donors do any research before making a donation."  By continuing to educate and advocate around charity accountability, we hope to help increase that number in Kansas City.  Call 816-421-7800 or e-mail to inquire about charities.