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Donorsinthe
When Charities Don’t DiscloseDark
WISEGIVING GU
IDE
A P U B L I C A T I O N O F T H E B B B W I S E G I V I N G A L L I A N C E : H O L I D A Y 2 0 0 7
TM
A Publication of TheBBB Wise Giving Alliance
The BBB Wise Giving Guide is
published quarterly to help
donors make more informed
giving decisions. This guide
includes a compilation of the
latest evaluation conclusions
completed by the BBB Wise
Giving Alliance.
If you would like to see a
particular topic discussed
in this guide, please email
suggestions to
give@council.bbb.orgor write to us at the
address below.
Holiday Issue 2007
BBB Wise Giving Alliance
4200 Wilson Blvd.
Suite 800
Arlington, VA 22203
(703) 276-0100
www.bbb.org/charity
BBB Wise Giving Guide Layout
and Production — art270, inc.
Staff members from the
affiliated Council of Better
Business Bureaus, Inc., provide
administrative, personnel,
media, accounting, information
technology, legal and office
services to the BBB Wise
Giving Alliance.
H. Art TaylorPresident and CEO
Bennett M. WeinerChief Operating Officer
Tierra C. BuggsBBB Charity Coordinator / Administrative Assistant
Kelley BevisResearch Analyst
Margery K. HeitbrinkEditor, Wise Giving Guide
Gayle S. LorenzResearch Analyst
Julie A. RizzoDirector of Development
Rebecca UwaifoResearch Analyst
Shawn Van GorderAssociate Director, Charity Evaluation
Copyright 2007BBB Wise Giving AllianceThe name Better Business Bureau is a registeredservice mark of the Council of Better Business Bureaus, Inc.
BBB Wise Giving AllianceStaff
BBB Wise Giving AllianceBoard of Directors
INSIDE2
9Donors in the Dark
10List of Nationally Soliciting Charities
46Q&A About the Alliance
How to Read the List ofNational Charities
45National Charity Seal Program
48Standards for Charity Accountability
Douglas Bauer – ChairRockefeller Philanthropy Advisors • New York, NY
Ernest B. Gutierrez, Jr. – Vice ChairThe Kresge Foundation • Troy, MI
Marcus Owens – TreasurerCaplin & Drysdale • Washington, DC
Virginia M. Esposito – SecretaryNational Center for Family Philanthropy • Washington, DC
Thomas M. BartholomyBetter Business Bureau / Charlotte • Charlotte, NC
Evelyn BrodyChicago-Kent College of Law • Chicago, IL
Margery S. BronsterBronster, Crabtree & Hoshibata • Honolulu, HI
Michelle L. CoreyBetter Business Bureau / St. Louis • St. Louis, MO
John EdiePriceWaterhouseCoopers • Washington, DC
John H. Graham IVAmerican Society of Association Executives • Washington, DC
Cheryl Lamm GunnMcMaster-Carr Supply Company • Elmhurst, IL
Irv KatzNational Human Services Assembly • Washington, DC
James E. McHaleW. K. Kellogg Foundation • Battle Creek, MI
David E. OrmstedtWiggin & Dana • Hartford, CT
Joseph R. ReynoldsWilliams Group • Grand Rapids, MI
H. Art Taylor - Ex-Officio
BBB Wise Giving Alliance • Arlington, VA
47Holiday Giving Tips
If you wondered, for even a split second,
whether this was indeed the BBB Wise
Giving Guide you know from the past,
I wouldn’t be surprised. Yes, this is it,
with a brand new look. And if the
changes have brought about the effect
we sought, you’re already finding the
pages livelier and easier to read.
What drove our search for change was the jump in
our report production. As the number of charities we
review has grown—more than doubling in the past two
years—the list has become more cumbersome. Given
the scope of our evaluations, it will never be simple,
but we were sure it could be more user-friendly. That’s
what we hope the re-design and added colors have
achieved. But you are the judges here, and we’d be
delighted to have your comments on the changes
and your suggestions for future ones. Write us at
give@council.bbb.org or 4200 Wilson Boulevard,
Suite 800, Arlington, VA 22203.
Perhaps you’ve noted something else new—the
BBB torch symbol has taken on a contemporary look.
You may also have seen the BBB tagline “Start with
trust” on the Contents page. That tagline is just as
applicable to donors as to consumers, a reminder that
there are standards for trust in charities as well as
business, and that the Alliance’s application of its
Standards for Charity Accountability helps donors
give with trust. As our cover article points out,
charities that disclose the information needed for
Alliance review are expressing the openness that
strengthens public trust in the charitable sector.
I hope that you will give generously, and with
trust, this holiday season. We at the Alliance thank
you for all you have given us in the past year, and
wish you peace and fulfillment in 2008.
H. Art Taylor, President
president’sMESSAGE
1Wise Giving : Holiday 2007
TWhen the shades are down, you can
only guess what’s on the other side.
That pretty well describes what happens when you
ask us about a charity and learn only that it hasn’t pro-
vided the information we’ve requested for a BBB Wise
Giving Alliance review.
Though inquirers don’t often tell us exactly what
they’ve made of that reply, we suspect that their respons-
es run the gamut from suspicion that the non-disclosing
charity must be hiding something to conviction that there
must be a good explanation for its silence. Or the inquirer
may simply be stumped.
There’s no single “right” way to interpret charities’
appearance on the “Declined to be evaluated or did not
respond” list in this magazine. There’s no single reason
why charities don’t take part in the Alliance’s charity
review program.
But we can provide some light. There’s much that
you may find helpful in understanding the category we
call “nondisclosure” for short—how organizations move
into it, their explanations for being in it and even for
staying out of it. Ultimately, though, our true subjects are
transparency and accountability, abstract words with
down-to-earth meaning for charities and the public that
supports them. They’re what’s missing when the shades
are down.
Accounting? Accountability?Without getting lost in elaborate definitions of
“transparency” and “accountability,” let’s just say that
they’re nearly inseparable—that willingness to be open, to
disclose, indicates readiness to stand behind the informa-
tion offered or the policies followed, to take responsibility
for what’s done.
In charity, transparency has long been nearly syn-
onymous with financial disclosure. The Internal Revenue
Service, which began requiring charities to file financial
data in the 1940s, has naturally spotlighted finances. The
IRS Form 990, which hundreds of thousands of charities
file annually, consists primarily of detailed financial
Donors in the DarkWhen Charities Don’t Disclose
2
information. Publicly accessible at www.guidestar.org,
the 990 is sometimes considered the resource for people
looking to “know” about a charity. To aid donors who
have asked about the charities soliciting them, state char-
ity officials have also focused on finances, often providing
summary financial information on their web sites.
The spotlight on charity finances, though common,
has not been universal. Even in the first decades of the
twentieth century, the National Charities Information
Bureau, one of the merger partners that formed the BBB
Wise Giving Alliance, was assessing multiple aspects of
charities, such as whether their governance was active
and responsible, their promotion and publicity ethical
and their fund raising free from pressure—as well as how
they spent their funds.
In 2004 the GAO announced that after 83 years as
the General Accounting Office, it had become the
Government Accountability Office. Though the GAO says
that the middle-name change had less to do with new
functions than with better describing functions long-held,
it’s a telling acknowledgment that “accountability” goes
beyond financial accounting, to programs, policies, truth
and transparency.
That’s our stand, too. As we detail below, we deal
with accountability and transparency as they’re
expressed in publications, solicitations, audits, board
actions and policies.
The first move is yoursIt’s sometimes alleged that the Alliance goes looking
for charities to evaluate. That’s not the case. We ask for
information because you do. When you say, “What can
you tell me about Charity ABC?” we can’t answer if we’ve
not approached ABC due to lack of previous inquiries.
Following your question, though, we check whether ABC
is soliciting nationally and thus falls within our range of
review. That established, we send what may be a series
of letters.
The first letter introduces the Alliance and the
Standards for Charity Accountability and asks Charity
ABC to complete an online questionnaire and provide
copies of certain basic documents within the next three
n the Darks Don’t Disclose
3Wise Giving : Holiday 2007
weeks, for an evaluation in relation to those standards. If
there’s no response by then, we ask again for the infor-
mation, again within three weeks. If necessary, there’s a
third letter enclosing a draft report that states that the
charity has not provided current information. This letter
says that the draft report will be distributed in two weeks
from the letter’s date and again invites the charity to
provide information.
The first and third letters are sent by certified mail.
The majority of national charities that receive those
letters provide the requested information. That’s impor-
tant to keep in mind. A few others respond, but only to
say they’re declining to be evaluated in relation to the
Alliance’s standards. From some there is silence.
There’s a little more silence than there used to be. As
the Alliance extends its reporting, following up more and
more of the inquiries it gets from donors, the number of
charities that do not disclose has grown, from about 22%
to 30% of all we cover.
Are we looking for the moon? While “disclosure” may conjure up images of outing
a mole in a spy network or a skeleton in the closet, that’s
not the sense it has here. We’re not looking for revela-
tions. What we request is detailed but quite mundane:
information about governance, finances, organizational
self-assessment, solicitations and other materials directed
to the public.
Gathering this diverse data and answering well over a
hundred questions online is no one’s favorite job. Even the
many charities that complete our questionnaire, appreciate
the range of areas we include and consider the purpose
well worthwhile don’t hesitate to tell us that the job is oner-
ous, though they’re asked to do it only every two years.
Obviously, though, the requests we make to charities
describe a purpose beyond disclosure. Information they
file isn’t just ticked off and stored away or passed on to
anyone who asks. It’s evaluated in relation to Standards
for Charity Accountability. The result of the evaluation is
published. And if charities don’t file, that’s reported, too.
Though some charities think we should keep mum in
those cases, we think donors deserve to know the out-
come, whatever it is, of our inquiries on their behalf.
Donors’ desire for help is documented. A key finding
of a BBB Wise Giving Alliance survey commissioned sev-
eral years ago was that 70% of Americans said it is diffi-
cult to tell whether a charity soliciting their contribution
is legitimate—that is, actually does the kind of charity
work it says it does and operates ethically.
Charities talk back It should be no surprise that charities that don’t
answer requests to file information rarely write or phone
to say why.
Still, it’s useful to know the reasons they give. Several
dozen BBBs around the country evaluate charities as the
Alliance does. Eight of them recently sent out a short
survey to almost 900 charities asking why they had
not responded to the request to complete the BBB
questionnaire. About 10% answered. Here’s what a
few of them said:
• It is our current opinion that it is not worthwhile to
devote the extraordinary amount of time necessary
to complete your form.
• Your standards for evaluation do not take into
account charities such as ours.
• We don’t agree with some of the standards.
• We are [already] audited by state and federal
agencies regarding program and fiscal compliance.
• Being seen as not meeting standards makes the
charity look worse than not participating.
• We do not make our financial records public.
...the number of charitiesthat do not disclose hasgrown, from about 22% to30% of all we cover.
4
“
”
In the view of some charities, then, the charity review
program takes too much time, is inappropriate for the
organization addressed, or will be of no use to anyone.
Or the information is already publicly available, or what’s
requested is no one else’s business. Or the standards
themselves are faulty. Or if there’s a standard not met,
obscurity beats exposure. Similar responses, outlined
below, come to the Alliance from national charities.
We don’t assume that nondisclosure is proof of
bad faith or worse. We know that it can be attributed to
letters that got buried on someone’s desk or came in the
midst of a crisis that required all staff energies. We agree
that our questionnaire is long and that a “file by” date can
be annoying (though we’re as familiar with term-paper
syndrome as any student). And unless you’re an
American Idol contestant eager for public appraisal,
the prospect of evaluation can be daunting.
Decades of experience tell us, though, that
nondisclosure results at least as often from charities’
assumptions about themselves, their donors and their
role on the public scene as from overly full agendas,
philosophical disagreement or organizational stage
fright. These are reasons we sometimes hear:
Nondisclosure reason #1— “Transparency is
all about money”
“Transparency” is a celebrated value these days, a
quality that every sort of institution is expected to
demonstrate. It sounds simple: being open rather than
closed to public view and scrutiny, welcoming rather than
rejecting, inhabiting a glass house rather than a bunker.
But too many charities think that transparency is
only about finances. Tell donors how their dollars were
spent and you’ve proven your commitment to openness.
It’s an easy way out, because financial reporting is, for
most well-known charities, routine and often required by
law. The annual form they file each year with the Internal
Revenue Service (Form 990) is available to all. Many
states also require financial reporting and make filings
publicly available.
Finances do matter. The Alliance’s Standards for
Charity Accountability include numerous finance-related
requirements. With good reason, donors are interested in
how their money is spent. But charities are about more
We don’t assume that nondisclosure is proof of bad faithor worse.
5Wise Giving : Holiday 2007
6
than income and expenses. Numbers and percentages
might look great while solicitations aren’t forthright
about how donated funds will be used, there’s no concern
for donor privacy, or the board isn’t actively or responsi-
bly governing.
Nondisclosure reason #2— “Obeying the law is
transparency enough”
“Look, we give the IRS what it asks for and our IRS
report is public information. We give reports to the foun-
dations that fund us. We meet filing requirements of
state regulators. Enough, already. We’ve amply shown
we’re transparent.”
True, charities must do a great deal of reporting to
one body or another if they are to safeguard their legal or
financial positions. Again, required reporting is usually
mostly about money. But charities that are ready to go
beyond what’s required of them by government or grant-
makers demonstrate that for them transparency is a com-
mitment to openness, to respect for inquiry. Whether an
Alliance evaluation concludes that a charity meets all
standards or not, the fact that the information on which it
was based was supplied voluntarily lends a luster that
enforced disclosures lack.
Nondisclosure reason #3— “See how
much information we publicly display”
Some charities think that transparency is about
quantity of information. Indeed, it can be helpful for
charities to put financial information and annual reports
on their web sites or make it readily available by other
means. The Alliance standards call for such measures
and donors can learn from them.
But donors are often without the tools to determine
whether the reported expenses are accurately represented
or where they stand against defined criteria. They don’t
know what to look for in an annual report. They’re
unlikely to find on a charity web site information about
the oversight activities of the board—which is after all
ultimately responsible for the use of contributions—or
how some fund raising expenses are being reported
(or not).
Nondisclosure reason #4— “Our donors know
we’re beyond reproach”
True, giving is often a matter of good intent and
blind trust. But increasingly, people want information
before they give. Many charities seem unaware that
potential givers are more likely to be put off by a nondis-
closure listing than by a conclusion that a charity did not
meet certain Alliance standards—specific points that they
can then weigh for themselves. They want an outside
view, from a disinterested party, which they can take
or leave.
Nondisclosure reason #5— “How can you ques-
tion us when our cause is so compelling and our dedica-
tion so profound?”
To some charities, being asked about how they oper-
ate—about the activity of their board or their commit-
ment to evaluating their work, for example—appears
meaningless if not insulting. These organizations have
trouble acknowledging that focus on “doing good” doesn’t
rule out giving time to building an effective board, devel-
oping sound budgets or assuring donor privacy—activi-
ties that strengthen rather than detract from the mission
that drives them.
Nondisclosure reason #6— “Sorry, but we’re
totally unique”
Some charities, understandably absorbed in their
own work, don’t see themselves as part of a group
with shared interests. Particularly if they are small or
inexperienced, they may have no idea that standards
of accountability exist or that they can profit from
considering principles and practices developed by
other charities over the years.
But if there’s any proofneeded that charity, despiteits rich diversity, is publiclyperceived as a community,it’s that a single charitablescandal will impact givingon charity generally.
7Wise Giving : Holiday 2007
More broadly, they don’t see that their actions
can affect “charity” as a whole.
But if there’s any proof needed that charity, despite
its rich diversity, is publicly perceived as a community,
it’s that a single charitable scandal will impact
giving on charity generally. Likewise, a few
well-publicized instances of charitable miscon-
duct are likely to set the government thinking
about regulating all charities.
From that perspective, every charity that
commits itself to transparency and accountability helps
strengthen the respect (and justify the privileges) that
America gives to charity and charitable giving. And it
differentiates itself from those unwilling to do the same.
Nondisclosure reason #7— “As a religious
group, we believe that only a review by the proper
religious organization is appropriate”
When a church or other religious group solicits only
its members or congregants, the Alliance does not review
it. When such a group solicits the public beyond its
congregation and potential donors ask the Alliance for
information, however, the Alliance considers it appropri-
ate to ask it, like other publicly soliciting national
organizations, to file information for evaluation.
Nondisclosure reason #8— “We don’t feel we
should divert funds from our mission to pay for an
Alliance review”
Whoa! Don’t believe it. This excuse, which donors tell
us they’ve heard, is simply untrue. There’s no charge to a
charity for an Alliance evaluation.
Nondisclosure reason #9— “We simply don’t
agree with all your so-called ‘Standards for Charity
Accountability’”
Even among charities that meet all Alliance stan-
dards, there’s bound to be disagreement about the rela-
tive value of individual ones, and donors who use
Alliance reports are likely to weigh some standards
more heavily than others.
But the Alliance’s standards have broad respect
and acceptance, due in large part to the way they were
developed. They weren’t cooked up in a back room by
self-appointed accountability pros. Instead, there was
an open process that drew on independent research on
donor expectations, professional and technical assistance
from a variety of philanthropic experts, and numerous
comments from donors and charities, over a three-year
period.
It’s sometimes charged that the standards, though all
right as far as they go, lack an important point: they don’t
say how effectively an organization is carrying out its
mission. The standards do recognize the importance of
this subject, requiring that organizations assess their own
performance and effectiveness at least every two years.
But judging effectiveness is so subjective and charity so
diverse that it’s unlikely that a single measure could be
devised for the job. Even if it could, there’d still be a need
for truthful solicitation and good governance practices.
Charities are free to take exception to the standards
and how they’re applied. Filing information gives them
the chance to make their case to donors. We invite and
...every charity that commits itself totransparency and accountability helpsstrengthen the respect (and justify theprivileges) that America gives to charityand charitable giving.
welcome a charity’s comments on not meeting a particu-
lar standard so that we can include them in our report.
And as recounted at length in the last issue of the Guide,
many a charity that fails to meet standards on the first
round of review finds it can to do so by the time its report
is made public.
In the light of experienceYou’ve read all these hypothetical viewpoints, and
where do they leave you? Aware of attitudes that float
about, maybe, but still in the dark about which to attach
to the one non-disclosing charity you’re interested in.
And unless you ask that charity and get an answer that
makes sense to you, you’re left to guess.
But there are yet other views on this whole nondis-
closure issue that are perhaps the most illuminating of
all. They’ve been expressed by charities that do file with
the Alliance, the ones that predominate on the multi-
page listing at the center of this magazine. These are the
charities that enter the evaluation process and persist to
the published report, even at times to a conclusion other
than “meets all standards.” Their experience with disclo-
sure throws light on the lack of it. Here’s what some have
told us in recent months:
• If you value accountability, you make time available for
the filing process.
• We’re a small charity, but when we can show through
an Alliance evaluation that we meet the same standards
as the giants who are working on the same health prob-
lem we are, we’re proud of it and think our donors will
be, too.
• We strongly disagree with one of the standards and
don’t meet it, but we have little respect for some of the
groups on the nondisclosure list and don’t want to be
seen in their company.
• We see the standards as baselines, and any charity that
doesn’t meet one or two should know why and be able
to explain it to donors.
• We want to differentiate ourselves from charities that
don’t disclose.
• We didn’t meet all the standards at first, but when we
realized that the practices called for would clearly bene-
fit our organization, we adopted them.
• We see accountability as a growing issue for donors,
who find it hard to assess charities without evaluation
from an independent source.
• People are looking for information. Transparency
matters, whatever the outcome of the Alliance report.
All these statements, from the practical to the
abstract, tell much about how the charities behind them
reacted when the Alliance’s requests for information
began arriving. While they didn’t all rejoice at the
prospect of responding, they didn’t immediately reject
the requests as annoying impositions, harmful diversions
or invitations to public disapproval. They weighed the
effort, the risks and the benefits and chose to invest in
accountability.
Donor powerCharities want the public trust. We think they need
to trust the public, too. We don’t know if all the charities
reluctant to file information don’t think donors can weigh
the Alliance’s conclusions for themselves or whether
they’re not sure if they can convincingly state their case.
Or, as we’ve said above, what their reasons are.
Whatever the answer, your power can be enormous.
Filing with us is voluntary, and we wouldn’t have it any
other way. Nor would you, we believe. But that doesn’t
mean there’s no role for encouragement. One charity’s fil-
ing often leads others to do so. We at the Alliance work to
acquaint more charities with the standards and the value
of transparency and accountability.
Your voice, though, is ultimately what counts. If a
charity on the nondisclosure list is of interest to you, let it
know you’d like it to file. The list is never static, and you
may well help shorten it.
Charities want the publictrust. We think they needto trust the public, too.
8
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