Ratings Group Says 10 Major Charities Raise ‘Red Flag’ for Donors

August 26, 2016 | Read Time: 4 minutes

August 26, 5:40 pm. This article has been updated with a response from the United States Holocaust Memorial Museum.

Teach for America, the United States Holocaust Memorial Museum, the National Fish and Wildlife Foundation, and other well-known nonprofits should raise a red flag for donors due to their lack of transparency, according to the charity ratings group BBB Wise Giving Alliance.

Those organizations were among a group of 10 major charities that failed to disclose information beyond what’s publicly available in the Internal Revenue Service’s Form 990, such as policies for assessing the impact of their programs and whether their fundraising appeals provide a specific description of the program activities for which funds are sought.

BBB Wise Giving evaluates charities on 20 standards related to their governance, finances, results reporting, and fundraising practices — information the ratings group deems critical for donor decision-making.

“We have an obligation to the donating public to let people know that these charities have refused to give us any information,” said Art Taylor, president of BBB Wise Giving Alliance.

20 Charities Warned

Three weeks ago, Mr. Taylor’s organization notified 20 charities that their names would appear on a published list unless they complied. Half subsequently provided the requested information.

“We’re hoping that this publication will encourage these other charities to do likewise,” Mr. Taylor said. “We’re sort of confused as to why they persistently refuse to give us the information we need to do these evaluations, even when donors ask us to look into the organizations on their behalf.”

One organization announced that it is opting out of the watchdog’s oversight in the wake of the report. In a statement, Andy Hollinger, communications director of the U.S. Holocaust Memorial Museum, responded to BBB Wise Giving Alliance’s criticism. “The museum is ranked by Charity Navigator and receives a four-out-of-four star rating for ‘Accountability & Transparency,’ ” the statement read. “Through our Charity Navigator participation, our annual financial audits by a recognized independent accounting firm, publication of an annual report with audited financial statements, and much more, we regularly inform our supporters about how their contributions are spent and managed.

“In the past, we have participated in BBB’s system. However, they do not recognize that the museum is a public-private partnership that receives federal funds and has a presidentially appointed board. Our board meets twice a year, and its executive committee meets four times a year. Since BBB does not recognize this as the strong board oversight that it is, the museum decided to no longer participate in its evaluation.”

Some charities on the list say they’re unfazed.

“I think the 990 is the pre-eminent document for disclosing our activities,” said Douglas Robinson, a spokesman for NeighborWorks America, which was included on the BBB’s “red flags” list.

“I don’t know what donor has not been pleased with the information we provide about our business,” he said. “What we do speaks for itself.”

Others nonprofits say they never heard from the ratings group.

“This appears to be more a media stunt than an effort to gain information,” National Fish and Wildlife Foundation chief executive Jeff Trandahl said in a statement. “We always welcome outside review and pride ourselves on transparency and full disclosure.”

Teach for America also provided a statement, citing the nonprofit’s four-star ranking from watchdog group Charity Navigator over 12 consecutive years. “We have a strong commitment to transparency and financial stewardship and a record of providing clear and accurate financial information,” the statement reads.

Doing Research

More donors are doing research before they give, according to a forthcoming study on donor behavior. Seventy-two percent of donors who responded to the 2016 Burk Donor Survey, said they always or sometimes do research on charitable organizations before making giving decisions. The bulk of donors do that research by visiting a charity’s website, but 42 percent say they have consulted an online ratings agency at least once before making a giving decision, up from 32 percent of donors who said so five years ago.

Other groups that collect data on nonprofits, like GuideStar, have been making moves to reward charities that go the extra mile to be transparent in reporting their results.

The BBB Wise Giving evaluation process is free for charities, and the reports are free to donors.

Said Mr. Taylor, “Assuming these charities are doing good work, why wouldn’t they want to promote the fact that they are doing this good work by going through this process and demonstrating to the public that they’re trustworthy?

Here’s the full list of organizations BBB Wise Giving Alliance said deserved a “red flag.”