Charity Watchdog Group Offers Seal of Approval; Revises Standards

The BBB Wise Giving Alliance, the country’s major charity watchdog, will soon allow national organizations

that meet its accountability standards to trumpet that achievement by displaying a new Wise Giving Seal of approval.

At the same time, the Wise Giving Alliance announced that it has formally adopted new and revised standards that call on nonprofit organizations to devote at least 65 percent of their total expenditures to charitable programs, regularly evaluate their operations, and take steps to protect donors’ privacy.

The standards will serve as the basis for the reports that the alliance produces on national charities, and are expected to be used by local Better Business Bureaus when they evaluate local organizations.

Most of the newly adopted standards go into effect with evaluations the watchdog group makes after the beginning of March. Several standards will not go into effect for one or two years because they will require changes that will take time for charities to put in place.

The alliance’s evaluations are valid for 24 months but can be amended at any time based on changes in charities’ practices or new information obtained by the watchdog group. Charities that were evaluated before March generally will not be reviewed again (or be subject to the new standards) until their current evaluations expire.

‘Credibility Insurance’

The Wise Giving Alliance said that its seal of approval, which is likely to be in use by summer, will provide a clear, concise, and accessible means for potential donors to find out if a charitable organization meets the watchdog group’s standards.

“This new seal is, quite simply, ‘credibility insurance’ for America’s charities,” said M. Cass Wheeler, chief executive officer of the American Heart Association, which meets all alliance standards. “The Wise Giving Seal stands as a pledge of trust — providing supporters with a positive answer to the age-old question, ‘Does this group deserve my support?’”

Until now, the Wise Giving Alliance (and the two organizations that merged to form it) never allowed charities that met its standards to say so while asking for funds. But charities, for an annual fee, will be allowed to use the Wise Giving Seal in direct-mail appeals, print and billboard advertisements, annual reports, posters, television public-service announcements, and Web sites.

More than 200 charities currently meet the standards of the Wise Giving Alliance and the watchdog group expects initial interest in the seal to come from this pool.

The Wise Giving Alliance said that if a national charity has not been evaluated and is interested in applying for the seal, the alliance will examine the organization at no charge to see if it meets the alliance’s newly adopted standards and make the evaluation public whatever the result. If the charity meets all standards, it can then ask to use the seal and pay the annual fee.

Qualified organizations that use the seal will pay the Wise Giving Alliance an annual fee based on a sliding scale tied to their annual contribution revenue. The alliance expects that it will require an organization with $1-million in such revenue to pay $1,000; a charity with more than $100-million in revenue will probably pay $15,000.

Overhauled Guidelines

Meanwhile, 20 new and revised standards adopted by the watchdog group deal with “newly emerging issues of relevance to potential donors, such as privacy protection, charity effectiveness, and Internet appeals,” said H. Art Taylor, president of the BBB Wise Giving Alliance, “while also updating our approach to long-standing accountability concerns, like charity use of funds and fund-raising practices.”

The BBB Wise Giving Alliance was formed in 2001 when the Council of Better Business Bureaus’ Foundation and its Philanthropic Advisory Service merged with the National Charities Information Bureau. The new standards replace the separate standards that were applied by the two now-defunct watchdog groups. Some of the guidelines mirror those used by the old organizations, but some are revised or entirely new.

Among the key guidelines charities will be asked to follow:

• Organizations should spend at least 65 percent of total expenses on programs. Exceptions could be made for some charities, including newly created groups with higher fund-raising and administrative costs, and organizations with donor restrictions on the use of funds. The alliance chose this guideline based in part on the results of a poll of donors’ expectations of nonprofit organizations.
• Boards should demonstrate that they are providing adequate oversight of a charity’s operations and staff members. The standard says that indications of adequate oversight include “regularly scheduled appraisals of the CEO’s performance.”
• Organizations should provide in written appeals — at least annually — a check-off box or other method that both new and continuing contributors could use to inform the charity if they do not want their names and addresses shared with other groups.
• Charities should assess their performance at least every two years and determine what future actions are needed to achieve their missions. A written report that outlines that assessment and recommended actions should be submitted to the organization’s board for its approval.

The complete list of 20 standards, with detailed explanations of how they will be used and when they take effect, can be found on the BBB Wise Giving Alliance’s Web site, http://www.give.org.