Criticized in the U.S., Charity Watchdogs Are Admired Overseas

Under President Xi Jinping, the Chinese government has embraced its budding nonprofit sector. It has two laws in the works meant to stoke charity, and it increasingly contracts with nonprofits to provide social services, said Youping Liu, deputy director of the China Charity and Donation Information Center.

Still, the concept of civil society is so new that government officials don’t know which groups are effective or how to evaluate them, according to Mr. Liu. Newly wealthy, would-be donors are no better at vetting charities.

“When they got confused in the past, they just donated the money to the government,” he said.

In response, he and his colleagues are building a multi-part system to evaluate, among other things, the effectiveness and transparency of the country’s estimated 500,000 nonprofits. And they are doing so with the U.S. BBB Wise Giving Alliance and Charity Navigator, among others, in their side-view mirrors.

“America has a lot of experience,” Mr. Liu said of the domestic nonprofit sector’s best-known watchdog groups. “They are all doing evaluation in a very professional model.”

Difficult Work

Even as charity watchdogs remain a flashpoint in the United States, the metrics by which they assess and rate groups are heavily studied, and repurposed, in other countries.

At a meeting in Washington Friday of the International Committee on Fundraising Organizations, an association of national charity monitoring groups, more than a dozen nonprofit leaders from countries including the Czech Republic, Japan, and Taiwan discussed efforts to jump-start or advance independent evaluation systems and build cultures of transparency and trust.

Cultural, political, and economic factors in their respective countries mean that the approaches, and the outcome, vary dramatically. All acknowledged the difficulty of the work.

“Mexicans don’t have any confidence in government,” said Javier Garcia Gutiérrez, executive director of a five-year-old watchdog group in Mexico called Construyendos Organizaciones Civiles Transparentes. “Organizations are compared with government.”

Watchdog groups in the United States are good at clearly communicating with donors, said Tien-Mu, of the Taiwan NPO Self-Regulation Alliance. By contrast, her organization does things like update its Facebook page annually. The alliance saw its profile expand earlier this year when questions were raised about how a prominent Taiwanese religious organization was using donations, she said. But, she added, she and her colleagues have a long way to go in educating donors about giving scrupulously.

Tomoyuki Hashimoto, a manager at the Nippon Foundation in Japan said that the 2011 tsunami and subsequent recovery efforts stoked interest in the value of giving, even in a country where there is deep trust in government.

Two years ago, he and his colleagues decided to build an evaluation system in Japan similar to that of the BBB Wise Giving, he said, but they are only now soliciting funding and buy-in. The concept of separating high-performing charities from their low-performing peers takes some explaining, he said.

“We have to visualize what these things are, what the standards are, why it is necessary,” Mr. Hashimoto said.

Obstacles to Participation

To be sure, some foreign countries already have well-developed policies and systems in place to deter charity fraud. They include Britain and Germany, said Art Taylor, chief executive of the BBB Wise Giving Alliance.

But in other parts of the globe, researching and then making formal donations to vetted charities is an entirely new concept. And under many models, the evaluation systems work only if the charities choose to participate.

“If you don’t get them to buy in, you are not really going to get anywhere,” Mr. Taylor said. “A lot of countries don’t provide the same level of data, even [Form] 990s, we have. So it is hard to just start a watchdog when you don’t really have access to information to do it.”

Still, Mr. Taylor said, there is no doubt that the watchdog groups in the United States are heavily influencing similar efforts abroad.

“It is a universal thing,” Mr. Taylor said of the need for such systems. “There is money involved. There is the lack of ability of people giving money to really watch what is going on. So they look for some third-party endorsement of validation.”

Asked if there is anything ironic about other countries adopting assessment tools loathed by some charity leaders in the United States, Mr. Taylor said that here must be some sort of independent evaluation built in between donors and organizations.

“You might not like it, but you realize you need it,” Mr. Taylor said.