September 21, 2000 | Read Time: 5 minutes
Supporters of the planned merger of two of the biggest organizations that monitor charities believe the move was a natural one. They note that the two groups — the National Charities Information Bureau and the Philanthropic Advisory Service of the Council of Better Business Bureaus — have long performed similar roles and have evaluated many of the same charities.
But the alliance is raising some concerns among government officials and others who worry that the move reduces the diversity of views available to donors who want to decide where their gifts will do the most good.
“The more organizations you have taking a hard look at the non-profit sector the better,” says Karl Emerson, a charity regulator in Pennsylvania and head of the National Association of State Charity Officials. But, he adds, the merger must ultimately be judged by what the new organization is able to accomplish.
“We’ll have to wait and see whether the new, proposed group will be better than the two independent ones,” says Mr. Emerson.
Among the harshest critics of the move are former officials of the National Charities Information Bureau, including Daniel Langan, who served as the bureau’s public-information director for 10 years until he was dismissed this month after publicly criticizing the merger.
Mr. Langan says the alliance is tantamount to a takeover of the bureau by the Council of Better Business Bureaus’ Foundation, the Philanthropic Advisory Service’s parent organization.
In a statement, Mr. Langan said the move “would mean a free ride for some charities that meet B.B.B. standards but refuse to be evaluated by N.C.I.B. because they cannot meet the tougher measurements.”
As an example, he points to differences between the organizations’ positions on surplus funds. Charities that hold assets worth more than two years’ expenses or twice the next year’s budget fail the bureau’s evaluations because the watchdog believes that such surplus money should be used for charitable programs. The Philanthropic Advisory Service has no such restriction.
But officials at the Council of Better Business Bureaus reject the notion that the service’s standards are any less stringent than the bureau’s. In fact, they say, an examination of the two groups’ charity reviews show that the service passes a smaller share of the non-profit groups that provide information for an evaluation than does the bureau.
George Penick, chairman of the National Charities Information Bureau, who is helping to engineer the merger, agrees that the service’s standards are sufficiently tough. He also insists that the new group will reflect the standards, perspective, and history of both organizations, and, he notes, he is slated to be chairman of the new organization’s board, which will also include other bureau directors.
Seeking to Rate More Groups
Mr. Penick, president of the Foundation for the Mid South, in Jackson, Miss., and other officials from both watchdog groups say that by combining their efforts and eliminating some duplication the new organization will work more efficiently. And, they say, it will be able to evaluate more charities and reach more donors.
In the past, each group has examined and published reports on about 200 national non-profit organizations annually. More than half of those organizations, the officials say, were rated by both watchdogs.
The new group will be located in Arlington, Va., where the Council of Better Business Bureaus and its foundation have their office. Candace McIlhenny, executive director of the foundation, will head the new organization, which has not yet been named. Bennett M. Weiner, who heads the service, will direct charity evaluations.
The new organization’s budget has also not yet been determined. The National Charities Information Bureau, an 82-year-old group based in New York, has spent about $1-million a year. The Philanthropic Advisory Service has operated in recent years with roughly a $600,000 budget. It has also used the services and staff of the council, as will the new organization.
Such sharing arrangements with the council worry Fred Lane, a professor of non-profit management at Baruch College of the City University of New York, who served on the National Charities Information Bureau’s board for 12 years, until 1994. He says he is troubled that the country’s single biggest watchdog group will not be an autonomous organization.
“It’s a weighty responsibility that should be taken on by an independent organization,” Mr. Lane says, “not one that is part of another organization, whether it be the Better Business Bureaus or any other association.”
Mr. Penick acknowledges that National Charities Information Bureau officials would have preferred the creation of a new, separate group, instead of folding the two watchdogs together under the Council of Better Business Bureaus. But he says that the merger plans are considered “a viable second choice,” and that the new group will be able to make its own decisions.
In addition, he says, becoming what he calls an “affiliated entity” of the Better Business Bureaus will be advantageous for the group, which will be able to tap into the council’s local connections and trade on its well-known name.
Fund-Raising Woes
Officials of both groups say that talks about merging began last spring, following the resignation of the bureau’s president, William P. Massey, who is now head of the Charlotte Museum of History, in North Carolina.
One of the considerations for the bureau, officials there say, was the group’s growing difficulty raising money. And, according to Ms. McIlhenny, the merger makes sense in part because the two groups were seeking financial support from many of the same grant makers.
The move makes sense to many charity officials for other reasons, too.
Peter Berns, head of the Maryland Association of Nonprofit Organizations, says that consolidating the two groups will eliminate confusion among charities and donors. “The word will get out to more donors, there’ll be more strength in terms of public education, if we have one concerted effort to put out a sensible set of standards that set a high bar for how charities ought to act.”
