Watchdog’s Approach Does Not Help Donors

To the Editor:

The Chronicle reported in its June 9 edition (Watchdog Watch) that the Better Business Bureau’s Wise Giving Alliance stated that the American Bible Society meets all of the alliance’s standards except for the standard calling for a charitable organization to avoid accumulating funds that could be used for program activities.

Until March 2003, when new standards took effect after the merger of the Wise Giving Alliance with the National Charities Information Bureau, the American Bible Society regularly met all of the standards of the Wise Giving Alliance. The merger brought to the alliance the National Charities Information Bureau’s standard that unrestricted assets were not to exceed a certain ratio.

As we explained to the Wise Giving Alliance, 84 percent of our net asset value is represented by “funds functioning as endowment.”

The society’s Board of Trustees has designated that only income earned from these “funds functioning as endowment” can be utilized for the purpose of funding current operations.

The intent of this “quasi-endowment” is to maintain an operating fund that can be used as a source for funding the society’s current operating budget now and in the future.

This positive, and unusual, position enables the society to direct every donor dollar toward programs in support of our mission while ensuring intergenerational equity for years to follow.

The Wise Giving Alliance standard does not allow for diversity in either organization design or approach. In other words, under the standard in question, organizations cannot have quasi-endowments (funds segregated and designated by the board of trustees for the express purpose of providing a continuing income stream to fund administrative costs so that new donor dollars can go in their entirety to fund the mission), no matter the intended purpose.

Moreover, the imposition of this standard gives no recognition to the fact that for the past 190 years the society has sought to responsibly put in place reserves that could continuously support its mission. To comply with the standard in question, the society would have to go on a spending spree to deplete the resources our predecessors have so prudently stewarded.

We would also note that the Wise Giving Alliance standard in question has nothing to do with organizational efficiency or mission effectiveness. The standard adds nothing to help the donor answer the question “Are my donor dollars being used wisely?”

The American Bible Society, the creator of the gift annuity concept in 1843, uses no unrestricted donor dollars either to build its endowment or to fund its quasi-endowment. Indeed, the purpose of our quasi-endowment, which is now called into question, is to ensure that every dollar given by a donor to the society will be used to support its mission.

Ironically, full compliance with the standard in question would ultimately force the society to tax donor gift dollars, in essence forcing our donors to make a mandatory contribution to help underwrite our administrative costs. We have chosen not to tax donor gifts for this purpose, favoring instead to honor donor intentions that their funds fully go to support our mission.

Richard Stewart
Chief Financial Officer
and Vice President for Administration
American Bible Society
New York