Charity Accountability – Vetting an Organization

With the tragic aftermath of the earthquake in Haiti, compassionate Americans and other contributors worldwide are donating millions of dollars to help in relief and rescue efforts.

Financial contributions offer immediate usefulness to supply what is needed, as it is needed.

Clothing, food, water, shelter, and medical supplies will help save lives eventually, but they must be shipped, stored, handled and distributed properly to be of help.

Whenever there is a national tragedy like the present disaster in the aftermath of the Haitian earthquake, there are start-up groups, along with scammers and completely fraudulent charities that inevitably emerge.

Some groups are not capable of handling large-scale emergencies like the one in Haiti. They are too localized, too untrained, and too small to be of help internationally.

If you already contribute to a reliable organization that can help Haitians, you can write a check or use a credit card without qualms. If you’re looking for a charity that is offering specific help for Haitians, vet the organization first.

The Better Business Bureau’s “Wise Giving Alliance Standards for Charity Accountability” will help donors make sound decisions in choosing an organization with confidence that their funds will be used prudently.

The BBB replaced the former National Charities Information Bureau (NCIB) and created a list of 20 standards that charitable organizations should follow to be considered legitimate. These apply to tax exempt, 501 (c)(3) organizations, not private foundations.

These standards encourage charities to “maintain an organizational commitment to accountability that transcends specific standards and places a priority on openness and ethical behavior in the charity’s programs and activities.” (www.bbb.org)

The BBB offers a site that lists hundreds of organizations, with complete details of how much in compliance they are with 20 standards. In general, the standards include four areas of accountability.

1. Governance and Oversight. This includes boards of members who have no conflict of interests as pertains to the organization and personal gain.

2. Measuring Effectiveness. Some organizations use their resources more effectively than other organizations. But every group should have measurable goals and objectives and some way of evaluating whether or not it’s performing as well as it could.

3. Finances. These should include openness, honesty and accountability. The BBB suggests that a group should spend at least 65% on its program’s activities, and should not deplete more than 35% of its finances for fundraising costs.

4. Fundraising and informational materials must be truthful and the information should not be misleading.

The BBB offers six tips to help you decide where to send your donation.

1. Rely on expert opinion when it comes to evaluating a charity.” The BBB offers its own “Wise Giving Guide” at www.bbb.org/charity-reviews/national for the public to check out a rather exhaustive, alphabetical list of national organizations for their compliance with the 20 aforementioned standards. Each lists the organization’s name, the address of its national headquarters, stated purpose, how long it’s been in service, finances, sources of income, expenses, and a breakdown of how it uses its contributions.

2. Be wary of claims that 100% of donations will assist relief victims.” All charities have their own bills to pay, but some may use other funds to pay for administration and fundraising costs.

3. “Be cautious when giving online.” The BBB mentions unethical practices that arose during the tsunami disaster in 2004, in which web sites and new groups appeared overnight allegedly to offer help.

4. “Find out if the charity has an on-the-ground presence in the impacted areas.” Can the group meet immediate needs? Many can’t.

5. “Find out if the charity is providing direct aid or raising money for other groups.” If they are helping indirectly, you might want to avoid the “middleman.”

6. “Gifts of clothing, food or other in-kind donations.” These probably do not offer the quickest assistance possible, but might eventually be used. Make sure the organization has the infrastructure and staff needed to distribute such things. If the group is not experienced in disaster relief assistance, they may not have the transportation and distribution plans to make it work.

As an example of the kind of information you can get about an organization from the BBB, following are excerpts about the American Red Cross. Incorporated in 1905, its purpose is to “provide relief to victims of disaster and help people prevent, prepare for, and respond to emergencies.” The national headquarters are in Washington, D.C.

Under “Evaluation conclusions,” the American Red Cross meets all 20 Standards for Charitable Accountability.

Under “Program,” among its main purposes, which includes helping people who survive home fire disasters, the Red Cross “collects, processes, and distributes blood and blood products. It reports providing more than 40% of the nation’s blood supply.”

Under the “Financial” summary, the Red Cross uses 90% of its funds for its programs, 4% for fundraising, and 6% for administrative costs.

As you are bombarded with requests for contributions from many groups you might never have heard of before, use this resource to check out a particular charity before you respond.

Sources:

www.BBB.org. Information about the Better Business Bureau.

“BBB Advises Donors on How to Vet Haiti Earthquake Charity Appeals.”
Http://www.bbb.org/us/bbb-advises-donors. Retrieved 1-16-10.

“Standards for Charity Accountability.” Http://www.bbb.org/us/Charity-Standards. Retrieved 1-16-10.

List of Charity Reviews. Http://www.bbb.org/charity-reviews/national. Retrieved 1-16-10.

“The American Red Cross.” Review by the BBB. Http://www.bbb.org/charity-reviews/national/human-services/american-red-cross-in-washington-dc-679.