August 20, 2014

Self-Reporting Is Key to Responsible Behavior by Charities

Dear Editor:

The fundraising community we represent was disheartened at the approach taken in the recent article "Charity Watchdogs Scoff at Direct Marketers’ Self-Reporting Effort". Instead of providing an unbiased view of the recent transparency efforts nonprofits are undertaking after many years of watchdog scolding, this article gives the impression that such efforts are to be disregarded. The headline highlights the derision that watchdogs demonstrate toward any responsible action by charities—reporting that they "scoff" at such efforts. Little information is provided in the article as to the actual reporting data, the dashboard itself, or why these steps are needed now.

The article further states that the community is "long at war," with charity watchdogs, another negative approach to our efforts to actively clarify and correct such watchdogs. We have found over many years that there is a consistent lack of accuracy by charity watchdogs that do not know the intricacies of fundraising, fundraising rules, and fundraising regulations. This leads to their providing only the most basic of "scorecards" to the public that they have deemed legible within their watchdog purview. We believe such scoring does little to shed light on the true value of fundraising and can be a major disservice to organizations and their donors.

The VP of marketing at Charity Navigator is cited as stating that there is no independent scrutiny or review of the information provided and that charities are only providing "pie charts." Both are accusations that do not withstand scrutiny. This critique is coming from the same organization that discounts the use of accounting standards reporting by charities, an acceptable and legitimate practice supported by the American Institute of CPAs. And Charity Navigator must be aware that the information being provided is derived predominantly from the IRS Form 990, which is a not only an "independent review" but also a legal reporting obligation with heavy penalties for noncompliance. Further, charities must also have their financial statements audited through an independent review process.

Watchdog Dan Borochoff [president of CharityWatch] derides the new dashboard by inexplicably declaring that charities do not know donors and that it seems to be designed "for organizations that oversolicit." This again demonstrates the lack of fundamental understanding of legitimate fundraising methods—in this instance, the responsible practice of identifying potential donors using data-driven marketing and fundraising to avoid "oversoliciting."

The bottom line is that in this piece, the tone, the headline, and the reporting only skewed toward the cynical view that "self-reporting" is a laughable exercise for charities. In fact, it is the essence of accountable and responsible fundraising, and it should be encouraged.


Senny Boone

General Counsel

Direct Marketing Association and Direct Marketing Association Nonprofit Federation