To the Editor:
George Mitchell’s recent piece for the Conversation and published by its partner, the Chronicle of Philanthropy, “Charities That Don’t Embrace Common Financial Norms Tend to Outperform Their Peers” (August 8), contained statements that the organizations we lead, the BBB Wise Giving Alliance and the Education and Research Foundation of the Better Business Bureau of Metropolitan New York, wish to address.
Mitchell wrote that “to earn their highest recommendations, Charity Navigator, CharityWatch, and Give.org impose various limits on fundraising expenses. The underlying assumption is clear: the less spent on fundraising, the better. Charities that flout such norms may risk damaging their reputations and losing supporters.” We disagree with this statement for several reasons.
BBB’s Give.org produces evaluations determining whether a charity does or does not meet the practices represented in its 20 Standards for Charity Accountability. Those standards do not state or assume that spending less on fundraising is better.
In fact, we have worked to dispel such assumptions through the Overhead Myth campaign, which we launched with the charity-reporting organizations GuideStar (now Candid) and Charity Navigator. The campaign declared that when considered alone, overhead expenses such as “administrative and fundraising costs” are “a poor measure of a charity’s performance.” Nonprofit managers know that multiple factors contribute to a charity’s success. We continue to teach this principle through educational outreach.
Charities that spend more than 35 cents to raise a dollar in total annual contributions do not meet BBB standards. It is uncommon for BBB-evaluated charities to miss that mark. In cases where they do, we consider a range of extenuating circumstances. Many of the charities that meet the guideline are large organizations that in our estimation perform well and are accountable to their constituents. The same holds true for the smaller organizations we evaluate.
Offering reasonable accountability guidelines for fundraising practices is valuable. Charities that solicit donations from the public will naturally need to spend money on fundraising. However, when fundraising costs get into higher percentages of funds raised, donors may feel misled about how their contributions are being used.
Donor trust is essential for fundraising success. When donors are misled, trust is breached, and all nonprofits suffer from the resulting decline in reputation.
Nonprofits should not merely look trustworthy; they should also show that they are trustworthy by demonstrating honesty and integrity in all their practices, including fundraising and financial management.
H. Art Taylor
President and CEO
BBB Wise Giving Alliance
President and CEO
Education and Research Foundation of the Better Business Bureau of Metropolitan New York