Category: Wise Giving Wednesday

Each year the U.S. Internal Revenue Service produces a Data Book that provides information and statistics about returns filed, taxes collected and related issues such as data on tax-exempt organizations.  The 2017 Data Book which was released about a month ago includes a table which shows the number of tax-exempt organizations. There are 20 different categories that fall under section 501(c) of the Internal Revenue Code which includes various types of organizations (including, but not limited to, labor unions, lobbying organizations, business leagues, recreation clubs, fraternal groups, benevolent life insurance companies, etc.). For 2017, the IRS reports that the combined total number of organizations under this 501(c) category was 1,646,650.

The largest of these categories in terms of the number of organizations, is section 501(c)(3) which covers charitable organizations. The IRS reports that in 2017 there were 1,286,181 organizations that were included in this 501(c)(3) charitable tax-exempt status. That total represents 78% of the combined total number of 501(c) groups referenced above. 

The actual total number of charities in the U.S., however, may be a bit higher than 1,286,181 for several reasons:

• Houses of worship (churches, synagogues, mosques, etc.) are not required to file for 501(c)(3) status in order to have charitable tax-exempt status. It is estimated that there are about 350,000 religious congregations in the U.S.
• If an organization that operates under the IRS definition of a charity has gross revenue of less than $5,000, it is not required to apply for 501(c)(3) in order to have this charitable tax-exempt status.
• Some organizations may fall under a group exemption letter held by a parent organization. 

While that 1.28 million total is huge, keep in mind that most of these charities are very small. More than half of them bring in $50,000 or less and do not fill out the IRS Form 990. Instead, they complete the IRS Form 990-N which is a type of electronic postcard that confirms they continue to operate. The remainders complete either IRS Form 990-EZ (gross income between $50,000 and $200,000) or the full IRS Form 990 ($200,000 or more in gross revenue.)  Also this group includes about 87,000 private foundations (in general, these are private or corporate foundations that give out grants and do not solicit) which complete the IRS Form 990-PF. 

Finally, the total number of charities has been growing. As shown in the IRS Data Book for the past five years, the total average gain in the number of 501(c)(3) organizations has been about 47,000 charities per year. This average increase incorporates newly formed organizations and reflects subtractions of those that have either lost their exempt status or ceased operations: 

Number of 501(c)(3) tax-exempt charities

2013      1,052,495
2014      1,117,941
2015      1,184,547
2016      1,237,094
2017      1,286,181 

While some may view this growth as creating a challenging choice for donors, others see the size of this sector as an asset that generates new ideas and approaches to problems and issues facing society. In turn, we believe the 20 BBB Standards for Charity Accountability provides helpful guidance for both new as well as existing charities and helps donors identify trustworthy organizations. 

---

Video of the Week 

As part of our Building Trust Video Series, we are pleased to provide a video featuring Brian Brewer, Director of Marketing and Communications, of the Cancer Research Institute (a BBB Accredited Charity) which funds research at academic centers around the world through fellowships, grants, and clinical trials focused on increasing the understanding of the immune system and with the goal of developing immunological methods for the prevention and treatment of cancer. CRI also provides information to the public about cancer immunotherapy, and connects patients to immunotherapy clinical trials. 

---

Recent Reports 

We are always working with charities to publish or update reports for donors. Visit  Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

• Hadassah
• National Multiple Sclerosis Society
• WaterAid America 

Finally, remember to let us know by going to  https://www.give.org/ask-us-about-a-charity1/ if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one.   

H. Art Taylor, President & CEO
BBB Wise Giving Alliance

Two years ago, when the BBB Wise Giving Alliance was one of the co-signers on The Overhead Myth letter, more than one charity executive approached me with the mistaken impression that we were no longer using expense ratios in our charity evaluations. That wasn’t the case at all.  As explained in the letter, we urged the donating public not to solely consider financial ratios in making their giving decisions and to look at a more complete picture of a charity’s accountability. We still strongly believe that today as reflected in the diversity of issues covered by the 20 BBB Charity Standards. Overall, we are seeking to ensure that the charity is spending its funds in accordance with donor expectations as expressed in its fund raising appeals.

As identified in BBB Charity Standards 8 and 9, we have specific expense thresholds that we verify as part of the financial analysis of our accreditation assessments. Specifically, our standards call for:

• Total program service expenses to be at least 65% of total expenses, and
• Total fund raising expenses not to exceed more than 35% of total related contributions (i.e., donations received as a result of fund raising efforts).

While I will probably devote more than one blog to this subject, there are a few major points about these two standards that I would like to explain. First, in applying both of these standards we look at a full year’s worth of expenses, not just an individual fund raising campaign. Another significant issue is that both of these standards serve as threshold verifications. In other words, as long as the subject charity satisfies these minimums, our report does not make any judgment about the charity’s expense ratios. The third point is that we generally use the charity’s audited financial statements, as opposed to the IRS Form 990, when completing the financial part of our standards.  In our view, the audited financial statements provide a more reliable and accurate presentation of the charity’s finances, in part, because they are required to follow Generally Accepted Accounting Principles (GAAP) which helps ensure that the statements are consistent, complete and more comparable.

Please also recognize that the two cited ratios above have different denominators.  The program ratio is based on total expense while the fund raising ratio is based on total contributions.

Also, BBB WGA will consider extenuating circumstances that the charity brings to our attention in applying these standards (for example, the higher fund raising expense of a newly created organization). Each charity is reviewed on a fact circumstance basis. 

---

On a separate note, as part of our Building Trust Video Series we are pleased to provide a video that features Robert Lee Bull Jr,  Chief Development Officer of the National Trust for Historic Preservation  (a BBB Accredited Charity). Robert provides a brief overview of the National Trust’s program activities and explains what they do to help strengthen donor trust.

 

 

---

We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

• Mali Rising Foundation
• National Park Trust
• Statue of Liberty-Ellis Island Foundation

Finally, remember to let us know by going to https://www.give.org/ask-us-about-a-charity1/ if you are interested in seeing a report on a charity not on the list and we will do our best to produce one. 

H. Art Taylor, President & CEO
BBB Wise Giving Alliance

A statement used in a charity appeal can be accurate but may still provide a misleading impression to donors. While each appeal  aims to make a strong case for support, there are certain phrases and references that cause BBB’s Give.org staff members to take notice and question the solicitation. One example is when an appeal contains a promise that the charity will spend 100% of donations on program services.

Charities that make this claim actually do have administrative and fundraising functions.  However, they will have  made an arrangement whereby funds received from other sources, such as board members, corporations or  sponsors, are being directed to pay for the charity’s administrative and fundraising expenses. It’s also possible that some of the administrative and fundraising duties are carried out by volunteers.  Unfortunately, the applicable explanation may be absent when the 100% claim is used. As a result, contributors may get the mistaken impression that the charity does not have any “overhead.” 

In other words, this 100% claim in appeals is used to influence a donation by making it appear that the charity has low or no overhead. It also undermines the importance of the need for reasonable overhead spending, perpetuating the “Overhead Myth.”  BBB Charity Standard 15 calls for solicitations and informational materials, distributed by any means, to be accurate, truthful and not misleading, both in whole and in part.  If BBB WGA sees a 100% claim like the one mentioned above, the charity will not meet this standard unless it also includes a prominent explanation near the percentage reference that states how its overhead expenses are covered. 

---

As part of our Building Trust Video series, we are pleased to provide a video that features Michael Roberts, President and CEO, First Nations Development Institute (a BBB Accredited Charity) which works to improve economic conditions for Native Americans through technical assistance and training, advocacy and policy, and direct financial grants.  

 

---

We are always working with charities to publish or update reports for donors. Visit  Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

• National Eating Disorders Association
• Operation Homefront
• SADD 

Finally, remember to let us know by going to  https://www.give.org/ask-us-about-a-charity1/ if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one.   

H. Art Taylor, President & CEO
BBB Wise Giving Alliance

Last week’s blog included some comments and advice on donating to different stages of Nepal earthquake relief efforts that will require future support just as much as today. In the past decade, fundraising for disaster relief became one of the first charity activities that demonstrated continuing success with both online and mobile contributions, and now social media as well. Disasters generate immediate public concern that motivate individuals to respond with the urgency such tragedies deserve. 

Facebook added a Donate Button in conjunction with users’ News Feed which resulted in over $10 million for Nepal relief efforts going to the International Medical Corps. Here, social media was helping to raise funds for a BBB Accredited Charity with significant experience in emergency response to disasters.  Perhaps inspired by this successful effort, BBBs also learned others created questionable requests via Facebook that had nothing to do with established charities.   

Crowdfunding also became a player in addressing the desire to send help to Nepal for smaller relief efforts.  GlobalGiving.org, another BBB Accredited Charity, raised $2.3 million towards its goal of $2.5 million for various Nepal relief projects that go through significant vetting by GlobalGiving before posting. But not every crowdfunding experience conducts that type of due diligence. 

Some of the other crowdfunding sites, such as those run by for-profit firms, enable individuals to post a project for Nepal relief with nothing more than a Paypal and Facebook account for identity verification.  A visit to some of these report individuals raising $30,000, $100,000 or more for reported projects such as rebuilding homes, assisting earthquake victims, and other efforts.  While most of these are probably well meaning and honest about their appeals, how does one sort out which of these activities are real or will be accomplished?  Unfortunately, these types of crowdfunding efforts involve an element of donor risk as well as raise problems with tax deductibility if the recipient is not an established charity that has 501(c)(3) tax exempt status. 

Social media does present opportunities to help raise funds from a larger audience of potential donors in the wake of a disaster, but  con artists and questionable efforts can arise during this surge of popularity. Individual stories of need can be touching and heart wrenching, but that should not be the sole basis on which to make an informed giving decision. Our best recommendation is to seek out trustworthy charities by verifying if charity is BBB Accredited (meets all 20 BBB Charity Standards). 

We are always working with charities to publish or update reports for donors.  Visit Give.org or local BBBs to check out any charity before giving.  Our recently evaluated charities include:   

• Pulmonary Fibrosis Foundation
• Soccer Without Borders
• National Association for the Exchange of Industrial Resources
• Trickle Up Program 

Finally, remember to let us know by going to https://www.give.org/ask-us-about-a-charity1/ if you are interested in seeing a report on a charity not on the list and we will do our best to produce one.  

H. Art Taylor, President & CEO
BBB Wise Giving Alliance

Giving USA, the annual summary of U.S. giving statistics produced by the Indiana University Lily Family School of Philanthropy, just released figures for 2016 giving this week.  As reported in the Chronicle of Philanthropy and other media articles such as the AP story in the Washington Post , 2016 contributions totaled $390.1 billion which increased 2.7 percent in current dollars (1.4 percent adjusted for inflation) over the previous year. The largest reported increase was for environmental and animal-welfare organizations which increased 5.8 percent after adjusting for inflation.  However, religious organizations continued to capture the biggest part of the giving pie with a slice totaling $122.9 billion representing 32% of total giving, followed by education (15%), human services (12%), health (8%), and all other causes (33%). 

In addition to confirming American generosity, this report reminds us each year that giving from living individuals (i.e., not including bequests) comprises 70% of donations totaling $281.9 billion dollars.  Individual giving is the largest share of giving, and in my discussions with people about contributions, I sometimes hear the mistaken impression that foundations or corporations contribute a larger amount of the total than they actually do. 

We believe that each donor makes a difference, no matter how much they decide to give, since cumulatively they are the most significant part of philanthropy in terms of giving totals. This is also all the more reason to make each contribution count by verifying the trustworthiness of charities by visiting Give.org to find out if the subject charity meets the 20 BBB Standards for Charity Accountability. 

---

As part of our Building Trust Video series, we are pleased to provide a video of Delaney Gracy, M.D., Senior Vice President and Chief Medical Officer, Children’s Health Fund (a BBB Accredited Charity) which seeks to deliver health care to disadvantaged children. Among other things, it has a national network that operates in 17 states and the District of Columbia that help reach over 75,000 individuals each year. 

---

We are always working with charities to publish or update reports for donors. Visit  Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

• Love146
• NAEIR/National Association for the Exchange of Industrial Resources
• Oxfam America 

Finally, remember to let us know by going to  https://www.give.org/ask-us-about-a-charity1/ if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one.   

H. Art Taylor, President & CEO
BBB Wise Giving Alliance

It is still difficult for many of us to emotionally recover from what happened at the Pulse Nightclub in Orlando this past Sunday. So many killed, so many injured and so many families and loved ones left devastated.  While the law enforcement investigations are ongoing and the story continues to unfold, it is heartening to see the outpouring of support and generosity that has emerged in response.  The one fundraising effort that is getting the lions share of attention is the Equality Florida Victims Fund on GoFundMe.com, a crowdfunding website, which as of this morning has raised $4.2 million towards its $5 million goal. 

This fundraising success provides us with several lessons. One is that crowdfunding websites provide both charities and individuals with the ability to quickly create a  vehicle to raise money within hours after a tragedy or a disaster.  Individuals seeking to make donations in support of victims and their families may not know which charities are engaged in relief, but they know the crowdfunding website.  However, there are cautions that donors should keep in mind as well.  A crowdfunding request by an established charity provides an opportunity for donors to vet the organization before making a gift, but crowdfunding requests made by individuals or families are a challenge to substantiate. Not all crowdfunding websites do a good job of screening requests that get posted.  There have been media reports of suspicious postings for the Orlando tragedy that were eventually taken down. 

Equality Florida [which consists of Equality Florida Institute, a 501(c)(3) charitable organization and a related 501(c)(4) civil rights advocacy group, Equality Florida Action] is dedicated to equality for the lesbian, gay, bisexual and transgender community throughout the state of Florida.  It produced the posting on the GoFundMe.com website but also decided to collaborate with another organization, the National Center for Victims of Crime, which has experience in establishing special funding for crime victims. This type of special collaboration is a great example of how organizations can work together to combine their outreach and expertise to help address an important need.  

The BBB Wise Giving Alliance will seek to produce current reports on both the Equality Florida Institute and the National Center for Victims of Crime.  In the meantime, donors can access our ten tips on giving in response to the Orlando tragedy.  

---

On a separate note, as part of our Building Trust Video Series we are pleased to provide a video featuring Collin O’Mara, President & CEO of the National Wildlife Federation (a BBB Accredited Charity).  As you will see in Collin’s video interview, the National Wildlife Federation is engaged in public outreach in seeking to get children and families more connected with nature, wildlife and the outdoors.   

---

We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include: 

• Campaign for Tobacco-Free Kids
• International Campaign for Tibet
• Orphan Grain Train  

Finally, remember to let us know by going to https://www.give.org/ask-us-about-a-charity1/ if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one.  

H. Art Taylor, President & CEO

There is an old Scottish proverb that says “What may be done at any time will be done at no time.”  Life is busy. Things to do.  And many of us make our charity contributions during the last quarter as we enter the giving season. It’s when appeals and generosity reminders appear everywhere we turn.  However, there are clear advantages in spreading out our gifts throughout the year and not waiting until the last minute. 

As noted in the piece I wrote for Forbes, “Consider These Factors Before Making Your Next Contribution Decision,” it’s important to take time to select causes and charities that we care about: “While it’s certainly possible to know this at the end of the year, it doesn’t hurt to give yourself more time to decide on what matters to you most.”  

And spreading our gifts also provides more opportunities to research charities to make sure we agree with their focus and verify their trustworthiness. Sadly, studies conducted by Money for Good show that only 38% of donors report researching at least one charity before donating. 

Who knows, by providing more time to check out charities, it’s possible one might find new organizations to support and ignite additional interests in  philanthropy. 

---

Video of the Week 

As part of our Building Trust Video Series, we are pleased to provide a video featuring Harold Wimmer, President and CEO, American Lung Association (a BBB Accredited Charity) which supports lung health through research, advocacy and health education. The organization reports that it funds research into the causes, prevention, and cures of lung diseases, including lung cancer, asthma, COPD and influenza. ALA also advocates at the national and local level to protect lung health, including fighting for healthy air, smokefree environments, tobacco regulation, smoking prevention, smoking cessation programs, lung health programs and medical research. 

---

Recent Reports 

We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

• Children’s Tumor Foundation
• Cure SMA
• Operation Underground Railroad 

Finally, remember to let us know by going to https://www.give.org/ask-us-about-a-charity1/ if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one. 

H. Art Taylor, President & CEO
BBB Wise Giving Alliance

Last year, BBB Wise Giving Alliance (BBB WGA) joined forces with Community Health Charities, a nonprofit representing more than 2,000 health and wellness charities, to promote transparency and high standards of conduct among health charities, especially at the workplace.

Through this partnership, Community Health Charities is asking all member charities to provide information for an independent BBB evaluation and report. The reports will then be available free of charge on Give.org. For Community Health Charities, the partnership is a clear commitment to the 20 BBB Standards for Charity Accountability and a way to signal that employers and donors can have the added confidence of a BBB independent evaluation. For BBB Wise Giving Alliance, this partnership represents an opportunity to raise awareness about the importance of trustworthiness in donor charitable choices and a new way to proactively engage with national and local charities that have not already been subjects of our review process.

We commend Community Health Charity’s decision to ensure that companies and employees have access to vetted health resources, volunteering, and giving opportunities. We have already heard from many charities that have initiated the evaluation process and are actively engaged with us in working towards meeting the Standards for Charity Accountability.  Some of the charities that completed the process and attained all of our Standards include: the ALS Association Golden West Chapter,  Ability Connection of Oklahoma, Cystic Fibrosis Research, Minnesota Brain Injury Alliance, and Oregon Lions Sight & Hearing Foundation.

---

Video of the Week

As part of our Building Trust Video Series, we are pleased to provide a video featuring Tom Bognanno, President and CEO of Community Health Charities, discussing the collaboration project.

---

Recent Reports

We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

• Camp Fire
• National Jewish Health
• The Hunger Project

Finally, remember to let us know by going to https://www.give.org/ask-us-about-a-charity1/ if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one.

H. Art Taylor, President & CEO
BBB Wise Giving Alliance