BBB Wise Giving Alliance Urges Donors to Research before Giving
Arlington, VA – Each year, American charities receive one-third of their annual donations during the
holiday giving season. With Dec. 1 marking this year’s #GivingTuesday,
BBB Wise Giving Alliance (BBB WGA) urges donors to research charities before giving to ensure their generous
contributions are going to trustworthy organizations.
“The evaluations we provide give donors insight into charity trustworthiness, helping them make wiser giving decisions,”
remarks Art Taylor, president and CEO of BBB WGA. ”Holiday donations can make a real impact. Therefore, it’s critical
that donors’ hard-earned dollars go to charities that operate ethically.”
BBB WGA is sharing five tips to help donors give wisely and make the most of their generosity this holiday season.
Watch out for name similarities. When charities seek support for the same cause, their names are often
similar. Before you give, be sure you have the exact name of the charity to avoid a case of mistaken identity.
Avoid on-the-spot donation decisions from unfamiliar organizations. The holidays bring a higher frequency
of donation requests outside public locations. Don’t succumb to pressure to make an immediate giving decision.
Responsible organizations will welcome your gift tomorrow as much as they do today.
Be wary of emotional appeals. Marketers have been known to exploit the holidays to make emotional pleas
to donors. Always research to verify that your selected charity operates ethically.
Avoid charities that don’t disclose. Although participation is voluntary, charities that don’t disclose
any of the requested information to BBB WGA raise a critical red flag for donors. Visit Give.org to find out
if your selected charity is nondisclosure.
Rely on standards-based evaluations. Charities can demonstrate they are trustworthy by agreeing to in-depth
evaluations such as the 20 BBB Standards for Charity Accountability. Get free access to charity reports at
Give.org.
“#GivingTuesday celebrates the generosity of people around the world during the holiday season,” says Henry Timms, co-founder
of #GivingTuesday and executive director of 92nd Street Y, where the movement was born. “To make sure this
generosity has the greatest impact, we hope donors take time to evaluate charities before donating.”
ABOUT BBB WISE GIVING ALLIANCE
BBB Wise Giving Alliance (BBB WGA) is a standards-based charity evaluator that seeks to verify the trustworthiness
of nationally-soliciting charities by completing rigorous evaluations based on 20 holistic standards that address
charity governance, effectiveness reporting, finances, fundraising, appeal accuracy, and other issues. National charity
reports are produced by the BBB WGA and local charity reports are produced by local Better Business Bureaus – all
reports are available at
Give.org.
Arlington, VA – September 8, 2015 – As the Syrian refugee crisis continues to grow, BBB Wise Giving Alliance (BBB WGA) warns donors to be cautious when making donations to assist refugees in need.
“Tragedies generate public sympathy but unfortunately also attract scam fund raising efforts,” notes H. Art Taylor, president and CEO of BBB WGA. “We are reminding contributors to be on the lookout for questionable solicitors and recommend that they focus giving efforts on charities that already have a presence in the impacted areas.”
When donating to assist in the Syrian refugee crisis, keep the following tips in mind to avoid scams.
Be cautious when giving online. Be cautious about online giving, especially in response to spam messages and emails that claim to link to a relief organization. Instead, go directly to the charity’s web site.
Rely on expert opinion when it comes to evaluating a charity.
Be cautious when relying on third-party recommendations from bloggers or other web sites. The public can go to Give.org to verify if a charity meets the 20 BBB Standards for Charity Accountability.
Be wary of claims that 100 percent of donations will assist relief victims. Despite what an organization might claim, charities have fund raising and administrative costs.
Find out if the charity has an on-the-ground presence in the impacted areas.
Unless the charity already has staff in the affected areas, it may be difficult to bring in new aid workers to provide assistance quickly.
Determine if the charity is providing direct aid or raising money for other groups.
Some charities may be raising money to pass along to relief organizations. If so, you may want to consider “avoiding the middleman” and giving directly to those that have a presence in the region.
The following organizations are collecting funds for Syrian refugee relief and meet all of the BBB Charity Standards:
ABOUT BBB WISE GIVING ALLIANCE: BBB Wise Giving Alliance (BBB WGA) is a standards-based charity evaluator that seeks to verify the trustworthiness of nationally-soliciting charities by completing rigorous evaluations based on 20 holistic standards that address charity governance, results reporting, finances, fundraising, appeal accuracy and other issues. National charity reports are produced by the BBB WGA and local charity reports are produced by local Better Business Bureaus – all reports are available at Give.org.
Questions about executive compensation at charitable organizations have been an issue of donor interest almost as long as charities have been soliciting. Unfortunately, there are some donors who believe that all charities should be run by volunteers. And of those who support paying a staff to run things, they argue the amount should be relatively low. Of course this is neither fair, practical, or realistic. Employees of charities accept they usually will not be paid as much as those in other sectors but they also need not take a vow of poverty. Charities need to have paid staff to carry out their operations and to deliver the services and activities for which they are created. This week’s blog seeks to debunk some of the commonly held misconceptions about charity compensation.
Are salaries just “overhead” expenses?
There is a serious public misperception that the amount that charities pay in salaries is part of the organization’s “administrative expenses” also known by the lay term “overhead.” The reality is that charity financial statements appropriately allocate salary expenses among three major expense categories: program services, fundraising and management and general expenses. These allocations are usually based on the actual or estimated portion of staff time spent in carrying out various activities. For example, conducting research on environmental issues (program services), calling on major donors (fundraising), and meeting expenses for the board of directors (management and general.) Sometimes a single individual will carry out multiple functions and have a portion of his/her compensation recognized in each of these expense categories. In other cases, a staff member will have all his/her salary allocated to just one expense category, such as an accounting staff member’s salary recognized as management and general expense.
Is executive compensation of charity staff members considered public information?
Compensation information of the charity’s officers and key employees is routinely included as part of the IRS Form 990, the annual financial form completed by charities (other than houses of worship.) This transparency of compensation information has been a fact of life for charities for decades. While this openness is sometimes a challenging concept for former business executives who join the paid staff of a charity, most executives recognize this transparency as a routine aspect of philanthropy that is different than the private sector.
In response to donor interest in this area, BBB Wise Giving Alliance routinely includes the total compensation of the charity’s CEO in its evaluative reports on soliciting charities. Over the years, however, we have become aware of viral email messages and social media postings that have included false information about charity compensation at well-known charitable organizations. Be wary of sensationalistic accusations, check with trusted sources when seeking to find out about charity issues of interest.
Who is responsible for setting charity executive compensation?
Determining the compensation of the charity’s chief executive officer is one of the basic responsibilities of an organization’s board of directors. The governing board usually considers a variety of factors, including but not limited to: information gathered from nonprofit salary surveys, the geographic location of the charity’s offices, and the size of the organization finances and staff. One would not expect the CE0 of a $100 million charity to be paid the same wage as the CEO of a charity that brings in $1 million.
In any event, solely considering compensation will not provide a complete picture of a charity’s trustworthiness. Refer to the BBB Standards for Charity Accountability to better understand key factors that help verify trust.
Video of the Week
As part of our Building Trust Video Series, we are pleased to provide a video featuring Pamela Timmons, Executive Director of Good Shepherd Ministries of Oklahoma (a BBB Accredited Charity) which seeks to provide free health care for those who are low-income and uninsured in Oklahoma City, including medical services, dental services and prescription medications.
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:
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
Arlington, VA – April 27, 2015 – The devastating earthquake in Nepal over the weekend has already touched the hearts of millions of Americans who want to support disaster relief through donations. BBB Wise Giving Alliance advises donors to avoid being taken advantage of by questionable solicitations or wasting their money on poorly managed relief efforts.
“The news out of Nepal is horrific and the photos are heart-breaking,” said H. Art Taylor, president and CEO of the BBB Wise Giving Alliance. “People want to help as soon as possible, and that is wonderful, but donors need to follow some key rules about supporting disaster relief so that their gifts get to those who need them most.”
Across the world, relief and development organizations and governments have begun responding to the earthquake in Nepal. American charities have also begun accepting donations to assist in the region. Before you choose a charity to give to, take a look at our tips for giving to this type of cause (below) and remember to check out the charity on Give.org. The list below includes nationally soliciting charities that have been accredited by BBB WGA (i.e., meet all 20 BBB Charity Standards) and indicate that they are collecting contributions to assist Nepal relief efforts:
BBB Wise Giving Alliance offers donors these tips for disaster relief giving:
Be cautious when giving online.Be cautious about spam messages and emails that claim to link to a relief organization. If you want to give to a charity involved in relief efforts, go directly to the charity’s website. In response to Katrina and Haiti earthquake , the FBI and others raised concerns about websites and new organizations that were created overnight, allegedly to help victims.
Rely on expert opinion when it comes to evaluating a charity. Be cautious when relying on third-party recommendations such as bloggers or other websites, as they may not have fully researched the relief organizations they list. The public can go to www.give.org to research relief organizations and other charities to verify that they are accredited by the BBB which means they meet the 20 Standards for Charity Accountability.
Be wary of claims that 100 percent of donations will assist relief victims. Despite what an organization might claim, charities have fund raising and administrative costs. Even a credit card donation will involve, at a minimum, a processing fee. If a charity claims 100 percent of collected funds will be assisting earthquake victims, the truth is that the organization is still probably incurring fund raising and administrative expenses. It may use some of its other funds to pay these costs, but the expenses will still be incurred.
Find out if the charity has an on-the-ground presence in the impacted areas. Unless the charity already has staff in the affected areas, it may be difficult to bring in new aid workers to provide assistance quickly. See if the charity’s website clearly describes what the charity can do to address immediate needs.
Find out if the charity is providing direct aid or raising money for other groups. Some charities may be raising money to pass along to relief organizations. If so, you may want to consider “avoiding the middleman” and giving directly to those that have a presence in the region. Or, at a minimum, check out the ultimate recipients of these donations to see whether they are equipped to provide aid effectively.
Gifts of clothing, food or other in-kind donations. In-kind drives for food and clothing, while well intentioned, may not necessarily be the quickest way to help those in need – unless the organization has the staff and infrastructure to distribute such aid properly. Ask the charity about its transportation and distribution plans. Be wary of those who are not experienced in disaster relief assistance.
ABOUT BBB WISE GIVING ALLIANCE: BBB Wise Giving Alliance (BBB WGA) is a standards-based charity evaluator that seeks to verify the trustworthiness of nationally-soliciting charities by completing rigorous evaluations based on 20 holistic standards that address charity governance, effectiveness reporting, finances, fund raising, appeal accuracy, and other issues. Learn more about the 20 BBB Charity Standards and about local charity review at local Better Business Bureaus at Give.org
Donors interested in giving via text message can give to the following organizations, who participate with the Mobile Giving Foundation:
US Fund for UNICEF – text NEPAL to 864233 to make a $10 donation
Save the Children – text NEPAL to 20222 to make a $10 donation
World Vision – text NEPAL to 777444 to make a $10 donation
Last November, I wrote an article that appeared in the Huffington Post in which I shared a very personal story from my childhood to help make a point about encouraging collaboration among charitable organizations. I received a lot of feedback from that posting, in part, because of the emotional impact of the recollection. It got readers’ attention and probably encouraged many to review the rest of the piece.
I mention the above since most successful charity appeals today use stories to help attract attention and motivate the recipients to contribute. A story about how someone was personally affected by the problem the charity is seeking to address and how he/she was helped by the organization enables donors to relate to the issue and understand things that statistics alone may not be able to explain.
With this in mind, here are some points for both donors and charities to consider when stories are used in charity appeals:
Did the story actually occur? It almost goes without saying but the best stories are the ones that actually happened. If a charity appeal includes a “representative” story that is really a compilation of various different incidents, then the organization should clearly identify this is the case. To do otherwise is misleading and can lead to recipients feeling manipulated or betrayed if the truth about the compilation is revealed at a later time.
Outdated stories should be identified. Unless told otherwise, appeal recipients will assume the story being shared is current. If the referenced story is more than three-years old and the appeal does not identify when the described events occurred, BBB WGA will ask the organization for a copy of the appeal to determine if this circumstance results in a misleading solicitation.
Proper use of photographs. See the previous Wise Giving Wednesday blog about the accurate use of photographs in appeals.
Statistics should be accurate and not exaggerated. To help supplement the story appearing appeals, a charity will often include statistics such as the frequency of the problem identified, how many individuals the charity assisted, or selected facts about the charity’s finances. Organizations should take care to verify the accuracy of these figures and be able to substantiate them if asked.
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. Problems such as those described above can lead to a charity not meeting this standard.
As part of our Building Trust Video series, we are pleased to provide a video that features Sandra Raymond, President & CEO of the Lupus Foundation of America (a BBB Accredited Charity) which seeks to improve the quality of life for all people affected by lupus through programs of research, education, support and advocacy.
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:
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
The world appears to be experiencing acts of terror, tragedies and natural disasters with increasing frequency. Last week, we learned of the horrific mass killing of 50 people and 50 others injured during the March 15th shooting that took place at the Al Noor Mosque and Linwood Islamic Centre in Christchurch, New Zealand. It is difficult to express in words the cruelty of this brutal violence against people gathered in prayer.
In Africa, the President of Mozambique announced yesterday that Cyclone Idai had killed more than 1,000 people and the neighboring countries of Malawi and Zimbabwe were also impacted. As reported, people are clinging to rooftops to be rescued. Some are calling this a “massive disaster.” International relief organizations such as Save the Children are responding to help.
In the United States, there is record flooding in Iowa and Nebraska as well as parts of South Dakota, Ohio, Wisconsin, Missouri and Illinois. Melting snow and record rainfalls have resulted in overflowing rivers and levees. Hundreds have fled homes for safety. While the water has receded in some places, there is much anticipated damage and destruction. Major disaster relief organizations such as the American Red Cross and Salvation Army are engaged in assisting impacted populations.
All of these events have motivated generous donors to make contributions to those in need. While some recognize and support the vital role filled by established and experienced relief organizations, others are turning to a variety of crowdfunding websites to support postings requesting help. For example, one New Zealand based crowdfunding site has a posting that has raised almost $7 million for the shooting victims and their families. Another crowdfunding site that is focused on Muslims helping others has raised another $2.3 million of aid for the shooting victims in Christchurch.
BBB Wise Giving Alliance continues to recommend contributing to experienced relief organizations that meet the 20 BBB Standards for Charity Accountability, particularly in the wake of natural disasters. Visit Give.org to access reports on these and other charities. Experienced relief organizations are more likely to provide quick and effective assistance. However, if crowdfunding is being considered, we offer the following additional advice:
Give to people and organizations you know. While charities can be vetted, it is much more difficult to assess the trustworthiness of individuals who have posted a request for assistance. As a result, it is safest to give to crowdfunding postings of people you personally know. If that is not possible, the next best circumstance is to find out if the funds collected by a posting are going to be forwarded and distributed by an established charitable organization. In that case, the organization can be checked out and the involvement of a third-party organization can provide an additional level of oversight and assurance.
Not all crowdfunding sites operate alike. Some crowdfunding platforms do a better job of vetting postings and projects that appear on their site than others. Review the site’s description of its procedures. If they do take precautions, they generally announce that fact loudly to help encourage giving. For example, if a posting is claiming to be raising funds to help a victim and/or their family after a tragedy or disaster one site holds the funds collected and distributes them directly to the identified family. For other sites, the giver is relying on the individual to follow through on their promised assistance.
Don’t assume pictures are used with permission. Unfortunately, some crowdfunding postings may be using pictures of victims without the permission of their families. As a result, you can’t assume the poster has an official connection. Again, each site has different rules on what they allow. As a donor, it is up to you to approach with caution, especially after a disaster or tragedy.
Your contribution may not be deductible as a charitable gift. If a crowdfunding posting is claiming to be helping a specific named individual or family, donors in the U.S. generally cannot take a federal income tax deduction, even if the individual or family is in need. See IRS Publication 526, page 6, for more information on this subject. On the other hand, if you are giving to a charitable organization that is helping a group of needy individuals and you are not restricting your gift to a specific person, then you can generally take a deduction. Additional factors should also be considered such as whether the crowdfunding site is being run by a charity or a for-profit firm. See a previous Wise Giving Guide article for more information about how this might impact deductibility. Also, if the crowdfunding post is made by a charity that is not in the U.S., it would generally not be deductible even though a charity is receiving the gift.
See if the posting describes how funds will be used. Vague descriptions of how the collected funds will be used should also be a yellow caution light. For example, will the funds be used to assist funeral expenses, medical expenses, reconstruction, or other activities? Thoughtful requests for funding will take the added step of identifying and verifying needs before money is raised.
Check out recent announcements to avoid duplication of effort. For example, regarding the Christchurch shootings, the Washington Post reported that the New Zealand Prime Minister “pledged to cover the funeral costs of all 50 victims and offer financial assistance to families.” If a quickly formed crowding posting raised money for funeral expenses, they would probably need to ask donors if funds could be used for an alternative purpose.
Video of the Week
As part of our Building Trust Video Series, we are pleased to provide a video featuring Pamela Timmons, Executive Director of Good Shepherd Ministries of Oklahoma (a BBB Accredited Charity) which seeks to provide free health care for those who are low-income and uninsured in Oklahoma City, including medical services, dental services and prescription medications.
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:
Finally, remember to let us know by going to www.give.org/charity-inquiry 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
As emergency rescue and relief efforts continue for those impacted by Hurricane Maria in Puerto Rico or the Earthquake in Mexico, BBB Wise Giving Alliance encourages donors to consider reviewing the following link to disaster relief donation tips in responding to appeals for support. The charities listed below are either soliciting and/or reporting activities that are providing some type of assistance to help the communities hurt by Hurricane Maria or the Mexican Earthquake. All
of these charities were found to meet the 20 BBB Standards for Charity Accountability. This list will be updated as additional efforts come to our attention.
As shown in the Give.org Donor Trust Report released in 2019, some donors will put their trust in a celebrity to help those in need when disaster strikes. Of the 2,100 adults surveyed, 17.75% of respondents said that they contributed to a celebrity’s disaster relief fundraising effort during 2018. This was more popular among younger generations, with 31.75% of Millennials saying they contributed to such celebrity activities compared to 5.53% of Baby Boomers. The most popular reason cited for having donated to a celebrity’s disaster relief fundraiser was being a fan of the celebrity, followed by trust in the celebrity’s ability to choose.
Whether they are athletes or astronauts, movie stars or media moguls, celebrities are often in the spotlight and have significant opportunities to bring attention to their favorite causes or charities. This has certainly helped countless charities over the years who have benefitted from these promotions. One related phenomenon involves celebrities that create their own charitable organizations, especially after a natural disaster or tragic event that can generate high emotion and spur some to action. While this may generate significant additional donations, BBB Wise Giving Alliance offers the following tips when considering contributions to charities that are newly created by celebrities:
Is there a plan?
Whether the new celebrity created charity is funding disaster relief or other urgent needs, has it announced a plan about what specific activities it wishes to fund? For example, immediate shelter, food distribution, medical treatment, paying for funeral expenses, financial aid, or long term construction projects to rebuild broken neighborhoods? The possibilities are almost endless but an unfocused effort will likely have a scattered and less than desirable impact on the problem(s) it seeks to address.
What is the proposed budget?
While every charity wants to raise as much as possible for their cause, even a new celebrity created charity should have some type of financial target based on identified goals to achieve some objective. While donors may be excited and inspired when they hear media reports citing a new large sum being raised, the charity may need to quickly adapt its proposed budget to accommodate this growing generosity.
Who’s in charge?
While some celebrities have demonstrated impressive leadership qualities by creating charities that have grown into established and cherished institutions, that is more of the exception than the rule. For most, managing a not-for-profit organization is a learning experience that can succeed or go awry if the celebrity does not seek out appropriate help to manage and administer the organization in a professional manner. For examples, while relatives or friends may be trusted by the celebrity, they may not have the qualifications to properly run an organization. In turn, seeking out experienced individuals to serve on the charity’s board could be an important first step in good oversight and provide needed guidance to do the right thing.
How quickly can they deliver?
When money is being raised for disaster relief purposes, some donors will expect the charity to spend funds almost as quickly as they are contributed. Depending on the nature of the organization’s activities, this expectation may not be realistic, but can influence donor perceptions about the organization. This is where program plans and proposed budgets can play an important role in avoiding decisions delays in carrying out the organization’s work.
Are they transparent on progress?
As audited financial statements and/or IRS Form 990’s for the fiscal year that includes disaster event expenses will usually take some time before they are available, charities would be wise to periodically update their program progress on their website. This transparency can be developed quickly and could result in generating additional confidence in the organization’s abilities.
Has it registered with appropriate government agencies?
New charities will also need to file for charitable tax-exempt status with the IRS. In addition, charities will need to register with the appropriate state government agencies (usually a division of the office of the state attorney general or the secretary of state.) If the charity is soliciting on a national basis, it may need to register with about 40 of the 50 states. In Canada, charities will need to register with Revenue Canada.
Video of the Week
As part of our Building Trust Video Series, we are pleased to provide a video interview of Lynn O’Connor Vos, President and CEO, Muscular Dystrophy Association (a BBB Accredited Charity) which seeks to cure muscular dystrophy, ALS, and related diseases by funding worldwide research and provide comprehensive health care and support services, advocacy, and education.
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:
Finally, remember to let us know by going to www.give.org/charity-inquiry 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
On March 26
th, New York State Attorney General Eric Schneiderman issued a
press release announcing that it had shut down a telemarketing firm (
Menacola Marketing) that was soliciting on behalf of the National Vietnam Veterans Foundation (NVVF.) New
York State indicates that the National Vietnam Veterans Foundation was previously shut down by the Attorney General
in 2016 due to deceptive solicitations.
As stated, “Under the settlement, Menacola will dissolve and its principals… are permanently barred from fundraising
for charity.” The principals will also pay $100,000 that will be distributed to reputable charities supporting veterans.
Prior to 2016, BBB Wise Giving Alliance had sent written requests to NVVF over a number of years and had not received
any of the requested materials or information.
BBB WGA encourages donors to check out charities at
Give.org before making a donation, especially in response to telemarketing requests for funding.
Video of the Week
As part of our Building Trust Video Series, we are pleased to provide a video featuring Ron Carter, President & CEO,
of
Children, Incorporated (a
BBB Accredited Charity) which is a child sponsorship organization that seeks to improve children’s lives through
greater access to education and basic needs assistance. In 2017, the organization reports that it works
across the United States and in 22 additional countries.
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:
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
As a former independent auditor, it’s hard for me to imagine a world in which there are no standards for charity financial
statements. In such a world, organizations could produce financial statements without regard to how other groups
report their financial transactions. The public would never know the basis of charity financial statistics
in financial summaries or media references. Comparisons between organizations would be a guessing game, at
best. Of course, such financial anarchy makes no sense and defeats the objectives of reliability, relevance,
comparability and understandability that help make up some of the core objectives of Generally Accepted Accounting
Principles (GAAP). Yet in the real world there are many instances where financial presentations do not
comport with GAAP. It’s not always clear to readers, however, when this occurs so here are three tips to help guide
your use of charity financial information.
1. Recognize the Reliability of Audited Financial Statements: As a standards-based charity evaluator,
BBB Wise Giving Alliance is especially sympathetic to the importance of standards and guidelines in providing a useful
reference point and helping to encourage good practices. This is one of the reasons that the financial section
of
BBB Charity Standards prefer to use a charity’s audited financial statements as opposed to the IRS Form 990.
Audited financial statements are prepared in accordance with GAAP which are the accounting standards established
in the United States by the
Financial Accounting Standards Board. In turn, the auditor’s opinion attached to audited financial statements
will identify any material aberration from GAAP so that users are aware of this difference when reviewing the financial
statement contents.
2. Identify the Source of Financial Information: The IRS Form 990, the annual financial form that
charities file with the IRS, is not intended to provide a financial presentation that is consistent with GAAP. As
a result, in some instances, there can be significant differences between the IRS Form 990 and a charity’s audited
financial statement. When you see a charity financial reference in media, on a website, or in a fundraising letter,
look closely to see if the source is clearly identified so that you know whether or not the summary is based on GAAP
financial information.
3. Watch Out for Non-GAAP Financial Statistics:Even if a charity’s audited financial statements are the source of financial summaries or ratios referenced
on websites or other sources, be mindful that sometimes these use numbers that have been re-calculated. They may
omit, reclassify or add figures that alter the summary from a GAAP presentation. Unfortunately, these financial stats
are not always clearly labeled to inform users of these changes. For example, referenced charity financial ratios
may omit in-kind gifts or reject certain GAAP practices (e.g. see Wise Giving Guide story on
joint-cost allocation). Please note that the financial section of reports produced by BBB WGA will specify
if BBB WGA has questioned the charity’s audited financial statements if BBB WGA believes that GAAP has not been followed.
On a separate note, as part of our Building Trust Video Series we are pleased to provide a video that features Mark Bergel,
Ph.D., Founder and Executive Director of
A Wider Circle (a
BBB Accredited Charity). A Wider Circle is an organization that works to end poverty for individuals and
families by collecting and distributing donated goods, providing professional attire, job preparedness courses, and
a well-baby program.
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:
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
