BBB WGA Joins Federal and State Regulators for Major Charity Fraud Announcement
Arlington, VA – BBB Wise Giving Alliance (BBB WGA) joined with the Federal Trade Commission, State Attorneys General, and State Charity Regulators today to help the donating public avoid questionable fund raising circumstances and find trustworthy charities to support. The FTC announced a major action against Cancer Fund of America, Children’s Cancer Fund of America, and Breast Cancer Society.
“It is heart-breaking news to learn that many Americans were deceived into contributing by charity bad actors,” said H. Art Taylor, president and CEO of the BBB Wise Giving Alliance (Give.org). “People want to help when they hear about a good cause, but donors need to be aware of potential deceptions, so their hard-earned money can go to charities they can trust.”
“We believe that charity financial ratios should not be the sole basis for a giving decision,” notes Taylor, “but today’s government action does show that a charity’s fund raising ratio can be a good initial marker to root out fraud and poor financial management.”
BBB Wise Giving Alliance offers the following tips for donors:
TIPS TO AVOID QUESTIONABLE CHARITY REQUESTS
Be cautious when responding to phone appeals. Like all forms of fund raising, telephone appeals can be put to good use by a charity, or can be part of a deceptive campaign that can result in little money going to the claimed charitable effort. Never be pressured to make an immediate, on-the-spot contribution decision.
Seek out additional facts. If interested in the charity, ask the caller for the charity’s website address and/or search online on your own to obtain program, financial and other information to make a more informed giving decision.
Watch out for excessive fund raising expenses. While most charities have reasonable fund raising expenses (less than 35% of total contributions received in the past year,) if a telephone appeal campaign is not managed well, it can result in excessive fund raising expenses where the charity might receive less than 20% or 10% of collected funds.
Rely on expert opinion when it comes to evaluating a charity. The public can go to Give.org to research charitable organizations to verify their trustworthiness. Charities that meet the 20 “BBB Standards for Charity Accountability” are called BBB Accredited Charities. Additional local charity reviews are available at bbb.org.
BBB WGA also suggests there are things that charities can do to be as responsible as possible to their donors:
RED FLAGS CHARITIES SHOULD CONSIDER
Is the charity spending funds on the activities emphasized in appeals? If phone and/or written appeals emphasize a specific charity program, the charity’s financial statements and other materials should demonstrate that this is the organization’s largest program activity. If not, donors may feel deceived. To avoid this perception, charity appeals and materials should make it clear which programs receive the largest share of the charity’s expenses.
Do the charity financial statements show large amounts of in-kind donations? While many charities are involved with in-kind drives for food, clothing and other items, it is especially important for charities to clearly explain the nature and use of large volumes of in-kind gifts that appear in charity financial statements. Charities should not over-value their in-kind gifts and/or include them in audited financial statements under circumstances that do not follow accounting rules (Generally Accepted Accounting Principles.) In-kind donations should not be used as means to make charity program service expenses higher than they would be without them.
Is the charity’s board of directors providing adequate oversight? Good charity accountability starts with good governance. If a charity’s board of directors is not engaged in proper oversight of the charity executive staff in terms of reviewing performance, approving budgets, being aware of fund raising arrangements, and establishing appropriate accounting procedures, this can lead to larger potential problems for the organization.
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.
ABOUT BBB: For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2014, people turned to BBB more than 165 million times for BBB Business Reviews on more than 5.4 million businesses and Charity Reports on 11,000 charities, all available for free at bbb.org. The Council of Better Business Bureaus is the umbrella organization for 112 local, independent BBBs across North America, as well as home to its national programs on dispute resolution, advertising review, and industry self-regulation.