Fundraising expenditure is just one of many standards we use to assess a charity’s performance

For the editor:

George Mitchell’s recent article for The Conversation and published by his partner, the Chronicle of philanthropy“Charities that do not adopt common financial standards tend to outperform their peers” (August 8), contained statements that the organizations we lead, the BBB Wise Giving Alliance and the Education and research from the Better Business Bureau of Metropolitan New York wishes to address.

Mitchell wrote that “to achieve their highest recommendations, Charity Navigator, CharityWatch, and impose various fundraising spending limits. The underlying assumption is clear: the less you spend on fundraising, the better. Charities that flout these standards risk damaging their reputations and losing supporters. We disagree with this statement for several reasons.

BBB’s produces assessments that determine whether or not a charity meets the practices represented in its 20 Charity Accountability Standards. These standards do not state or imply that it is better to spend less on fundraising.

In fact, we’ve worked to dispel these assumptions through the Overhead Myth campaign, which we launched with the charities GuideStar (now Candid) and Charity Navigator. The campaign said that, taken in isolation, overhead costs such as “administrative and fundraising costs” are “a poor measure of a charity’s performance”. Nonprofit managers know that many factors contribute to the success of a charity. We continue to teach this principle through educational activities.

Charities that spend more than 35 cents to raise a dollar in total annual contributions do not meet BBB standards. It is rare for charities rated by the BBB to miss this mark. In cases where they do, we consider a series of mitigating circumstances. Many of the charities meeting the guideline are large organizations that we believe operate well and are accountable to their constituents. The same goes for the smaller organizations we assess.

Offering reasonable accountability guidelines for fundraising practices is valuable. Charities that solicit donations from the public will naturally have to spend money on fundraising. However, when fundraising costs reach higher percentages of funds raised, donors may feel misled about how their contributions are used.

Donor confidence is essential to fundraising success. When donors are misled, trust is broken and all nonprofits suffer from the resulting decline in reputation.

Nonprofits don’t just have to look trustworthy; they must also demonstrate that they are trustworthy by demonstrating honesty and integrity in all of their practices, including fundraising and financial management.

H.Art Taylor
President and CEO
BBB Wise Giving Alliance

Claire Rosenzweig
President and CEO
Better Business Bureau of Metropolitan New York Education and Research Foundation

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