There are over 1.4 million non-profit organizations in the United States. That number does not include churches and other religious entities. While it may only feel like you’ve been solicited by all of them, the fact remains that the average person will be asked to make a charitable gift over and over again. With so many charitable causes and avenues from which to choose, how can you trust that an organization will do what it says it will do with your contribution?
United Way of Union County has met the Better Business Bureau’s 20 Standards of Charitable Accountability for the last 11 years and is accredited through the Central Ohio watch dog. This spring, we joined Holbrook & Manter, CPA’s in encouraging all local non-profits to consider going through the BBB’s accreditation process. A seminar with more than 30 representatives of local organizations was held to describe this free program, which provides a well-recognized means for local charitable organizations to be accountable to donors.
“If you are going to pursue these standards, then it will force many organizations to think differently, behave differently, and in many cases, mature as an organization,” said Dean Pulliam, the Charity Accountability Analyst of the Better Business Bureau of Central Ohio. “This is the age of transparency. Donors want to know what you’re doing, why you do it, and how accountable you are.”
Pulliam says it takes a minimum of six to eight weeks for a charity to become accredited. Those in the program are then reviewed every two years to make sure they maintain accreditation. At any time, Pulliam says he can provide coaching for charities looking to achieve the standards, no matter the situation in which they find themselves.
“From a board member’s perspective, you have some fiduciary responsibility that you have to be aware of when you serve as a volunteer in that capacity,” said Brian Ravencraft, a CPA with Holbrook & Manter. “The Better Business Bureau accreditation helps out a lot with those responsibilities. These 20 standards are good measurements to use and help out a lot with those responsibilities.”
Ravencraft said that most of the non-profit organizations that his firm audits meet about 90 percent of the standards and simply need to fine-tune a process or report to achieve the others. Amy Cooperider, Finance Director of Turning Point, the domestic violence shelter that serves Union County and a United Way Partner Agency, was at the seminar. She said it won’t take much effort for the shelter to become accredited as it already meets all standards.
“Since we are already very transparent, we need to get affiliated with the Better Business Bureau to compete with other non-profits vying for those same grant dollars,” she said. “The program made me think about how we’ve arrived at the day when companies can access our information online, and do so frequently. Researching a charity is easy to do now. Time to step up and get with the digital age!”
“You would be surprised by how many inquiries are made, checking charities out,” Pulliam said. “They’re checking you and your legitimacy. If I were in your chair, I’m concerned about anyone who might call the Better Business Bureau to ask about your charity. Are they accredited? If not, are they pursuing accreditation? I expect them to check us out.”
United Way works to bring neighbors and resources together to improve lives in Union County. United Way of Union County has raised more than $18 million for local needs since it was established in 1958. More than just a fundraiser, United Way collaborates with local businesses, government, and non-profit organizations to solve pressing social service issues large and small.
For more information, please visit www.unitedwayofunioncounty.org.
The 20 Standards of Charitable Accountability of the Better Business Bureau.
1. A board of directors that provides adequate oversight of the charity’s operations and its staff.
2. A board of directors with a minimum of five voting members.
3. A minimum of three evenly-spaced meetings per year of the full governing body with a majority in attendance, with face-to-face participation.
4. Not more than one or 10% (whichever is greater) directly or indirectly compensated person(s) serving as voting member(s) of the board. Compensated members shall not serve as the board’s chair or treasurer.
5. No transaction(s) in which any board or staff members have material conflicting interests with the charity resulting from any relationship or business affiliation.
6. Have a board policy of assessing, no less than every two years, the organization’s performance and effectiveness and of determining future actions required to achieve its mission.
7. Submit to the organization’s governing body, for its approval, a written report that outlines the results of the aforementioned performance and effectiveness assessment and recommendations for future actions.
8. Spend at least 65% of its total expenses on program activities.
9. Spend no more than 35% of related contributions on fund raising. Related contributions include donations, legacies and other gifts received as a result of fund raising efforts.
10. Avoid accumulating funds that could be used for current program activities. To meet this standard, a charity’s unrestricted net assets available for use should not be more than three times the size of the past year’s expenses or three times the size of the current year’s budget, whichever is higher.
11. Make available to all, on request, complete annual financial statements prepared in accordance with generally accepted accounting principles.
12. Include in the financial statements a breakdown of expenses (ex. Salaries, travel, postage, etc.) that shows what portion of these expenses was allocated to program, fund raising and administrative activities.
13. Accurately report the charity’s expenses, including any joint cost allocations, in its financial statements.
14. Have a board-approved annual budget for its current fiscal year, outlining projected expenses for major program activities, fund raising and administration.
15. Have solicitations and informational materials, distributed by any means, that are accurate, truthful and not misleading, both in whole and in part.
16. Have an annual report available to all, on request, that includes:
a. The organization’s mission statement,
b. A summary of the past year’s program service accomplishments,
c. A roster of the officers and members of the board of directors,
d. Financial information that includes:
i. Total income in the past fiscal year,
ii. Expenses in the same program, fund raising and administrative categories as in the financial statements, and
iii. Ending net assets.
17. Include on any charity websites that solicit contributions, the same information that is recommended for annual reports, as well as the mailing address of the charity and electronic access to its most recent IRS Form 990.
18. Address privacy concerns by:
a. Providing in written appeals, at least annually, a means (ex. Such as a check off box) for both new and continuing donors to inform the charity if they do not want their name and address shared outside the organization, and
i. What information, if any, is being collected about them by the charity and how this information will be used,
ii. How to contact the charity to review personal information collected and request corrections,
iii. How to inform the charity (ex. A check off box) that the visitor does not wish his/her personal information to be shared outside the organization, and
iv. What security measures the charity has in place to protect personal information.
19. Clearly disclose how the charity benefits from the sale of products (i.e., cause-related marketing) that state or imply that a charity will benefit from a consumer sale or transaction. Such promotions should disclose, at the point of solicitation:
a. The actual or anticipated portion of the purchase price that will benefit the charity (ex. 5 cents will be contributed to abc charity for every xyz company product sold),
b. The duration of the campaign (ex. The month of October),
c. Any maximum or guaranteed minimum contribution amount (ex. Up to a minimum of $200,000).