The Better Business Bureau (BBB) Wise Giving Alliance (WGA) is a standards-based charity evaluator that seeks to verify the trustworthiness of charities publicly soliciting donations. The BBB WGA helps charities build trust and donors give wisely.
The BBB WGA’s foundation is the BBB Charity Standards, 20 standards addressing four themes. Following are the four themes and an overview of each theme and its corresponding standards. For each of the 20 standards noted below, the BBB WGA assigns a finding of (1) standard is met, (2) standard is not met, or (3) unable to verify.
Governance and Oversight
The governing board has the ultimate oversight authority for any charitable organization. The standards noted here seek to ensure that the volunteer board is active, independent, and free of self-dealing. To meet these standards, the nonprofit will have:
- Board Oversight
- Board Size – Minimum of five voting members
- Board Meetings
- Board Compensation
- Conflict of Interest Policy
Measuring Effectiveness
The effectiveness of a nonprofit in achieving its mission is of the utmost importance. It’s key that potential donors know that when they give to a nonprofit, their money is going to have an impact. This is why a section of the BBB WGA’s standards require that nonprofits set defined, measurable goals and objectives, put a process in place to evaluate the success and impact of its programming, and report on the nonprofit’s progress. To satisfy the requirements the nonprofit must have the following:
- Effectiveness Policy
- Effectiveness Report
Finances
While the BBB WGA believes that a nonprofit’s finances only tell part of the story of how they are performing, the finances can identify nonprofits that may be demonstrating poor financial management and/or questionable accounting practices. The finance standards seek to ensure that the nonprofit is financially transparent and spends its funds in accordance with its mission and donor expectations. If the nonprofit has the following they must be provided:
- Program Expenses – at least 65% of total expenses are on program
- Fundraising Expenses – no more than 35% of contributions on fundraising
- Accumulating Funds
- Audit Report
- Audit report if gross income exceeds $1 million
- A review by a certified public accountant is gross income is less than $1 million
- Internally produced financial statements if gross income is less than $250,000
- Accurate Expense Reporting
- Detailed Expense Breakdown
- Budget Plan
There are cases where an organization that does not meet the first three standards under finance may provide evidence to demonstrate that its use of funds is reasonable and complies with the standards we have established – and we consider them accordingly.
Solicitations and Informational Materials
A fundraising appeal is often the only contact a donor has with a nonprofit and may be the sole impetus for giving. This section of the standards seeks to ensure that a nonprofit’s representations to the public are accurate, complete and respectful. If the nonprofit has the following they must be provided:
- Accurate Materials
- Annual Report
- Website Disclosures
- Donor Privacy
- Cause Marketing Disclosures
- Complaints Records
The BBB WGA also provides a list of charities in alphabetical order. Donors may locate a nonprofit on this list and pull up the charity review published by BBB WGA. The report provides information on the nonprofit, including the finding on each of the 20 standards, including the purpose and programs of the nonprofit, information on governance and staff, fundraising, tax status and financial information.
Finally, the BBB WGA provides “Tips for Donors.” This includes publications to help the donor in its charity donation decisions. While it’s ultimately the donor’s decision, the BBB WGA recommends donors avoid or be extremely cautious when contributing to nondisclosure charities. Charities that do not provide BBB WGA with any of the requested information needed to complete a charity evaluation are called “nondisclosure charities.” While this could be benign, some of these charities could also be hiding something by choosing not to disclose.
For more information, please visit Better Business Bureau Wise Giving Alliance
While nonprofits may feel like someone is always watching with so much exposure to their financial information, watchdog groups, including Charity Navigator, Candid, and the BBB Wise Giving Alliance are working to help donors and nonprofits. Nonprofits should see watchdog organizations as another outlet to provide access to their mission and provide a holistic understanding of the operations of the nonprofit.]
Written by Amy Guerra. Copyright © 2023 BDO USA, P.C. All rights reserved. www.bdo.com
