Watchdogs’ Bite Will Continue To Injure

November 9, 2015       Barbara Nastasi      

Plan International USA faced a hurdle a few years back. Watchdog website Charity Navigator had given the organization a two-star rating (out of four) and a donor was prepared to stop giving as a result. During her 2015 Risk Summit workshop, “A Different Perspective: Understanding Charity ‘Watchdogs,’” Kitty Holt, Plan International USA’s ethics and compliance officer, shared tips on how to improve ratings and preserve donors, as the organization was ultimately successful in doing.

Charity watchdogs vary greatly from one another, Holt said, with differences ranging from whether or not ratings are voluntary to whether ratings are based on Form 990 data or donor feedback. What they share is the attention of donors, according to Holt.

Some 72 percent of donors stated that watchdogs greatly or moderately impact their likelihood of donating, Holt said, citing a 2014 Software Advice survey. A lack of a watchdog seal of approval greatly decreases the likelihood of making a donation for 66 percent of donors, according to the survey, with the Better Business Bureau’s Wise Giving Alliance seal carrying the most weight.

Holt said that she envisions watchdogs becoming more prevalent in the future as donors zero in on charities’ results. Nations without charity watchdogs are looking to the U.S. to potentially follow suit. With that in mind, Holt provided several tips to consider:

* Familiarize yourself with watchdogs’ standards and criteria and try to understand why your rating is what it is.

* Develop and use a model that can forecast the organization’s rating for a given watchdog. With such a model, organizations can plug in a new budget and avoid being surprised by corresponding effects on its rating.

* Perform a dry run of questions before seeking accreditation with a particular group.

* Get to know your evaluators and share concerns. Some watchdogs are in the process of tweaking evaluation formulas based on input from organizations.

* Have a cross-functioning team prepare a detailed write-up for Schedule O of the Form 990. Some watchdogs base ratings on the Form 990 and information included in Schedule O might provide deeper perspective into an organization’s operations.

* Build policy based on ratings. An organization, for instance, might prioritize the maintenance of a certain rating level from a particular watchdog as part of its cause marketing policy.

* Know when to say when. If your organization is bound not to perform well with a particular element of an evaluation process, don’t dwell. Focus on other portions.

* Prepare letters and talking points for donors in advance of positive or negative changes in rating.

* Seek out help if necessary. There are organizations available that are experienced in helping improve watchdog ratings.