In an effort to promote trustworthiness and transparency by nonprofits, the Better Business Bureau Wise Giving Alliance (WGA) is wagging its finger at some of the nation’s largest charities that have not provided information requested by the charity evaluator. The Arlington, Va.-based WGA today released a top 10 list of what it deemed “red flag charities.”
There are about 360 charities among 1,400 evaluated by WGA — about one in four — that do not disclose requested information but these 10 are the largest, according to Fiscal Year 2014 contributions, cited by the alliance:
At least five of the organizations in the top 10 were contacted via email for comment. A spokeswoman for Dana-Farber Cancer Institute (DFCI), which last year reported $1.2 billion in total revenue, said “transparency in all forms is always of foremost concern” to the organization and its donors “We take it very seriously and we pride ourselves on being extremely open and transparent so our donor know where their contributions are going and the impact they are having,” spokeswoman Ellen Berlin said. The institute’s profile on the WGA website notes that it did not disclose and participation in the review is voluntary. DFCI “simply declined to submit an application to be part of the BBB Wise Giving Alliance,” she said. “We go above and beyond to comply with all of their requirements so that we can be transparent to all,” Berlin said, noting that the organization is currently reviewed by the IRS, Attorney General’s office, and other regulatory bodies.
The U.S. Holocaust Memorial Museum has participated in WGA’s evaluations previously but decided against it because of how it rates board oversight, according to spokseman Andy Hollinger. The museum receives federal funds and has a presidentially appointed board that meets twice a year, and an executive committee that meets four times a year. “Since BBB does not recognize this as a the strong board oversight that it is, the museum decided to no longer participate in its evaluation,” he said.
Both organizations cited their high ratings by Charity Navigator, particularly on accountability and transparency.
The Kennedy Center for the Arts could not find a record of WGA’s request, according to a spokeswoman.
The alliance released this list now “to honor and value the charities that have disclosed information, even some who don’t meet our standards but still provide us with the information so we can still do reports,” said H. Art Taylor, president and CEO of the Arlington, Va.-based WGA. “There are lots of reasons a charity might give for not giving us information but I don’t believe they measure up when they think about we’re not going out and looking for charities to evaluate,” he said.
When organizations don’t provide financials and other information to be able to do reports, Taylor said WGA officials believe it’s their responsibility to let the public know, that these groups refused to give information that they need.
Taylor said he’s more confused than surprised by some charities on this list. “All these organizations seem to have the wherewithal and resources available to them. They have what it takes to provide the information if they choose, they’re just choosing not to provide the information, to an organization I believe is very credible, very fair, willing to work with groups. “We’re not out to say gotcha to any charity that goes through the process,” he said, adding that any nonprofit can go through the process free of charge and WGA will post its report for free.
Tax forms and audited financial statements for a number of these organizations can be found on their websites but the evaluation by WGA goes beyond merely providing policies and financials as part of a review that includes 20 standards that must be met. For example, WGA requests a charity’s solicitation letters to ensure appeals are not misleading or inaccurate, especially if joint cost allocation is involved; when board meetings are held and if they are scheduled throughout the year; cause-related marketing relationships, and conflicts of interest and if they are material.
“They could very well have some or all of that information on their website but they need more if they’re going to meet our standards, and not rely on what publicly available information is out there,” Taylor said. “Our reviews cover far more territory than what’s on a 990,” he said.
Each organization received three letters seeking information over a period of two months, the last of which was certified. Typically, WGA will not receive any reply, other times they might receive a letter saying that they won’t provide the information, according to Taylor.
The top 10 list at one point was 20 but half of the organizations responded to a final opportunity to disclose and were removed.
The charities aren’t just snubbing WGA when they don’t respond but also donors, Taylor argues, because they’re the ones who approach the alliance requesting an evaluation of a specific charity.
He is unconcerned about any criticism WGA might sustain by pointing a finger at charities. “Transparency is the fundamental tool that donors must have to really understand whether a charity is worthy of their support,” he said.
The Federal Trade Commission (FTC), in conjunction with state charity officials in all 50 states, last year announced a historic case against four charities related to the fraudulent Cancer Fund of America. Three of the four charities were on WGA’s nondisclosure list, Taylor said, and if the public had known that, they might not have donated to them.
When he started at WGA, Taylor said it became clear that donors have very different relationships with nonprofits than they do with businesses and consumers. “A business owner and consumer can tell you directly whether they’re satisfied with a product. A donor to a charity, that relationship with the product doesn’t exist, there’s no way for the donor to generally know what’s happening. They have to trust that charity is delivering on its promise.”
Editor’s note: This story was updated on Aug. 25 at 5 p.m. to reflect comments from a representative of Dana-Farber Cancer Institute, and on Aug. 26 at 8:45 a.m. with information from the U.S. Holocaust Memorial Museum and the Kennedy Center for the Arts.
As we celebrate our 36th year, NPT remains dedicated to supplying breaking news, in-depth reporting, and special issue coverage to help nonprofit executives run their organizations more effectively.