Better Business Bureau Wise Giving Alliance
Loosens Fundraising and Program Percentage Standards
The challenging economic climate and its impact
on charity fundraising has prompted the
Wise Giving Alliance to modify
two of
its longstanding, and often criticized,
standards
requiring that charities spend no less than 65% of overall
expenditures on programs and no more than 35% of contributions on
fundraising. The modified standards, to be applied on a case by case
basis, will require that charities spend no less than 55% on
programs and no more than 45% of contributions on fundraising.
Assuming the 10% leeway will be applied only in individual cases, it
is not yet clear how and when it will be applied. However, whether the
organization meets the other 18 of the
Alliance’s 20 standards will not be a factor.
The Alliance
announced that the adjustment (if and when applied) will be for
fiscal years ending in 2008 through June 2010. The
Alliance
has not indicated whether it will continue the adjustments beyond
June 2010.
The Alliance noted in making its decision that not only has
the philanthropic sector seen its largest annual drop in
donations in the last 50 years, it also anticipated that
foundation giving in 2010 will drop by approximately 9%.
Charity Navigator has not announced whether it will also adjust
its financial calculations to account for the expected drop in
donations. One of Charity Navigator’s two primary measurement
criteria is based on organizations’ increased program capacity from
year to year. Clearly, many organizations will suffer decreased
capacities and if changes in the methodology applied by Charity
Navigator are not forthcoming, many charities will undoubtedly
see a decrease in their ratings.
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