Mission Matters Insights
How Can my Organization Become a BBB Accredited Charity?June 11, 2015
Charities interested in assessing their effectiveness in soliciting donations from the public will want to meet the Wise Giving Alliance Standards for Charitable Accountability.
The Better Business Bureau (BBB) developed the Wise Giving Alliance Standards for Charitable Accountability in order to assist donors in their gift decisions and to foster public confidence in charitable entities. These voluntary standards were specifically developed with the input from the general public on what they consider important in a charitable organization, and any charity that meets the standards is known as a “BBB Accredited Charity”. All BBB Accredited Charities have to meet certain standards in how they govern, how they use their funds, and how honest and willing they are to disclose information to the public.
Which organizations are eligible?
The standards apply to tax exempt publicly soliciting organizations and to other organizations involved in charitable solicitations. The standards do not apply to private foundations who do not solicit donations from the public.
A closer look at the standards
The standards cover the areas of Governance and Oversight, Finances, Fundraising and Informational Materials.
Governance and oversight standards seek to ensure the volunteer board is active, independent and free of self-dealing. In order to meet these standards an organization must:
- Have adequate oversight of the organization's operations and staff.
- Have a minimum of five voting members.
- Only one or 10% (whichever is greater) directly or indirectly compensated person serving as a voting member of the board. Those receiving compensation shall not act in the capacity of board chair or treasurer.
- Not have any board or staff member engaging in inappropriate transactions resulting from a conflict of interest.
- Have three evenly timed meetings each year with a majority of the governing board in attendance. It is important to have a policy in place to measure the effectiveness of the organizations operations to ensure the goals and missions of the organization are being met. This measurement should be assessed no less than every two years and should be communicated to the governing body.
- Confirm that the finances section of the standards seeks to ensure that the organization is spending funds in a prudent and honest manner which is consistent with how the funds were received.
- Use funds in accordance with donor expectations and restrictions.
- Use at least 65% of total expenses on program activities and spend 35% or less of related contributions (donations received from fundraising efforts) on fundraising.
- Avoid accumulating excess fund that could be used for program expenditures.
- Make complete annual financial statements (in accordance with GAAP) available on request to all.
- Have a board approved annual budget with a breakdown of program activities, management and fundraising expenditures.
Fundraising and Informational Materials standards ensure that the organization's representation to the public is accurate complete and respectful. In order to adhere to these standards, the organization must:
- Have an annual report available to all that includes a mission statement, details on the past year’s program service accomplishments, and financial information including total income in the past fiscal year, expenses, and ending net assets.
- Distribute solicitations and informational materials that are accurate, complete and not misleading or convoluted in any way.
- Respect the privacy of all donors, including not releasing names of new and continuing donors outside the organization against their wishes.
- Disclose how the charity benefits from sale of services or products.
Why is it important for my organization to be BBB Accredited?
The BBB is highly respected and for more than 100 years has been recommending businesses, brands, and charities that they trust. Being a BBB Accredited Charity allows you to:
- Foster public confidence- These recommendations go a long way toward instilling confidence in both potential donors and the public.
- Attract large donations- Savvy donors will have more confidence making large donations to an accredited charity.
- Challenge competitors- Charities can ensure that their organizations will be trusted and respected among public charities competing for the same opportunities and donor dollars.
- Follow best practices- Since the standards set by the BBB Wise Giving Alliance are more stringent than government standards, charities adhering to these standards can be confident that they are following the best practices for public charities.
The BBB Wise Giving Alliance Standards for Charitable Accountability are guided by a main principle that full disclosure to donors and potential donors at the time of solicitation and onward is crucial. The BBB intends to ensure public confidence and foster a desire to donate through these standards of practice. Read the BBB full guide for more details on the standards. Questions? Contact us.