How the BBB can help charitable foundations create transparency

The Better Business Bureau is normally associated with for-profit organizations rather than charitable foundations. Enterprises interested in maintaining their reputation with consumers depend on favorable ratings from the organization. The BBB has its standards and grading policy outlined on its website for both commercial enterprises as well as charities.

A guideline for transparency
With the Wise Giving Alliance Standards for Charity Accountability, donors have access to concrete guidelines that help them make more informed decisions about charities they're interested in supporting. Meeting the 20 standards established by the BBB can seem like a daunting task for many organizations, but the upshot of achieving these benchmarks is improving fundraising results. A study conducted by Professor Greg Chen of the Baruch College School of Public Affairs, City University of New York indicated charities that have aligned with the BBB levels of excellence saw an 8 percent increase in revenue.

The BBB's standards provide a framework for nonprofit organizations to work from, including governance, accuracy and transparency of fundraising solicitations and financial management. Charities incur no additional expense in having their operations reviewed by the organization, and the donating public have free access to the information online. This provides nonprofits an opportunity to place this accreditation near their online donation forms. Giving donors unlimited access to information pertaining to a foundation's activities is one of the most important ways to build transparency. Building a link to the BBB into a website can give donors reassurance when they are deciding whether they should contribute.

CEOs, board members key to developing trust
Furthermore, when organizations have trustworthy leadership intact, people will likely be more inclined to contribute during fundraising campaigns. According to the Chronicle of Philanthropy, a recent GuideStar study highlighted the fact that chief executives at the top of nonprofit organizations have seen their yearly incomes increase even with the backdrop of the economic recession. In fact, during 2011, CEOs were given a 2 percent increase in salary, which falls short of the 4 to 6 percent average annual raise before the financial downturn hit in 2008.

The amount of fundraising money an organization distributes to board members and executives impacts its BBB review, but it also sends a strange signal to donors if a large portion of donor dollars are used to pay the salaries of the organization's leadership.

The larger the amount of money directed toward a specified program or goal, the more likely donors are to develop a sense of trust with the organization.

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