Merger Won’t Affect Goals of Standards

To the Editor:

Your coverage of the proposed merger of the Council of Better Business Bureaus’ Foundation, and its Philanthropic Advisory Service, with the National Charities Information Bureau (“Merger of 2 Watchdog Groups Raises Concern Among Observers,” September 21) did not fully address some important considerations that we believe would be useful to your readers in weighing the benefits of combining the two organizations.

For many years, national charities, corporate-contribution executives, foundations, and others have questioned the rationale for two national charity watchdogs that essentially provide the same services based on very similar standards. Constituents of both organizations have suggested that by joining forces we could eliminate duplication of effort, maximize resources, and expand our donor-education services significantly.

By merging these two organizations we have the opportunity to strengthen, not weaken, charity accountability; provide more, not less, information for donors; and reduce the paperwork burden for charities.

We would like to clarify two important points related to the council’s standards: the recommended level for program expenditures and the standards’ position on surplus funds.

In regard to the program percentage provisions, the council’s program percentage is 50 percent of total income, while the bureau’s program percentage is 60 percent of total expenses.

These are two different calculations with two different denominators that do, however, share a common goal: Was a majority of the donor’s funds spent on the charity’s programs as opposed to fund raising and administration?

The method of measuring program expenditures also directly relates to another point: the need to address large amounts of unrestricted reserves held by a charity that could be used for programs.

The National Charities Information Bureau addresses this issue with a specific provision setting a cap on available net assets. The Better Business Bureau standards address this concern by calling for a charity to spend at least 50 percent of total income (including, but not limited to, investment income, realized gains, and other non-contribution income) on program service activities in order to continue to meet our standards.

Once again, different guidelines seek a similar goal: Is a charity spending currently available funds for current activities?

Further, we strongly disagree with former N.C.I.B. official Dan Langan’s assertion in your article that the council’s Standards for Charitable Solicitations give any organization a “free ride.”

As the fall 2000 issue of our quarterly newsletter “Give But Give Wisely” shows, 37 percent of the charities reviewed against our charity standards do not meet one or more of the 23 provisions.

One year ago, we launched a major revision to our standards under the guidance of an expert panel. The National Charities Information Bureau initiated a review of its standards at the same time.

The development of new standards will continue under the merged organization, with the expectation that they will be completed by close of 2001. The Council of Better Business Bureaus’ Foundation, along with the network of 130 Better Business Bureaus throughout the United States, is dedicated to continuing and enhancing services to donors.

We believe this merger will greatly further the cause of charity accountability and welcome the opportunity to join with the National Charities Information Bureau.

Candace McIlhenny
Executive Director
Council of Better Business Bureaus’ Foundation

Bennett M. Weiner
Director
Philanthropic Advisory Service
Arlington, Va.