
From ANIMAL PEOPLE, January/February 2002
Wise Giving Alliance raises the standard for program spending
ARLINGTON, Va.--About one U.S.-based animal protection charity in five would probably flunk strict new accountability standards published for comment in January by the Better Business Bureau Wise Giving Alliance.
The Wise Giving Alliance was formed by a merger of the Council of Better Business Bureaus Philanthropic Advisory Service with the National Charities Information Bureau. The 21 standards published by the new organization mostly echo standards already in effect, including two standards for board structure which have proved particularly problematic for small animal protection charities. Newly added is a strengthened standard for spending funds on charitable service.
The problematic board standards are that charities should have at least five directors, and that only one director may be compensated.
The requirement of a five-member board works fairly well for human service charities, which tend to involve large numbers of human constituents, but many smaller and/or highly specialized animal protection charities are formed by the only three people in a particular community with a deep interest in the work that the charity is to do, such as sterilizing feral cats, rescuing a particular breed of dog, or rehabilitating wildlife.
Even some large animal protection organizations, including PETA, have just three board members. These are usually organizations still under direct supervision by the founders. The requirement that only one director may be compensated forces the founders of charities with more than one founder to choose, as their workload grows, between being compensated and remaining in control of the organization. As founders working fulltime for a charity almost inevitably need to be compensated, founders often yield control at that point, and sometimes are actually thrown out of the charities they started by board-level coups-d'etat.
ANIMAL PEOPLE has recommended to the Wise Giving Alliance that charities of less than $500,000 annual income and less than $500,000 reserves be allowed to have only three directors, and that founders be exempted from the requirement that only one director may be compensated.
The Council of Better Business Bureaus formerly required that charities should spend at least 50% of their total annual income on program service. The NCIB required that fundraising plus administrative costs should not exceed 40% of the annual budget. The Wise Giving Alliance, after a year of public opinion research, has proposed that 65% of total expenses should go to program service, exclusive of fundraising activity claimed as program service, such as direct mail solicitations declared as "public education."
The new Wise Giving Alliance standard was met by 103 of the 128 U.S.-based animal protection charities whose IRS Form 990 filings ANIMAL PEOPLE abstracted in November 2001. Among the best-known organizations that would have flunked were the Animal Legal Defense Fund, Defenders of Wildlife, the Humane Society of the U.S., Lifesavers Wild Horse Rescue, the National Humane Education Society, Tiger Haven, Tony LaRussa's Animal Rescue Foundation, and PETA and the Physician's Committee for Responsible Medicine, if much of their fundraising expense had not been channeled through a little-known joint subsidiary, the Foundation to Support Animal Protection.
The Wise Giving Alliance invites response to their new standards c/o their web site, where all of the standards are posted, at <www.give.org>, or c/o Exposure Draft, Standards for Charitable Accountability, BBB Wise Giving Alliance, 4200 Wilson Blvd., Suite 800, Arlington, VA 22203.