Limit campaign expenses to 35% in US standards proposal

Community Action, April 14, 2003

ARLINGTON, VA -- The BBB Wise Giving Alliance proposes that a charity should spend at least 65 per cent of its total expenses on program activities and should not spend more than 35 per cent of "related contributions" from donations, legacies and other gifts, on fund raising activities. The Alliance is a group supported by a number of large corporations and big givers.

The group recently published a list of voluntary standards for charities that are designed to help donors make "sound giving decisions" as well as to "foster confidence in charitable organizations."

The standards were developed by consultation with both small and large charities, accountants, grant foundations, corporate contribution officers, regulatory agencies, research organizations and the Better Business Bureau system, They are based on the principle of full disclosure to donors at the time of solicitation and beyond.

The Alliance claims that these voluntary standards are more stringent than statutory requirements at the local, state and federal levels. Key among the recommendations is in the financial standards which are intended to ensure that charities spend their funds "honestly, prudently and in accordance with statements made in fund raising appeals."

The Alliance urges charities to avoid accumulating funds that could be used for current programs by ensuring that their unrestricted net assets available for use "should not be more than three times the size of the past year's expenses or three times the size of the current year's budget, whichever is higher."

Other areas included in the voluntary standards recommendations on the governance of charities are:

* ensuring that the board of directors consists of a minimum of five voting members

* not more than one or 10 per cent--whichever is greater--of the board be comprised of directly or indirectly compensated persons, who are voting members.

* compensated members shall not serve as the board's chair or treasurer.

The standards also offer guidance on fundraising and informational materials to ensure that representations made at the door during solicitations for funds are "accurate, complete and respectful." The Alliance not only recommends ethical practices that go beyond disclosure "to ensure public confidence and encourage giving."

Read the full standards website: communityaction.ca