Wise Giving Alliance raises the standard for program spending

From ANIMAL PEOPLE, January/February 2002:

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.