“Trust But Verify” Should Guide Charitable Giving Decisions

February 26, 2010

Have you been solicited for a contribution by a charity that you don’t know a lot about?  If so, the Better Business Bureau recommends (in the words of President Reagan about an arms deal with the Soviet Union) that you “trust but verify.”  Perhaps we should put the emphasis on “verify.”

For example:  A Southern Indiana businessman contacted the BBB earlier this week about a request that his business make a $500 contribution to the National Coalition of Disabled Firefighters.  This contribution, according to the solicitor, would sponsor one child’s attendance at a “Burn Camp,” which (the solicitor said) serves children who are burn victims and have suffered “EXTREME disfigurement due to the HORRIFYING trauma they experienced.”   Who wouldn’t want to help?

According to information faxed to the businessman, the National Coalition of Disabled Firefighters has a local mailing address at P. O. Box 395, Georgetown, IN 47122, with Tax Exempt ID 33-0768089.

A little BBB “verification work” shows that a potential donor may want to think twice before sending $500 (or $10,000, which the solicitation says is the suggested corporate level for a “PLATINUM SPONSORSHIP, 20 KIDS”).

Here’s what BBB found:  The tax ID 33-0768089 is assigned to Emmanuel Outreach Temple, Inc., 963 Glencliff Street, Laharba, CA 90631.  This recently-formed church reported to the IRS on its 2006 IRS Form 990 (which is public information) that it operates four programs:  1) United States of America Police Disabled Officer; 2) Children Dream Foundation Network; 3) American Assisting Veterans Program; and, yes, 4) National Coalition of Disabled Firefighters. 

So, one wonders, how is Emmanuel Outreach Temple, Inc. using the money raised for these programs?  This is where things get murky.  According to IRS Form 990, the organization had total revenue of $788,272 in 2006.  On Line 13 of the Form 990, called “Program Services,” the charity reports spending $0.00 (that's right, $0.00!)  On Line 30, called “Professional fundraising fees,” the charity reports spending $702,245.  Under a category labeled “Management and general” expenses, the charity reports spending $12,292 (but there is apparently a math error, because the reported expenditures in the “Management and general” column total $16,192.)

For 2007, Emmanuel Outreach Temple, Inc. reported to the California Attorney General that the organization had revenue of $749,465, of which $74,947 (10%) went to charity, with the balance of $674,518 being paid to commercial fundraisers.

To meet BBB’s Standards for Charity Accountability, a charity must:  1) Spend at least 65% of its total expenses on program activities; and, 2) Spend no more than 35% of related contributions on fund raising. (These are voluntary standards adopted by the BBB Wise Giving Alliance in consultation with charities and donors, and there is no legal requirement that charities meet this BBB standard.)

Better Business Bureau reports on charities that voluntarily submit to evaluation through the BBB Charity Review Service (another free public service of the BBB) are available online at www.bbb.org/charity.  Donors may give with high confidence to charities that have been evaluated by BBB and meet BBB's twenty Standards for Charity Accountability.