Busting the Charity “Overhead” myth

BBBBy Katherine Hutt
Oregon Better Business Bureau

When it comes to your charity dollars, what’s more important than how much a charity spends on its fundraising and administrative costs? Well, a lot actually.

Three leading charity evaluators say effectiveness is key and that the “overhead myth” that emphasizes financial ratios leads to simplistic information that can be misleading.

BBB Wise Giving Alliance has joined with GuideStar and Charity Navigator to urge charities to “help crush the false notion that overhead ratios serve as the sole basis for trusting a charity.”

The three groups today issued an open letter to charities “to help move toward an Overhead Solution by demonstrating ethical practices, managing towards results and educating funders.” It’s the second joint letter from the organizations; last year they issued a letter directed to donors denouncing the overhead ratio as a primary measure of charity performance.

“For many years BBB Wise Giving Alliance has encouraged donors to verify their trust in charities by considering the full picture of an organization’s performance and not just financial ratios,” said Art Taylor, President & CEO, BBB Wise Giving Alliance, “We also believe that charities have a responsibility to steer donors towards a better understanding of their activities and accomplishments and look forward to helping them share that message.”

What can donors do?

Learn more about the charities you support. BBB Wise Giving Alliance’s website at give.org includes detailed charity reports that evaluate charities based on twenty standards.

Read more about today’s letter and The Overhead Myth campaign at overheadmyth.com.

Research new charities rather than just reacting to a solicitation from a fundraiser or a friend. Review the website, annual report, program activities, etc. Charting Impact provides a framework for the kinds of questions you should ask before donating.

For more information on these and other charity issues, go to BBB Wise Giving Alliance at give.org.
– See more at: https://www.bbb.org/blog/2014/10/lets-end-the-charity-overhead-myth/#sthash.3KyiEQmL.dpuf

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