Charity Ratings
Giving and Charities
December 24, 1997

The National Charities Information Board is an organization dedicated to making sure that all of the good causes we give to remain on the up-and-up. Since World War I they've been tracking philanthropy in the United States and reporting their findings back to American givers.

The NCIB has developed nine criteria to determine if a charity is doing a good job. We list the guidelines, taken from NCIB's website, below. Read through them and see how your favorite charity stacks up.

NCIB Standards

These Standards are the result of a study in the late 1980s by a distinguished national panel. This study spanned two years and took hundreds of comments into account. NCIB believes the spirit of these Standards to be useful for all charities. However, for organizations less than three years old or with annual budgets of less than $100,000, greater flexibility in applying some of the Standards may be appropriate.

NCIB does not advise whether to give to any particular charity. Contributors are encouraged to familiarize themselves with NCIB Standards, and then decide for themselves the importance of an organization's compliance with or variation from those Standards. The information and analysis published by the NCIB is furnished to assist contributors in making informed decisions and is not intended to endorse or disparage the organization.

1. BOARD GOVERNANCE
The board is responsible for policy setting, fiscal guidance, and ongoing governance, and should regularly review the organization's policies, programs and operations. The board should have

a. an independent, volunteer membership;

b. a minimum of 5 voting members;

c. an individual attendance policy;

d. specific terms of office for its officers and members;

e. in-person, face-to-face meetings, at least twice a year, evenly spaced, with a majority of voting members in attendance at each meeting;

f. no fees to members for board service, but payments may be made for costs incurred as a result of board participation;

g. no more than one paid staff person member, usually the chief staff officer, who shall not chair the board or serve as treasurer;

h. policy guidelines to avoid material conflicts of interest involving board or staff;

i. no material conflicts of interest involving board or staff;

j. a policy promoting pluralism and diversity within the organization's board, staff, and constituencies.

2. PURPOSE
The organization's purpose, approved by the board, should be formally and specifically stated.

3. PROGRAMS
The organization's activities should be consistent with its statement of purpose.

4. INFORMATION
Promotion, fundraising, and public information should describe accurately the organization's identity, purpose, programs, and financial needs.

5. FINANCIAL SUPPORT AND RELATED ACTIVITIES
The board is accountable for all authorized activities generating financial support on the organization's behalf:

a. fund-raising practices should encourage voluntary giving and should not apply unwarranted pressure;

b. descriptive and financial information for all substantial income and for all revenue-generating activities conducted by the organization should be disclosed on request;

c. basic descriptive and financial information for income derived from authorized commercial activities, involving the organization's name, which are conducted by for-profit organizations, should be available. All public promotion of such commercial activity should either include this information or indicate that it is available from the organization.

6. USE OF FUNDS
The organization's use of funds should reflect consideration of current and future needs and resources in planning for program continuity. The organization should:

a. spend at least 60% of annual expenses for program activities;

b. insure that fund-raising expenses, in relation to fund-raising results, are reasonable over time;

c. have net assets available for the following fiscal year not usually more than twice the current year's expenses or the next year's budget, whichever is higher;

d. not have a persistent and/or increasing deficit in unrestricted net assets.

7. ANNUAL REPORTING
An annual report should be available on request, and should include

a. an explicit narrative description of the organization's major activities, presented in the same major categories and covering the same fiscal period as the audited financial statements;

b. a list of board members;

c. audited financial statements or, at a minimum, a comprehensive financial summary that 1) identifies all revenues in significant categories, 2) reports expenses in the same program, management/general, and fund-raising categories as in the audited financial statements, and 3) reports all ending balances. (When the annual report does not include the full audited financial statements, it should indicate that they are available on request.)

8. ACCOUNTABILITY
An organization should supply on request complete financial statements which

a. are prepared in conformity with generally accepted accounting principles (GAAP), accompanied by a report of an independent certified public accountant, and reviewed by the board; and

b. fully disclose economic resources and obligations, including transactions with related parties and affiliated organizations, significant events affecting finances, and significant categories of income and expense; and should also supply

c. a statement of functional allocation of expenses, in addition to such statements required by generally accepted accounting principles to be included among the financial statements;

d. combined financial statements for a national organization operating with affiliates prepared in the foregoing manner.

9. BUDGET

The organization should prepare a detailed annual budget consistent with the major classifications in the audited financial statements, and approved by the board.

--Trudy Hoyden
(TMF Hoyden)

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