Charities and transparency – How not to get taken for a ride

New York State Attorney General Eric Schneiderman wants the act of giving to charity in his state to come with some assurances that the money is going to the intended causes. National Breast Cancer Awareness Month – along with its ubiquitous pink ribbon brigade – has authorities wondering whether charitable donations are being used more to fund promotional product placement, rather than the most important work of charities. If Schneiderman has his way, new rules regarding charities and transparency will be established that will serve as a model on which the public can rely.

Charities and transparency – Worrying about Kony 2012

One need go no farther than the recent viral charity campaign Kony 2012, founded by Jason Russell and his Invisible Children charity organization, to see how what appears to be the best of intentions can quickly transform into a tabloid circus as sloppy as Lindsay Lohan’s drawers at the end of a given evening. Russell talked a good game on Oprah about how the world must stand up to Ugandan warlord Joseph Kony and his army of brainwashed, AK-47 toting children – which is curious, considering that some Ugandans claim Kony is dead and his army hasn’t done anything or been heard from in over six years – but once Russell had a TMZ-televised drunken nervous breakdown sans clothing on a San Diego sidewalk, people began to question whether Kony 2012 was a solid investment.

The founder disappeared and went into treatment. Questions regarding the legitimacy of Kony 2012 remain, as the “millions of dollars” in annual donations are being used in a ways that are far from transparent to donors and concerned citizens.

Charities and transparency – What is it?

Since I’ll assume that you already understand what a charity is, let’s jump right into transparency. There are numerous ways to define it in this context, but here’s where we’ll weigh anchor: the obligation or willingness on the part of a charitable organization to publish and otherwise make available critical data regarding how it uses donations. Transparency is closely tied to accountability, the obligation and willingness on the part of a charity to fully explain the actions its takes to its crop of investors. Numerous websites like Charity Navigator offer consumers tool with which a charity’s fiduciary actions can be evaluated on counts of both transparency and accountability.

Charities and transparency – Following best practices

When transparency and accountability are held to be of the utmost importance by a charity, odds are that that charity has a specific, tangible set of best practices that it follows religiously. From governance and donor relations to many other related areas, responsible non-profit charities take it upon themselves to administer ethics reviews. They also seek out independent ombudsmen to cross-check their work. In all things, a charity must ultimately make it easy for donors to obtain critical information regarding the organization’s function.

Charities and transparency – Schneiderman’s List

Schneiderman’s office has begun a year-long review of the Susan G. Komen For the Cure Foundation, and in the process, execution of the pink ribbon campaign will come into question. The following five points of inquiry planned for the investigation should serve as a model for any investigative group that wants to analyze whether a charity is on the level. Eventually, the following “best practices” would become law, if concerned public officials like Schneiderman have their way.

1. A clearly described promotion – Attractive merchandise is great, but it should be crystal clear just how much of the money investors spend on merchandise goes straight into important charitable service. It should be clear if there are any caps on donations, as well as whether consumers must take any additional action beyond merchandise purchase in order to trigger their intended donation. Schneiderman suggests that all data be printed on a “Donation Information Label” that is clearly visible on all charitable organization literature.
2. ‘Portion of the proceeds’ is no longer enough – Schneiderman insists that charities specify exactly how much of a donation goes to charitable work.
3. Additional transparency – No list of requirements for charities and transparency would be complete without verbiage that specifies exactly how much of a company’s proceeds will be donated; exactly what/how much specific limits entail; and where consumers can find this information.
4. Social media transparency – In marketing materials across all platforms, charitable organizations must be transparent regarding the use of money. This includes online social media.
5. Reveal total amounts to the public – In representing total monies raised, charities must be fully transparent and exact, says Schneiderman. Not gross revenue from merchandise sales, necessarily, but the actual donation to charity.

Criticism of Kony 2012, from a Ugandan (Note: One instance of adult language)

Sources

Charity Navigator

The Consumerist

The Daily Beast