Charity Sector Watchdogs: An Intelligent Development? in Charity Village by Andy Levy-Ajzenkopf

March 08, 2011 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, Canadian Charity Law, Global Giving, Ethics and Canadian Charities, Avoiding 'Charity' Scams

Andy Levy-Ajzenkopf wrote an interesting article on Charity Sector Watchdogs in Canada.  He quotes Cathy Barr (Imagine Canada), Anderson Charters, owner of CharityCan.ca (a great database), Ken Berger (Charity Navigator), Kate Bahen (Charity Intelligence) and myself.

Charity Sector Watchdogs: An Intelligent Development? in Charity Village by Andy Levy-Ajzenkopf is at:

http://www.charityvillage.com/cv/archive/acov/acov11/acov1111.asp


Here is an excerpt from the article with some of my perspectives:


A legal opinion
Toronto charity lawyer Mark Blumberg of Blumberg Segal LLP — and the informative blog Globalphilanthropy.ca — provides a voice of moderation, telling CharityVillage® that the emergence of charity watchdogs is, on the whole, a good thing. However, it’s his opinion that there is still a ways to go before they really have a handle on how to properly rank and rate charities.
He says that while there are those who attack charity watchdog organizations because by highlighting problem-charities they may be seen to contribute to public mistrust of charities, he’s unconvinced.

“We cannot ignore the misconduct of a very small number of charities and let these bad actors hide out amongst the goodwill and glow of 85,000 charities in Canada,” Blumberg notes. “Whether it is tax evasion schemes, fraudulent receipting, improper fundraising, abuse of children or vulnerable beneficiaries, or other egregious conduct, the sector and our society should not allow the few bad actors impunity just because they are ostensibly in the ‘charitable sector.’”

The biggest challenge with charity watchdogs, Blumberg says, is that they sometimes “inappropriately” simplify issues and promise too much. “One cannot tell whether a charity is a good or effective charity simply by looking at the ratio of money spent on the cause. What is best is very subjective. Some charity watchdogs try to evaluate a large number of charities using methodology that, whether they acknowledge it or not, is too dependent on unreliable financial numbers and ratios that are fraught with problems,” Blumberg states. 

He says those calculations and ratios, when overemphasized, often make “hideous” charities look great or good charities look bad. And while it may be easier to pick out a bad charity from all the good ones, he says, it is infinitely more difficult to distill good charities from great charities. “The emphasis on financial numbers and ratios rewards charities that are sloppy in filling out their T3010, promote non-transparent accounting or are downright dishonest. I have noticed a number of charities positively rated by watchdogs that raise millions of dollars through fundraising events that list they spent $0 on fundraising.”

One thing is clear to Blumberg though: these watchdogs are here to stay. And he has the following words of counsel for charities and watchdogs alike.

“[Charities should] be aware of the criteria used by watchdogs, consider improvements with respect to some of the criteria if they make sense to your charity, let the watchdog know why certain criteria may not be appropriate, be able to respond to queries from watchdogs, and be prepared to discuss with stakeholders (including the media) why a good charity may not in some cases look so great when particular methodology is used,” Blumberg says. “For many charity watchdogs, just like the charities they are watching, they are a work in progress and they have significant room for improvement. A good watchdog, like a good charity, will listen, be prepared to acknowledge mistakes, offer its work with some humility and be constantly trying to improve.”

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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