Charity Vetting and Due Diligence: Managing the Charities in Your Employee Giving Campaign Requires More than Great Technology
By Jim Starr, President and CEO, America's Charities on March 13, 2019
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“When my employees choose to donate to a charity, how do I know that charity is legitimate?”
“How do I know the funds actually get to my employees’ designated charities?”
Those are among the most popular questions we get from employers who approach us about partnering on their employee giving programs.
To be sure, they are smart, important questions. And happily, the answers are quite simple: you know your charities are legitimate because we go to great lengths to confirm they are. You know the funds have reached your employees’ designated charities because we provide you, and your employees, with confirmation when they do.
However, those simple answers belie a complex process. And as important as these questions are, asking what happens when something doesn’t go as planned is equally as important.
Most employee giving technology platforms tout their charity vetting process. Like America’s Charities, they will tell you that they vet each charity in your program to ensure it is a legitimate, 501(c)(3) tax-exempt organization, legally registered and in good standing with the IRS. They will tell you that, like us, they check to make sure charities are not listed on the IRS’ revocations list of those organizations that have lost their tax-exempt status. They will tell you that, like America’s Charities, they also ensure your charities are not on the Office of Foreign Assets Control’s (OFAC) Specially Designated National and Blocks Persons List.
But what happens to your employees’ donations when they are on the revocations or OFAC list? What if your employee wants to donate to a specific program or chapter of a charity? What happens if an employee’s donation is returned? The vetting process I described is important – but it’s not enough. It’s important to read your giving partner’s fine print terms and conditions and really understand what happens when something goes wrong.
The IRS’ revocations and OFAC lists are ever-changing, like nonprofits themselves. The data are not always up-to-date. Charities start up, go out of business, merge with other charities, fail to file the proper paperwork, and so much more. Sometimes an employee’s donation is returned simply because the charity’s address or some other detail in the database is not correct. What happens to your employees’ gifts then?
America’s Charities has a team of experts that consistently, and constantly, research and update our charity records to make sure your employees’ gifts get to their designated charities. In every instance that a charity cannot accept donations, our team contacts your employee directly to notify him or her of the problem and walk him or her through the process of choosing another charity in your program.
Many employee giving platforms strive to leverage technology that streamlines this process. America’s Charities, in fact, provides a suite of employee giving technology solutions; we’re big fans of using technology to make the workplace giving process easier for the employers that host the program, easier for the employee donors who give, and easier for the charities that benefit from the program. However, when a technology provider requires a charity to “register” on its technology platform, or periodically update its profile so the database can stay up-to-date, that technology is not making it more efficient – for anyone. It’s simply shifting the burden, and the work, directly on others: the program administrator (you), donors, and charities.
Most charities, no matter the size, simply don’t have the bandwidth or resources to register with every technology platform, let alone find all the places where they need to update their profiles. Between websites and mobile apps, at my last count there were more than 300 charitable giving sites, with dozens of new giving platforms seemingly popping up every year. And, at the end of the day, charity registration may make it easier for the technology provider, but there is no way to ensure all of the charities in your program, let alone all approximately 1.5 million tax-exempt charities registered with the IRS, register and keep their profiles updated on every platform.
America’s Charities firmly believes that technology is an important path to greater efficiency – but it’s only part of the process, not the entire solution. And it should not come at your expense, nor your donors’ philanthropy choices, nor the very organizations committed to solving our world’s greatest problems.
Instead of asking charities to register on America’s Charities’ employee giving platforms, we do that work ourselves, just as our team puts the effort and resources into verifying charity information beyond the IRS database. For our select group of high-impact nonprofit members, our team goes a step further and actually updates their profiles on our technology platforms, and select other platforms. By doing this work, we know that our clients, and their donors, can feel comfortable that all of the charities in their program have been fully screened, including their financials, governance, and services. It means our nonprofit members can rest easy knowing we have taken active steps to qualify them as participants in each workplace giving program we manage. That’s one of the many reasons that our nonprofit members receive more pledge volume in workplace giving campaigns we manage, versus those we do not manage: we do the work to ensure they are presented well.
America’s Charities is a strong advocate for charitable choice for employees. But it’s imperative that the charities your employees can choose from are properly vetted, and that your organization knows what happens when things don’t go as intended, as it inevitably does. We believe your employees shouldn’t have to wonder if their gifts get to their charities of choice – and we believe you, as the workplace giving manager, shouldn’t have to worry about the ever-shifting charity landscape.
As I recently wrote, technology is important, but it’s not everything. For workplace giving to be truly successful, you need the guiding support from humans – ideally a team of experts like we have here at America’s Charities. We encourage you to ask your workplace giving partner how they manage charity vetting, and go beyond the initial questions to find out how they handle it when things go wrong. We also invite you to learn more about how our charity vetting and funds management services can scale your organization’s program more easily with the necessary resources to achieve your giving, volunteering and social impact goals. Click here to request a call from our team.