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Contribution to the OECD/DAC Workshop
DEVELOPMENT PARTNERS IN EVALUATION
Paris, 25-26 March 2003
Monitoring Charitable Organizations:
Criteria and Assessment Methods
by Burkhard Wilke
Secretary General
International Committee on Fundraising Organizations (ICFO)
Berlin / Germany
SUMMARY
Non-governmental organizations (NGOs) have become an important social
counterpart of the economic and political forces in society. Private donations are
widely regarded an important factor in respect to the NGOs’ independence. But
donors have to be aware of the fact that as a rule they are not protected by the state
from fraudulent fundraising appeals. That is why private or semi-official monitoring
and advisory bodies have been set up in a number of countries. The International
Committee on Fundraising Organizations (ICFO) provides a worldwide forum for
these national monitoring agencies to meet and share experiences. There are
several good reasons for fundraising NGOs to be accountable. Reliable fundraising
NGOs should create “informed trust”, also because more and more donors are no
longer willing to practice “blind trust”. Non-reliable NGOs fear accountability because
it reveals their weak points. That’s why “good” NGOs should be interested and
should feel ethically obliged to be accountable to the public. The Members of ICFO
are building “bridges of trust” between reliable NGOs and the donors. In respect to
the standards on which the relevant monitoring processes are based, there are
differences, but the main idea is more or less the same: to provide the donors with
dependable, independent information concerning the reliability, the effectiveness and
the efficiency of the respective charities. In many countries, the monitoring
procedures do not only have external effects but also an internal dimension in the
sense of being a controlling instrument. ICFO itself has developed a set of
International Standards for those NGOs whose international activities, including
fundraising subsidiaries in various countries, are coordinated by an international
headquarters. ICFO has set up an appropriate monitoring scheme which has now
been tested in two assessments of a large international charity.
1. The INTERNATIONAL COMMITTEE ON FUNDRAISING ORGANIZATIONS
(ICFO)
1.1 History and Background
Since the end of world war II the number of non-governmental organizations has
increased enormously, notably in the industrialized countries but also in many
developing areas. NGOs have become an important social counterpart of the
economic and political forces in society. In most industrialized countries they are only
minimally regulated by state authorities. Often the only regulatory body involved are
the tax authorities which have set up schemes to register NGOs in order to control
their fulfillment of the requirements for tax exemption or other concessions.
Therefore donors have to be aware of the fact that as a rule they are not protected by
the state from fraudulent fundraising appeals. But as public confidence in NGOs is
vital to the success of fundraising, private or semi-official monitoring and advisory
bodies have been set up in a number of countries. In 1958 a small group of
monitoring agencies met in The Netherlands and decided to create the International
Committee on Fundraising Control. The idea was that this would provide a forum for
national monitoring agencies to meet and share experiences. In 1990 the name was
changed to “International Committee on Fundraising Organizations” and ICFO was
registered in Amsterdam as an association under Dutch law. Today ICFO has ten full
members and one supporting member (see Attachment A).
1.2 ICFO´s Mission
The purpose of ICFO is to ensure that fundraising for charitable purposes is being
organized and performed in a satisfactory manner and that the administration of the
collected funds is adequate. ICFO and its Members look after the interests of donors.
Most voluntary sector organizations are honest and reliable. There are, however, a
few which misuse the donors’ money by directing it to activities other than for which it
was raised and which deny their donors access to information about their financial
activities. Such dishonest activities are not acceptable. This is where ICFO and its
national Members can be of help.
Fundraising organizations which are attached to one of the national ICFO Members
are bound to follow the guidelines given in accordance with the respective national
law and tradition. This may include ethical guidelines for fundraising, principles for
accounting, transparency, annual reports, public access, etc. Being monitored and
recommended by the national ICFO Member enhances a fundraising organization’s
potential by obtaining the additional trust which follows adherence to the respective
standards.
1.3 Structure and Activities
The various national ICFO Member organizations are independent entities which are
not identically organized, but which operate for the same goal within differing national
frameworks. Some are based upon fundraising organizations themselves, others
upon representation from other institutions, such as consumer organizations etc.
Some operate with the authority to give fundraising organizations an official seal of
approval for public fundraising - and to take it away.
Within this framework ICFO’s activities are as follows:
•sharing information and experience among national monitoring organizations;
•formulating standards for non-governmental charitable organizations working
internationally;
•monitoring the international headquarters of those charities on a voluntary basis;
•helping in establishing new national monitoring agencies;
•providing information about the various national monitoring systems (ICFO
Comparative Survey) and the activities of internationally working charitable
organizations to businesses, foundations, governments, the media, and the
general public.
2. The Accountability of Donation Soliciting NGOs
2.1 Accountability - Why?
Most NGOs have been granted tax exemption and therefore - of course - are subject
to the fiscal authorities’ oversight. Most NGOs are predominantly financed by public
subsidies and therefore - of course - are monitored by the respective public
administration. On average, NGOs are only slightly financed by private donations, i.e.
approx. 11% of their total income, following new data from the Johns Hopkins
Comparative Nonprofit Sector Project1, and donations are more often motivated by
emotions rather than by rational decisions. So, why should NGOs be accountable to
donors?
2.2 Six good Reasons for a Charity to be accountable
I. Donating money for a good cause is mostly motivated by emotions, especially
since donors are completely free to decide whether they want to donate or not.
All charities, even those who misuse the funds they have raised, can easily
appeal to the donor’s compassion, using professional advertising techniques.
But only honest and reliable NGOs are able to prove their efficiency and
effectiveness by sound, transparent information. This is their “unique selling
point”, in comparison to the non-reliable competitors.
II. Non-reliable NGOs fear accountability because it reveals their weak points.
So, “good” NGOs should be interested and feel ethically obliged to be
accountable to the public.
III.Emotion-based fundraising can be quite successful - on the short run. But only
the donor’s trust can establish a longtime, stable and efficient relationship to
the respective charity. Accountability creates trust.
IV.In former times, donors have often practiced “blind trust” in respect “their”
charity, especially when the donations were part of their religious conviction.
Nowadays, donors are more and more flexible in respect to their selection of a
charity, but increasingly want to feel as close as possible to “their” project. This
growing tendency towards cause-restricted funds creates a very special need
for accountability.
V. Advertising and administrating cause-restricted funds is much more expensive
than the handling of free donations. NGOs should make the donors aware of
this fact and should try to attract as much free donations as possible - by
practicing accountability in respect to their entire organization, and thus
creating “informed trust”.
VI.Last but not least, there are of course numerous NGOs for which donations
are a very important, if not the most important financial resource. For them, the
five reasons mentioned above are the more vital and important.
1 Salomon, Lester M.; Helmut K. Anheier et al.: Der Dritte Sektor. Aktuelle internationale Trends. The
Johns Hopkins Comparative Nonprofit Sector Project, Phase II, page 24, Gütersloh/Germany 1999
(ISBN 3-89204-457-0)
3. Monitoring Charitable Organizations
3.1 Voluntary Monitoring and Accountability
Even when charities are perfectly accountable towards the public, many donors have
difficulties to fully understand the often very detailed information and to compare the
organizations they are interested in. That is why the assistance of private monitoring
agencies is demanded by a still increasing number of donors as well as by the
charities themselves. The Members of ICFO are building “bridges of trust” between
reliable NGOs and the donors.
Although there is a shortage of thorough research on what motivates people to give,
or prevents them from giving, there are surveys from Austria, Britain and Germany
which indicate an important role of independent information and respective advice to
donors: in a recent survey by ICM Research for the Media Trust (U.K.), 73% of
respondents said they would be more likely to give to a charity if they had
independent information about charity performance, and this figure was 90%
amongst those who had never given to charities2. A German survey showed that the
seal-of-approval issued by the Deutsches Zentralinstitut für soziale Fragen (DZI) is
regarded six times more important by the donors than testimonials from VIPs.3 And
an Austrian survey indicated in 2000 that 58% of the respondents would prefer a
charity which has been awarded a seal-of-approval, 25% are not interested in that
information, and 17% answered “don’t know”.4
3.2 Systems, Methods and Criteria
The idea - some people in NGOs would say: the dreadful vision - of a common
worldwide fundraising market has not yet become reality, except very few
internationally operating and donation soliciting NGOs. Even in the European Union
the national charity sectors are still separated from each other, primarily due to
differing tax systems. So, it is not surprising that the national monitoring agencies
which have joined ICFO also still show significant differences, although having a lot
of characteristics in common already.5
One of the most differing points is the structure of the monitoring agencies
themselves, i.e. their organizational structure, their financial sources and their target
groups (see attachment B). The information concerning “target groups” gives
evidence that in nearly all respective countries there are public benefit sectors which
are not covered by a seal of approval. In most cases at least the following charity
sectors are subject to donor-related monitoring: social/humanitarian affairs and
environmental protection.
In respect to the criteria, i.e. the standards on which the relevant monitoring
processes are based, there are also differences, but the main idea is more or less
the same: to provide the donors with dependable, independent information
concerning the reliability, the effectiveness and the efficiency of the respective
charities. In general, the standards (see attachments C and D) refer to
2 Brearley, Chris: Confidence in Fund-Raising Charities. A submission to the PIU project on
modernising the legal and regulatory framework of charities and the voluntary sector with some
suggestions for raising confidence in fund-raising charities. November 2001 (available at the
Consumers’ Association, 2 Marylebone Road, London NW1 4DF, U.K.)
3 Schneider, Willy: Die Akquisition von Spenden als eine Herausforderung für das Marketing, Berlin
1996, page224-226.
4 Österreichische Forschungsstiftung für Entwicklungshilfe (ÖFSE): Spendenwesen in Österreich.
Spendenmarkt und Spendenstudie 2000. Wien 2000, page 21.
5 The British ICFO Member, Accrediting Bureau for Fundraising Organisations (ABFO), is presently
reorganizing its entire structure and monitoring system. Therefore it is not included in the comparative
information given in this paper.
•financial means,
•management and supervisory structures,
•communication and advertising.
In addition to the criteria described in attachment C, significant standards in common
can be stated as follows:
•There are no conflicts of interests for the members of the board of the applying
charities.
•Financial statements have to be audited by someone with a defined and specific
qualification.
•So far, there is no obligation the reserves to be placed into ethical funds.
•The information to the public has to be accurate, not-misleading and it is forbidden
to put any pressure on donors.
•Fundraising campaigns have to respect people’s dignity.
•The public has to be given the opportunity to seek information about the
management and accountability.
Presently there is no monitoring of the quality of the statutory activities themselves.
The ICFO Members check the management structures and the performance of
internal supervisory bodies, because these elements are widely regarded to be
decisive factors for competent planning and successful realization of the projects.
CBF (The Netherlands) will shortly include requirements concerning quality control in
their monitoring process.
The differences of the monitoring procedures (see attachment E) are primarily due to
the various structures of the monitoring agencies. An important common point is that
the first step, i.e. the application always comes from the respective charity itself. So,
the monitoring process is completely voluntary. But sometimes there are third parties,
besides the donors, which recommend the charities to apply for such independent
monitoring. For example, the German Federal Ministry on Economic Cooperation and
Development as well as the German Foreign Office have eased their own application
procedures (concerning public subsidies) for those charities which have been
awarded the DZI Seal-of-Approval. In many countries, the monitoring procedures do
not only have external effects but also an internal dimension in the sense of being a
controlling instrument, notably in those cases where the monitoring is documented
most detailed and the subsequent confidential report is submitted to the charity. All
the schemes comprise annual monitoring, but not always in a “full-size” manor.
3.3 Monitoring of Charities working internationally
ICFO has developed a set of standards (ICFO International Standards, see
www.icfo.de) for those NGOs whose international activities, including fund raising
subsidiaries in various countries, are coordinated by an international headquarters. If
the headquarters is a well-established organization in another country, an ICFO
member may very well be monitoring it in that country and thus provide accountability
for the funds raised.
The situation is different when there is no ICFO Member organization existing in the
respective country or when the national accreditation scheme is not suitable for that
headquarters. In response to this, ICFO has set up a monitoring process specifically
for these international fundraising bodies. That scheme has now been tested in two
assessments of a large international charity. In 1998 and in 2000 the Foster Parents
Plan International Inc. was assessed by ICFO auditors and found to meet the ICFO
International Standards. The next reassessment takes place in 2003.
Although the ICFO Standards are rather general and relatively unspecific, they have
proven to be a sufficient basis for an intense and sound assessment process. ICFO
has decided to put these standards into practice for a while before reviewing and
maybe revising them based on the experiences of the assessments themselves.
ICFO welcomes any comments and suggestions from interested parties on how to
extend and improve the standards.
Attachments A - E
(6 pages)
Attachment A/1
ICFO Members
Austria Österreichische Forschungsstiftung
für Entwicklungshilfe (ÖFSE)
Berggasse 7
A-1090 Wien
(founded 1967)
Tel: +43 1 317 401-0
Fax +43 1 317 4015
office@oefse.at
www.oefse.at
Contact: Gerhard Bittner
Canada Canadian Council of Christian
Charities
(CCCC)
1-21 Howard Avenue
Elmira Ontario N3B 2C9
(founded 1972)
Tel: +1 519 669 5137
Fax +1 519 669 3291
mail@cccc.org
www.cccc.org
Contact: Frank Luellau
France Comité de la Charte
(CC)
133 rue Saint-Maur
F-75541 Paris Cedex 11
(founded 1989)
Tel: +33 1 53 36 35 02
Fax +33 1 47 00 84 52
ccharte@comitecharte.org
www.comitecharte.org
Contact: André de Montalembert
Germany Deutsches Zentralinstitut
für soziale Fragen
(DZI)
Bernadottestr. 94
D-14195 Berlin
(founded 1893)
Tel: +49 30 839001-0
Fax +49 30 831 47 50
sozialinfo@dzi.de
www.dzi.de
Contact: Burkhard Wilke
The
Netherlands Centraal Bureau Fondsenwerving
(CBF)
Anthony Fokkerweg 1
NL-1059 CM Amsterdam
(founded 1925)
Tel: +31 20 4170 003
Fax +31 20 6140 791
mail@stichtingcbf.nl
www.cbf-keur.nl
Contact: Jos Zwartjes
Norway Stiftelsen Innsamlingskontrollen
i Norge (IK)
Postboks 395 - Sentrum
N-0103 Oslo
(founded 1948)
Tel: +47 2241 9530 / 2294 1480
Fax +47 2242 5735
post@innsamlingskontrollen.no
www.innsamlingskontrollen.no
Contact: Øivind Fegth Knutsen
Attachment A/2
Sweden Stiftelsen för Insamlingskontroll
(SFI)
Odengatan 65
Box 6417
S-11382 Stockholm
(founded 1943)
Tel: +46 8 506 11270
Fax +46 8 506 11274
sfi@far.se
Contact: Kim Österberg
Switzerland Stiftung ZEWO
(ZEWO)
Lägernstr. 27
CH-8042 Zürich
(founded 1934)
Tel: +41 1 366 99 55
Fax +41 1 366 99 50
info@zewo.ch
www.zewo.ch
Contact: Ernst Zuest
U.K. Accrediting Bureau for Fundraising
Organisations
(ABFO)
c/o Andrew Reading
2 Marylebone Road
London NW1 4DF
(founded 1995)
Tel: +44 20 7770 7110
Fax +44 20 7770 7650
Andrew.Reading@which.co.uk
Contact: Andrew Reading
U.S.A. Evangelical Council for Financial
Accountability (ECFA)
440 W. Jubal Early Drive,
Suite 130
Winchester, VA 22601
(founded 1979)
Tel: +1 540 535 0103
Fax +1 540 535 0533
info@ecfa.org
www.ecfa.org
Contact: Paul Nelson
Supporting
Member:
U.K. Charities Aid Foundation
(CAF)
Kings Hill1
West Malling
Kent ME194TA
(founded 1924)
Tel: +44 17 32520 000
Fax +44 17 32520 001
enquiries@caf.charitynet.org
www.charitynet.org
Contact: Steven Ainger
__________________________________________________
International Committee on Fundraising Organizations (ICFO)
ICFO General Secretariat , c/o DZI, Bernadottestr. 94, D-14195 Berlin, Germany
Fon +49 30 839001-11 - Fax +49 30 8314750 - wilke@dzi.de - www.icfo.de
Attachment B
Table 1: Organizational Structure of ICFO Member Organizations
Country Agency Structure and Mission Finances Target
Charities
Austria ÖFSE foundation, full-time staff, library
and documentation center for
development aid; ÖFSE has
initiated and supported the
establishment of the Austrian Seal-
of-Approval and reviews its
development
75% public
subsidies
25% other
subsidies
development
aid
(Austrian
Seal-of-
Approval)
(Austrian Seal was established as a
cooperation of seven NGO umbrella
organizations; issued by the
Austrian Chamber of Auditors;
based on the extended audit of the
regular auditor of the respective
charity, i.e. on direct behalf of the
charity itself)
extended audit is
payed by each
charity itself
all public
benefit
Canada CCCC association, primarily of evangelical
charities; full-time staff and
volunteers
100% fees christian
France CC association, members are the
audited charities; full-time staff and
volunteers
100% fees social,
humanitarian
Germany DZI foundation; full-time staff; not only
charity monitoring but also library,
literature datebase and publishing
department covering the whole
sector of “social work”
65% public
subsidies
35% own income
(fees, interests)
social,
humanitarian
The
Netherlands CBF foundation; full-time staff 45% public
subsidies
40% fees
15% other
subsidies
social,
humanitarian,
environmental,
health
Norway IK association, members are the
audited charities; full-time staff and
external auditors on behalf of IK
100% fees all public
benefit, but not
political
Sweden SFI foundation, full-time staff and
auditors on behalf of SFI 100% fees all public
benefit, but not
predominantly
political and not
contrary to
ethical
standards
Switzerland ZEWO foundation, full-time staff 67% fees
27% interests
6% public and
corporate
subsidies
all public
benefit, but not
predominantly
political,
religious or
ideological
United
Kingdom ABFO association, staff by Consumers’
Association 100% subsidies
by Consumers’
Association and
CAF
all public
benefit
USA ECFA association, members are the
audited charities; full-time staff 100% fees Evangelical
Attachment C
Table 2.1: Selected Standards of ICFO Member Organizations
Country/
Agency Minimum Number
of Board Members Board Membership
must be an unpaid
activity
Ban on Family
Links in the Board Possibility of
being Board
Member and CEO
Austria
(Austrian
Seal-of-
Approval)
5yesyesno
Canada
CCCC 5 yes no, but it should be
seldom no, unless without
remuneration
France
CC 3 yes, but president
and treasurer must
be unpaid
no no
Germany
DZI no such number no, but if anyone is
being paid, an
additional
supervisory body is
required
no, but if there are
links, an additional
supervisory body is
required
yes
The
Netherland
s
CBF
5 yes, except CEO
who can be board
member and can be
paid as a staff
member
yes yes, a minimum of
two persons, and a
supervisory body
of 3 persons
minimum
Norway
IK 3noyesyes
Sweden
SFI 3 no no yes, more or less
common
Switzerlan
d
ZEWO
5 usually, but 7 if
there are familiy
links
yes accepted between
two members at
most, but then the
board must have 7
members
no
USA
ECFA 5
(the law is 3) yes, except CEO
who can be board
member and can be
paid as a staff
member
yes yes, but it is not
recommended
__________________________________________________
International Committee on Fundraising Organizations (ICFO)
ICFO General Secretariat , c/o DZI, Bernadottestr. 94, D-14195 Berlin, Germany
Fon +49 30 839001-11 - Fax +49 30 8314750 - wilke@dzi.de - www.icfo.de
Attachment D
Table 2.2: Selected Standards of ICFO Member Organizations
Country/
Agency public
access to
financial
statements
Ceiling on
overhead
expenses
Revenues pre-
sented
separately for
each fund-
raising activity
Ceiling on
fundraising
costs
Commissions
for the
collected funds
permitted?
Austria
(Austrian
Seal-of-
Approval)
yes no yes no yes
Canada
CCCC yes 20% of total
income
(including
fundraising
costs) required
by Income Tax
Act
no 20% of total
income
(including
administration
costs) required
by Income Tax
Act
no
France
CC yes no yes, or for each
country no no
Germany
DZI no 35% of total
expenditure
(including
fundraising
costs)
no, but income
and expenditure
must be
presented in
sufficient detail
35% of total
expenditure
(including
administration
costs)
yes, under
severe
conditions
The
Netherland
s
CBF
yes no no 25% of
fundraising
income
yes
Norway
IK yes “reasonable” yes, for each
category of
activities
no yes
Sweden
SFI yes yes no yes commissons are
not used in
Sweden
Switzerlan
d
ZEWO
yes yes no yes
USA
ECFA yes no no no no
__________________________________________________
International Committee on Fundraising Organizations (ICFO)
ICFO General Secretariat , c/o DZI, Bernadottestr. 94, D-14195 Berlin, Germany
Fon +49 30 839001-11 - Fax +49 30 8314750 - wilke@dzi.de - www.icfo.de
Attachment E
Table 3: Monitoring Procedures
Country/
Agency Who conducts
the monitoring? Monitoring
fees on-site visits
in
headquarters
Documentatio
nAppeal
against
decision
Austria
(Austrian
Seal-of-
Approval)
the regular auditor
of the charity, on
direct behalf of
the charity
additional audit
costs are
charged by the
auditor
yes included in the
regular
auditor’s report
yes, Chamber
of Auditors
Canada
CCCC staff members,
assisted by
volunteers
every five
years, special
investigation
when
complaints
specific
information if
application is
rejected
no
France
CC volunteers,
coordinated by
staff members
annual
membership
fee:
EUR 1,525 -
12,000
yes draft report
submitted for
comments and
final report
submitted
no
Germany
DZI staff members annual audit
fee:
EUR 500 -
5,000
initial fee:
1,000
not regularly,
but special
investigation
when
complaints
extensive
communication
to clarify open
questions; final
report
submitted
yes, appealing
committee
The
Netherland
s
CBF
staff members annual audit
fee:
EUR 250 -
5,000
initial fee:
3,630
not as a rule draft report
submitted for
comments and
final report
submitted
yes, appealing
committee
Norway
IK staff members,
assisted by
auditors or other
professionals
annual
membership
fee and
compensation
for additional
audit costs
not regularly,
but special
investigation
when
complaints
final report
submitted to
the charity’ s
auditor
no
Sweden
SFI auditors, on direct
behalf of SFI compensation
for external
audit costs
yes, if
necessary SFI is not
obliged to
explain
decisions
no
Switzerlan
d
ZEWO
staff members initial fee:
EUR 2,666
annual fee:
500 - 11,000
recertification
(every 5
years): EUR
1,533
every five
years, special
investigation
when
complaints
brief report yes, appealing
committee
USA
ECFA annual
membership
fee:
US-$ 290 -
8,000
every five
years, special
investigation
when
complaints
continuing
dialogue yes, ECFA
Board of
Directors
_________________________________________________
International Committee on Fundraising Organizations (ICFO)
ICFO General Secretariat , c/o DZI, Bernadottestr. 94, D-14195 Berlin, Germany
Fon +49 30 839001-11 - Fax +49 30 8314750 - wilke@dzi.de - www.icfo.de
