James Bausch

A Guide to Good Giving

VTR Date: October 13, 1994

James Bausch discusses philanthropy.


GUEST: James Bausch
VTR: 10/13/94

I’m Richard Heffner, your host on the Open Mind. And today’s program will be just about as far off-beat and as far off the beaten track as I’ve ever taken it since The Open Mind began in 1956. But the fact is that, like so many of you, I’ve become more and more puzzled with each passing year, not about the real need to give from what we get – that’s quite certain – but rather about how and where we can best give and know that our gifts are wisely and productively made. Of course, my own sensibilities are such that when Sarah Brady’s gun-control people call or write, I’ll always at least try to be responsive. But after that, you and I all need help, tips, and guidelines for judging which of the one million organizations recognized as charities by the Internal Revenue Service are truly on the up ad up and deserve our support. Because what good works they do are those we want done, efficiently and effectively.

And that’s why, after having rated films for 20 years, I was so intrigued recently to learn about the National Charities Information Bureau, which rates charities and does indeed offer tips and guides for concerned givers. James J. Bausch is president of National Charities Information Bureau. And this may be a particularly good time to ask him how to give wisely and well. Mr. Bausch?

BAUSCH: Thank you. I think one of the things that you have to keep in mind is that you always have to know who’s asking for the money. What’s the name of the charity? Do you know them? Do they make sense? Will they send you information that you ask for in writing before you give? If any of those things come up with a negative, look somewhere else.

HEFFNER: What do you mean, “With a negative?” What would be a negative?

BAUSCH: Well, we’re all used to telemarketing, unfortunately, where we
get …
HEFFNER: Unfortunately.

BAUSCH: …where we get called just as we’re about to pick up the fork, it seems. And all the causes sound wonderful. They’re emotionally moving, and that’s appropriate. These are emotional issues that many of the charities are dealing with, and most of them dealing with very well. But if someone says to you, “We really need your money now,” and you say, “Well, could you send me something in writing about your charity?” And they said, “Well, we’ll send you something with the receipt for your contribution,” or, “Because the holidays are so hear, we really need the money now, but we’ll be happy to follow up with…” hang up. Charities that are really legit do not operate that way.
HEFFNER: Well, what would you expect them to send? And when you’d see what they’d send you, what should it say?

BAUSCH: You should look at a few things. Do you have a board of directors? Do they have a paid staff? And how large is it? Do they tell you how they spend their money? How much goes to program? How much goes to fundraising? Do they give you an audited financial statement or a financial summary, at least? Do they send you an annual report? Do they really show you that they do with their money what they say they’re going to do? I think that we should establish a base, by the way, before I go any further, and say that most charities that we are familiar with are terrific. They do very good work, and they do it very, very well.

HEFFNER: Now, wait a minute. What do you mean by “most charities we are familiar with?”


HEFFNER: The one million that the IRS … you know, when I said, “Internal Revenue Service,” for a moment I thought I said, “Eternal Revenue Service,” and maybe I did…

BAUSCH: (Laughter)

HEFFNER: … but seriously, we’re talking now about a million possibilities.

BAUSCH: That’s right. And there are more every year. The IRS approved 44,000 new charities last year. And the number is growing. You probably know the figures yourself that Americans give $126 billion a year to charity. One hundred and two billion of that comes from individuals; not from the big foundations and corporations that we think of. The lion’s share is paid by Mr. and Mrs. America.

HEFFNER: Is that true elsewhere around the world, by the way?

BAUSCH: No, it isn’t. Not nearly to the same extent. This is an American phenomenon we’re dealing with.

HEFFNER: And how do you explain it?

BAUSCH: I think it’s part of our culture ever since the beginning. I hesitate to mention DeToqueveille to you, Mr. Heffner …

HEFFNER: Don’t hesitate at all.

BAUSCH: … but as he pointed out, this volunteering and giving, there’s something peculiarly and wonderfully American about it. We do it to an extent that just isn’t done elsewhere in the world. Yes, in Great Britain you see the Save the Children Fund, and Princes Anne, who heads it, they do very good work. And I can give you other examples overseas. And it certainly is charitable giving. But not nearly to the extent that there is in the United States. It’s part of our fabric. It’s hard to imagine the warp and woof of American fabric without volunteering and charitable giving in it. In fact, it’s impossible.

HEFFNER: That’s interesting the way you put that, talking about the warp and woof of American giving or American character. Our family structure has changed so in recent years, there are so many changes that have taken place in the nature of American
life. Have these changes not been reflected in our patterns of giving?

BAUSCH: Not so far. But I think that’s an excellent question. Warren Elschman, who heads the Center for Philanthropy at the University of Indiana, has come out with a sort of very incisive essay. And he talks about just that. The family is changing. The family is where we learn these values. What’s going to happen? He doesn’t know. It’s a big puzzle as to whether the next generation will feel the same way we felt because we were brought up that way by our families. And yet, we’re about to witness the most extraordinary intergenerational transfer of wealth in history. The Baby Boomers are about to come into the inheritance. What are they going to do? For many years they’ve been criticized as being self-serving and self-centered. As they’ve gotten older, that pattern seems to have changed.

I will say, however, that from a National Charities Information Bureau, or NCIB’s point of view, it’s still the older giver who is most concerned about where the dollars go. We’re doing right now a look at who really supports NCIB and why. The last look we took, a few years ago, indicated that the majority of people who asked for our wise-giving guide or our reports are either investigative reporters, on the one hand …

HEFFNER: (Laughter)

BAUSCH: … or older people. We’re seeing, we think, a shift to a generation below that. But we’re not sure. And I think one of the big issues is: Where are the single-parent families, the different families that we have today, the day-care families, the latchkey families, where do they learn what we learned in a far more traditional family? I’m not saying one is better than the other, but I think recognizing reality, as you point out, it’s going to have some impact.

HEFFNER: You talk about an academic question, that this question has been raised. Have there been no indications what the answers may be?

BAUSCH: I think that the questions have been raised as an agenda to look at. I haven’t seen answers that I find satisfying.

HEFFNER: Satisfying, or satisfactory?

BAUSCH: Either one.

BAUSCH: Yes, I think that we don’t know. We just don’t know what’s going to happen. We do know that there are indications, that we can accept, that the Baby Boomers are looking at involvement, volunteering, and giving, first in their return to religion, which is surprising many people, and secondly, in their involvement with charities. The tendency is to get involved with charities that friends are involved with. And so all it takes is, sort of, one or two or three friends in a neighborhood or a group or an office to be turned on by a charitable appeal, and it does seem that there’s a very quick pickup by that person’s peers.

HEFFNER: Let’s go back, because I took us off, away from it, this question of judging, how you judge the, I don’t know whether “validity” is the right word, of the appeal made to you, but the appropriateness given one’s own resources and interests and desires to help. Go back to that. What can we do?

BAUSCH: It’s a difficult question. When you look at national charities – and they’re the ones that the National Charities Information Bureau rates, we don’t rate local charities – when you look at national charities, there’s an enormous amount of information. There are the federal tax forms that they file. But as it turns out, a General Accounting Office of the Form 990’s, as they’re called, the federal tax form filed by charities, showed that half of them were incorrect in one or more major aspects. That study was confirmed by Baruch College a couple of years ago. And about half are wrong.

HEFFNER: Wrong? Fraudulent?

BAUSCH: No. Most of the time not fraudulent, I wouldn’t think. I think we’ve all filled out or tried to fill out tax forms…


BAUSCH: … and its’ very difficult to track from one to the other.

HEFFNER: But, Jim, you know, I’m not going to ask for, and if I did ask for or were sent, I wouldn’t look at, and if I did look at, wouldn’t understand, the kinds of forms you’re talking about. So you have to help me more. D you, as an organization, help more in terms of your rating?

BAUSCH: Yes, we do. We have nine standards, that range from governance to use of funds to whether there’s an annual report to how the money is spent to how the money is raised. And on national charities, about 375 or so that are currently in our focus, and we’re going to expand that to America’s 500 largest non-religious, non-hospital charities in the next couple of years, we do all the work for you. We get somewhere between three and eight pounds of materials from the charity by the time we’re finished looking at them against these standards. The standards themselves are interesting. The basic standards have been around as long as the organization, since 1918. But at the end of the 1980’s, a distinguished national panel was pulled together for a two-year period to update the standards and look at them in light of today’s needs and the needs of today’s givers. The point of view of NCIB is always the point of view of the giver. We look at: What does the contributor need to know, or at least should have access to in making up his or her mind about giving a charitable contribution?

HEFFNER: So it becomes a user-friendly rating system.

BAUSCH: That’s correct. I hope to make it even more user-friendly as time goes on.

HEFFNER: What do most of us, my friends and me, what are we looking for when we contribute to a charity? You use certain standards: the nature of the board of directors, is there one, how well they serve, are there conflicts of interest, et cetera. Do you think that’s what I’m going to look for when I turn to you for rating the appeals that come to me?

BAUSCH: I think that we can give you guidelines on what to look for. And I think the ones that you’ve identified are the hardest ones to look at. The easier ones to look at are: How is the money spent? Is the purpose of the charity clearly stated? And is that where the lion’s share of the money goes?

HEFFNER: Rather than to fundraising?

BAUSCH: Rather than to fundraising, or rather than to some other, even worthwhile, goal, but that’s not stated and it’s not what you gave your money for.


BAUSCH: Most charities that we evaluate, more than 88 percent, meet our standards on the use of funds. That is, they spend a minimum of 60 percent of their funds on the programs that they solicit the money for. And that is a bare minimum. We hope it goes higher. More than 75 percent of charities meet all our standards. But it’s interesting that the ones that are hardest to look at, the board-governance issues: Is there a board-attendance policy, and is it enforced? Are there conflict of interest regulations, and are they enforced? turn out to be key. If the board is paying attention, the charity tends to meet all the standards. And if they fall down on the board-governance standard, they tend to fall down on some of the other standards as well.

HEFFNER: If somebody’s watching the shop.

BAUSCH: If somebody’s watching the shop. We see right now in the press a lot of coverage on United Way of America.


BAUSCH: Not its current administration, which I think has made marvelous strides in cleaning up the act, but the previous administration under William Aramony. In all of the indictments that have come down against Mr. Aramony, I’m most surprised by what’s not there. And what’s not there is the simple question: Where was the board when all this was going on? It means more than having your name on a prestigious letterhead to be on a board of a charity. It means that you take on a fiduciary and more responsibility, to pay attention to what’s going on, and to ask the tough questions of the executive director or president.

HEFFNER: Now, let me stop you there. You say you take on a moral, but you preceded that by saying, you take on a fiduciary responsibility.

BAUSCH: That’s correct.

HEFFNER: Is that literally the case?

BAUSCH: That is literally the case. The board of directors or board of trustees of a charitable organization bears the fiduciary responsibility for the organization; not the staff head they hire. They are responsible. That’s why, when people are invited to join charities’ boards, knowledgeable people, one of the first questions they ask is, “Is there directors’ and officers’ insurance?” Because they know they are responsible. If you get someone who is a very dynamic, entrepreneurial, visionary leader as your staff head, as United Way did, I don’t think you can take away from William Aramony what he did for United Way. He built it from this to this. I mean, it became an extraordinary organization. And when he left, under a cloud, many people thought, well, he was just really living too high on the hog, he was flying the Concorde, he had limos at his beck and call, his salary was too high. But that’s not what these indictments say. There are six dozen criminal indictments of a felony nature that have been charged against him by the US Attorney. We’re not talking about living high; we’re talking about cooking the books, laundering money. Those are the charges. How can that happen if there’s a board of directors that’s paying attention? If you let the executive director get the bit in his or her teeth and just run with the organization, and just pat him on the back all the time, that’s what’s going to happen. If the board pays attention, has an active audit committee, asks the right questions, that doesn’t happen.

HEFFNER: Can the National Charities Information Bureau do enough to forestall any other kind of action being taken, perhaps governmental action, in the light of the United fiasco?

BAUSCH: I don’t know. I think that the government is going to get more involved regardless of what NCIB or the Better Business Bureau or other watchdog organizations are able to do.

HEFFNER: How will they get involved?

BAUSCH: Well, Congressman Pickelle, as his swan song in the Congress, held hearings on charities and how they should be regulated, will give the Internal Revenue Service more options and more clout to go after charities. And I think some of that is terrific. For example, right now the only recourse the Internal Revenue Service has is to withdraw a charity’s charitable status. There’s nothing – they can either say, “You can keep it,” or, “You can take it away – ” there’s nothing in between. Well, now, under the proposed legislation, they will be able to finethe charity. Under current regulation, if the Internal Revenue Service finds a charity at fault, they’re not allowed to say or to publish that. Under the proposed regulations, a charity that transgresses and has to pay the fine, the IRS can publish that name and release it to the press. Well, those are very, very strong, but intermediary measures that I think will help.

It’s very interesting. A few years ago, a Gallup poll was taken of the American people on: What do you think of charities? More than 80 percent found charities less trustworthy today than they did ten years ago.

HEFFNER: Excuse me. That would be the same thing that would be said about congresspersons, about …

BAUSCH: I think that’s true.

HEFFNER: … doctors, lawyers, teachers …

BAUSCH: I think that’s so.

HEFFNER: … newspaper people, and of course, television people.

BAUSCH: I think that’s true. I think …

HEFFNER: But anyway, they did find that.

BAUSCH: They did find that. And they asked follow-up questions: Do you think that a voluntary system of standards would work or be sufficient to control it? And 75 percent said yes. And then who should be the monitor? An independent, non-governmental agency? Or the government? And 67 percent said that an independent agency could do it just as well, if not better, than the government, although they wouldn’t rule some government intervention out. So when you put all those together, I think that there is room for greater government intervention of the kind I just mentioned with the IRS, and I think there is a greater role for organizations like the National Charities Information Bureau, who, taking the point of view of the giver, find out information that the giver has a right to know.

HEFFNER: Now, this isn’t something I regularly do on The Open Mind, obviously, because I don’t do programs like this. If someone wanted to know, someone wanted to avail himself/herself of the information that you have about the charities that you cover, the 500 that you will cover eventually, what do they do?
BAUSCH: They can just drop us a line, and we’ll send them a copy of our quarterly publication, The Wise-Giving Guide, which lists the summary evaluations of the charities we evaluate. Just says whether they meet or don’t meet our standards. And if they don’t meet, which ones they don’t meet. And then they can follow up, if they’re interested in a particular charity, by asking for our full report on that charity.

HEFFNER: Now, I would be remiss if I didn’t follow up by saying, “Where do they write you?”

BAUSCH: Thank you very much. If they write to the National Charities Information Bureau, 19 Union Square West, New York City, 10003.

HEFFNER: Why don’t you have a Post Office Box Charity or something like that, or Char Info would be a little bit easier. At any rate …

BAUSCH: Very good idea.

HEFFNER: Question: You talk about individual givers, and of course that’s what I’ve been talking about. What about the large institutions, the foundations, and the other? What’s been the movement among those people in light of the United Way problem?

BAUSCH: I think they’re paying a lot more attention. The large foundations, of course, have always been able to look in depth at the grantees that they support. The small foundations, many of them rely on the National Charities Information Bureau, when it comes to national charities, and actually use our standards and adapt them to looking at local charities in their own areas. But the large foundations have taken a more active role. Recently, in the NAACP story, when Benjamin Chavis was asked to resign, and did, I think one of the things that fomented that was that the Ford Foundation, upon hearing what was going on within the NAACP, announced that it was withholding its grant payment. It didn’t rescind the grant, but it withheld the payment. Well, if you withhold a quarter of a million dollar payment, people begin to notice. So I think the foundations, large foundations, are geared to look at what’s going on. I think the Council on Foundations, which is the body that brings together just about every foundation in the United States, I think, has taken a very strong, positive role in talking about the ethics of grantmaking, and what you should look at before the grant is made. There is a line, I think, that it’s tempting sometimes for a foundation to cross. The foundation shouldn’t become the grantee. The grantee shouldn’t become a staff member of the foundation and doing only the foundation’s bidding. I think one of the wonderful things about charities in America is that they carve out their own missions and then seek funds to do it. They may be market-dependent, but they’re mission-driven. And I think that that’s one of the things that makes charities work.

HEFFNER: Do you think we understand, as a people, sufficiently, how unique this matter of charitable giving is in this country? I know, as you said before, in England there are certain major charities, you find them in other countries too. But you’re right in identifying Americans as being motivated to give. Do you think we understand, though, how unique we are?

BAUSCH: I don’t think so. And I think, if we did, we wouldn’t go around talking about it. I think that’s another American characteristic.

HEFFNER: Well, I didn’t mean in terms of patting ourselves on the back. I meant in terms of understanding what a continuing obligation we have.

BAUSCH: I think the obligation is felt, but I think that as people become concerned about the honesty of politicians, doctors, charities, everyone, they are more and more reluctant to give. I think that’s why they need, or should have access to the information. I have a very peculiar, non-accounting view of the monies that charities raise. And it’s that the money never belongs to them. It always belongs to the people who gave it, and they gave it in trust to be used for specific purposes. If the charity violates that trust, they deserve to have the whistle blown on them. Because they not only hurt charity in general, they not only injure the contributor who gave, they injure the good charities, the great majority of charities that are doing the wonderful work that, quite frankly, in America we depend on charities to do. In Scandinavia, they depend on the government to do much of the work that charities are expected to take on here.

HEFFNER: Thirty seconds left. Do you consider your organization to be a whistle-blower?

BAUSCH: When necessary, yes. I think it’s very important that we praise the good charitable work that’s done; and I think it’s equally important that we point out the few rotten apples in the barrel who aren’t doing it right, and let people know what’s going on.

HEFFNER: So we can count on the NCIB for the right rating?

BAUSCH: Yes, you can.

HEFFNER: Okay. Thank you so much for joining me today, Jim.

BAUSCH: Thanks.

HEFFNER: Appreciate it very much.

BAUSCH: Thank you.

HEFFNER: And thanks, too, to you in the audience. I hope you’ll join us again next time. And if you’d like to share your thoughts about our program today, please write The Open Mind, P. O. Box 7977, FDR Station, New York, New York 10150. For transcripts, send $2.00 in check or money order.

Meanwhile, as an old friend used to say, “Good night and good luck.”