News & Updates

 

Wise Giving Wednesday: Donor Trust and Celebrity Fundraising

Jan 29, 2020

As shown in the Give.org Donor Trust Report released in 2019, some donors will put their trust in a celebrity to help those in need when disaster strikes. Of the 2,100 adults surveyed, 17.75% of respondents said that they contributed to a celebrity’s disaster relief fundraising effort during 2018. This was more popular among younger generations, with 31.75% of Millennials saying they contributed to such celebrity activities compared to 5.53% of Baby Boomers. The most popular reason cited for having donated to a celebrity’s disaster relief fundraiser was being a fan of the celebrity, followed by trust in the celebrity’s ability to choose.

Whether they are athletes or astronauts, movie stars or media moguls, celebrities are often in the spotlight and have significant opportunities to bring attention to their favorite causes or charities. This has certainly helped countless charities over the years who have benefitted from these promotions. One related phenomenon involves celebrities that create their own charitable organizations, especially after a natural disaster or tragic event that can generate high emotion and spur some to action. While this may generate significant additional donations, BBB Wise Giving Alliance offers the following tips when considering contributions to charities that are newly created by celebrities:

Is there a plan?

Whether the new celebrity created charity is funding disaster relief or other urgent needs, has it announced a plan about what specific activities it wishes to fund? For example, immediate shelter, food distribution, medical treatment, paying for funeral expenses, financial aid, or long term construction projects to rebuild broken neighborhoods?  The possibilities are almost endless but an unfocused effort will likely have a scattered and less than desirable impact on the problem(s) it seeks to address.

What is the proposed budget?

While every charity wants to raise as much as possible for their cause, even a new celebrity created charity should have some type of financial target based on identified goals to achieve some objective. While donors may be excited and inspired when they hear media reports citing a new large sum being raised, the charity may need to quickly adapt its proposed budget to accommodate this growing generosity.

Who’s in charge?

While some celebrities have demonstrated impressive leadership qualities by creating charities that have grown into established and cherished institutions, that is more of the exception than the rule. For most, managing a not-for-profit organization is a learning experience that can succeed or go awry if the celebrity does not seek out appropriate help to manage and administer the organization in a professional manner. For examples, while relatives or friends may be trusted by the celebrity, they may not have the qualifications to properly run an organization. In turn, seeking out experienced individuals to serve on the charity’s board could be an important first step in good oversight and provide needed guidance to do the right thing.

How quickly can they deliver?

When money is being raised for disaster relief purposes, some donors will expect the charity to spend funds almost as quickly as they are contributed. Depending on the nature of the organization’s activities, this expectation may not be realistic, but can influence donor perceptions about the organization. This is where program plans and proposed budgets can play an important role in avoiding decisions delays in carrying out the organization’s work.

Are they transparent on progress?

As audited financial statements and/or IRS Form 990’s for the fiscal year that includes disaster event expenses will usually take some time before they are available, charities would be wise to periodically update their program progress on their website. This transparency can be developed quickly and could result in generating additional confidence in the organization’s abilities.

Has it registered with appropriate government agencies?

New charities will also need to file for charitable tax-exempt status with the IRS. In addition, charities will need to register with the appropriate state government agencies (usually a division of the office of the state attorney general or the secretary of state.) If the charity is soliciting on a national basis, it may need to register with about 40 of the 50 states.  In Canada, charities will need to register with Revenue Canada.

Video of the Week

As part of our Building Trust Video Series, we are pleased to provide a video interview of Lynn O’Connor Vos, President and CEO, Muscular Dystrophy Association (a BBB Accredited Charity) which seeks to cure muscular dystrophy, ALS, and related diseases by funding worldwide research and provide comprehensive health care and support services, advocacy, and education.

Recent Reports

We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:

Finally, remember to let us know by going to www.give.org/charity-inquiry if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one.

H. Art Taylor, President & CEO  
BBB Wise Giving Alliance