Do donors actually use watchdog groups like the BBB Wise Giving Alliance and Charity Navigator to decide which nonprofits to support? The answer may surprise you.

It’s an important question, because as the debate over questionable or downright corrupt practices heats up, the roles and importance of regulators, the trade associations and the charity watchdogs will also be debated.

In an earlier post, What Is The Watchdog Watching?, we took issue with the much-too-heavy reliance on ‘cost of fundraising’ and ‘cost of overhead’ metrics used by some watchdogs like Charity Navigator.

Since then, the key watchdog groups have backed off that metric (see our post, When Sharks Become Vegans), even launching an “End The Overhead Myth” campaign.

While we await new standards and guidelines from the watchdogs, it’s worth understanding what role they play in donors’ decisions to give or not give.

Bottom line: Very little.

In the last 12 years there have been two major studies (in 2001 by BBB’s Wise Giving Alliance and in 2011 by the University of Pennsylvania) to determine whether prospective donors really use these watchdog services to make give/don’t give decisions and to what extent.

The most recent study, Nonprofit Watchdogs: Do They Serve the Average Donor?, conducted by The University of Pennsylvania School of Social Policy and Practice and Harris Interactive, found that:

• “The overwhelming majority of donors (77.6%) do not consult these online intermediaries [watchdog organizations] when making donations.”

• “In fact, a large proportion of donors (57.9% do not use information from any Internet-based source.

• This finding closely matches that of the BBB Wise Giving Alliance study of 2001, which found that only 21% had used the Internet to get information before giving. (The Penn study found the number had increased to 22.3% by 2011.)

• Among those who do use the Internet to assist in making giving decisions, most commonly used is the relevant nonprofit’s website.

The Penn/Harris study goes into great detail as to the use of both internet and watchdog research by level of giving, gender, age, education and ethnicity. You can get into as much detail as you wish right here.

The study concludes:

• “These findings throw into doubt the role that watchdog organizations currently play in the donation process.

• “…we do believe that the watchdog organizations have an important role in our modern and complex society. By keeping organizations honest and allowing interested donors to compare metrics among competing [nonprofits], watchdogs serve an important function in the voluntary sector.

• “However, their rating systems have not yet reached a requisite level of universal acceptance, and many donors are either unaware of their existence or do not care enough to use them.

• “At present, only donors who give large sums of money and those engaged in advocacy use these ratings systematically.

• “We believe that although the interest of the average donor in watchdog organizations is yet to be determined, improving the organizations is nevertheless worth the effort. The better the rating systems become, the more likely donors will be to use them.”

What improvements or changes do you think the watchdog organizations should make that would result in both a better rating system and a greater audience of donors?

Roger