NJ Division of Consumer Affairs’ Charity Search App is Well Intentioned but Misses the Mark

Posted 6/4/2012

The New Jersey Division of Consumer Affairs recently unveiled a new app for Apple mobile devices (iPod, iPad, iPhone) that will allow users to search for any organization that is registered with the Division.

The app mirrors in functionality the interface of the Division’s online Directory of Registered Charities, appears to use the same search engine, and requires an active Internet connection to be accessed on a mobile device. To use it, type in the name of the organization you’d like to research; if your search is successful, you will see one or more organization names that match your query. Tap on an organization’s name, and you’ll be taken to a screen that displays the organization’s name, address, phone and charities registration number; the fiscal year-end date of the most recent report on file; total revenues for that fiscal year; total expenses; and breakdown of expenses by “program,” “management” and “fundraising.”

The app provides the following definitions to “guide” a would-be-donor in interpreting the figures:

Program Expenses: The amount spent on actual charitable programs.

Management Expenses: The amount spent on salaries, daily operations, etc.

Fundraising Expenses: The amount spent on solicitations, paid fundraisers, and other fundraising activities.

Although the donor protection intent behind the “New Jersey Charity Search” app is laudable, we have concerns about its execution. Users should be aware that, as with its Web-based counterpart, the search engine is somewhat finicky, and registered organizations could easily be missed with a misspelling, misplaced space and the like. Although the app instructs users to call the Division of Consumer Affairs if a charity can’t be found, clearly some donors won’t be bothered.

Even more disturbing are the underlying assumptions behind the app itself. Rather than taking advantage of the opportunity to educate donors about researching a charity, instead the app presents the most basic financial information without any explanation or context. In addition to its overly simplified and questionable definitions (inexplicably, for example, all salaries and daily operations are defined as administrative expenses), the app reflects the Division’s continued bias that all administrative, fund raising and overhead expenses are somehow inherently “bad” and in no way contribute to a charity’s good work. In the app itself and in communications promoting its release, the Division is perpetuating the very same misconceptions to which non-profits objected vocally last year when the Division floated a regulatory proposal (since withdrawn) that would have, in effect, required many charities to encourage donors to restrict their gifts.

While everyone wants to see program purpose dollars maximized, the fact is that administrative and fund raising expenses are a necessary part of running an organization. They help to ensure efficiency, accountability and compliance with the law; can help an organization by increasing awareness of and support for its activities; and can lead to stronger operations through the building of a more diversified funding base. Indeed, chronic under-spending on these items can risk undermining an organization’s overall effectiveness and long-term stability.

The Center for Non-Profits believes that donors deserve better than to be misled into thinking that the best – or the only – way to evaluate a charity is to calculate the ratios of program dollars vs. admin or fund raising. We have posted a short article to offer donors a broader context for informed giving decisions. Charities can feel free to share it with their donors, board members, funders, staff and volunteers.

The Division of Consumer Affairs is in a unique position to encourage donors to investigate charities in a thoughtful way, taking into account programs, mission, impact and finances. We will continue to urge them to do so, and will continue to offer our assistance in this effort.

Feel free to share your views on this or any other issue by emailing Linda Czipo at the Center at lczipo @ njnonprofits.org (remove the spaces in the email address before sending).

For more information:

NJ Division of Consumer Affairs Press Release: www.njconsumeraffairs.gov/press/5292012.htm

New Jersey Charity Search App (iTunes; Apple devices only): http://itunes.apple.com/us/app/new-jersey-charity-search/id503535534?ls=1&mt=8

NJ Division of Consumer Affairs, Directory of Registered Charities (Web search): www.njconsumeraffairs.gov/charity/chardir.htm

Center for Non-Profits Article, “Tips for Making Informed Giving Decisions”: www.njnonprofits.org/InformedGivingTips.pdf