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How Fundraising Material Can Be Counted as a Program Cost

February 12, 2013

Charities may classify some of the costs of fundraising activities as program expenses, a practice known as joint-cost allocation. But the activity must meet certain criteria: It must encourage recipients to take action to support the charity’s mission, and it cannot be designed solely to raise money.

Below are examples of two letters included in direct-mail appeals that were supplied by Bennett Weiner, chief operating officer of the BBB Wise Giving Alliance, a charity-monitoring service. Mr. Weiner says the Arthritis Foundation applied joint costs properly for its letter while Defenders of Wildlife did not.

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Charities may classify some of the costs of fundraising activities as program expenses, a practice known as joint-cost allocation. But the activity must meet certain criteria: It must encourage recipients to take action to support the charity’s mission, and it cannot be designed solely to raise money.

Below are examples of two letters included in direct-mail appeals that were supplied by Bennett Weiner, chief operating officer of the BBB Wise Giving Alliance, a charity-monitoring service. Mr. Weiner says the Arthritis Foundation applied joint costs properly for its letter while Defenders of Wildlife did not.

Jamie Rappaport Clark, president of Defenders of Wildlife, said in an e-mail that her group’s letter is three years old and “we are in the process of providing the Better Business Bureau with more current materials and data for the evaluation.”

Related: Watchdog Cracks Down on Misleading Statements on Fundraising Costs

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