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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