The Maryland Association of Nonprofit Organizations became the first state organization of its kind yesterday to certify that a select group of its member charities are particularly well-run and worthy of public trust -- stamping each with a newly developed seal of approval.
The certification program, called "Standards for Excellence," requires organizations to go through a rigorous application process in which fellow nonprofit executives scrutinize financial records, seek documentation of difficult-to-define results, and examine how much information charities provide to the public.
It's all an effort to improve the reputation of the nonprofit world: a rapidly proliferating sector that, studies show, garners skepticism from potential donors even as a booming economy fuels its growth.
Seven Maryland organizations were the first to receive the seal yesterday: The Central Maryland chapters of the Alzheimer's Association and the American Red Cross, the Center for Poverty Solutions, the Fuel Fund of Maryland, Interfaith Housing of Western Maryland, the Maryland Food Bank and Special Olympics Maryland.
Each had to demonstrate compliance with 55 standards, including whether a group's financial statements have been audited, whether it has developed a clear mission statement, how it evaluates its work, and whether its board has devised an appropriate conflict-of-interest policy. In return, the groups received permission to use the logo of approval -- a box with a check mark.
National organizations such as the Better Business Bureau and the National Charities Information Bureau have evaluated nonprofits for years. But those organizations have looked mainly at larger charities that tend to be national in scope. The Better Business Bureau is reviewing its 23 standards to reflect an explosion in online solicitation and changes in nonprofit accounting methods.
Kathleen Enright, director of public affairs for the National Center for Nonprofit Boards in Washington, said the Maryland group's effort was unique. National watchdog organizations, she said, typically develop "minimum standards."
"If you don't meet those criteria, it's considered pretty much unacceptable. The Maryland Association of Nonprofit Organizations is trying to go beyond that. They're trying to promote excellence."
The standards coincide with new pressures on charities to demonstrate their worthiness and justify results.
With nonprofits being formed every month, donors say they are confused about where to send their money and increasingly skeptical of pleas for help.
In Maryland, where charitable giving lags behind that of other, less wealthy states, organizations that depend on donations are particularly concerned. A survey of more than 1,000 Marylanders, unveiled last month for a state charity task force, found that 61 percent thought charities spend too much on overhead. In focus groups, donors said they didn't feel they had enough information on where their money went.
"Marylanders are telling us that they don't have the time to individually research the charities that are asking them for money," said Peter V. Berns, executive director of the Maryland Association of Nonprofit Organizations. "They are eager to have a place to turn that will help them identify organizations that are worthy of their support."
Michael G. Daigneault, the president of the Ethics Resource Center in Washington who spoke to the association's members at a conference yesterday, said self-regulation is vital for the reputation of nonprofits. "No one is really minding the store -- not the government, not the sector itself, not donors," he said.
The Maryland Association of Nonprofit Organizations, a 900-member association, developed its standards over the past several years, with the help of 50 Maryland nonprofit leaders, and financial support from the Charles Stewart Mott Foundation, the Hoffberger Family Foundation, Crestar Bank and Lockheed Martin Corp.
The Fuel Fund of Maryland, which helps pay home heating bills for needy residents and received certification yesterday, wanted to demonstrate its effectiveness to the public as the state prepares for utility deregulation next year, said executive director Mary Ellen Vanni.
"We want our reputation to precede us," she said.
Rob Hess, president and CEO of Baltimore's Center for Poverty Solutions, said of the process: "It gave us kind of a fresh look at everything we do, at how we can move the bar to a new level. I think it brings a new level of respect to the sector."