By Holly Hall

In recognition of the recession’s severe impact on charities, the Better Business Bureau Wise Giving Alliance announced today that it will allow organizations more leeway in meeting its standards for how much they spend on fund-raising and program activities.

Since 2003 the watchdog agency has required charities that meet its 20 standards to spend at least 65 percent on programs (Standard 8) and no more than 35 percent of contributions on fund-raising expenses (Standard 9).

But for the fiscal years ending in 2008 through June 2010, the agency announced, charities that spend up to 45 percent of contributions on fund raising and as little as 55 percent on programs will still receive the Wise Giving Alliance stamp of approval, so long as they comply with the other 18 standards.

In making the change, the watchdog agency noted that contributions nationwide last year suffered the biggest decline in 50 years, according to Giving USA, the annual tally of philanthropy. Meanwhile, the Foundation Center reported last month that grants from foundations are likely to decline by at least 9 percent this year, a steeper-than-expected drop.

Such big declines in giving, the agency said, could make an organization’s fund-raising expenses appear greater than they were in better times, thus unfairly penalizing charities whose fund-raising costs have not, in reality, increased.

Officials at the watchdog agency also said that ratios showing how much charities spend on fund raising versus programs are of limited value in assessing an organization. Donors should look for additional ways to measure a charity’s effectiveness, such as its impact on social problems, whether it has good governance, and whether its fund-raising communications are clear and honest, they said.