Wall Watchers - Philosophy.

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The Purpose of Wall Watchers [ top ]

Wall Watchers is an independent donor advocate facilitating the information needs of donors.

Wall Watchers seeks to provide the truth of stewardship for donors and then to help donors obtain accurate, detailed information about Christian ministries in the Christian Ministry Marketplace.

Wall Watchers examines the practical epistemology of donor stewardship. Not stopping with the theory and origin of the "why" of stewardship (even though that is done too), but how to put it into practice with "where" and "who" (the practical application of putting a known truth into practice).

Wall Watchers’ desire is to facilitate wisdom, understanding and discerning decision making for donors. This is done in part by providing information on organizations alleging to be charitable and its key leadership in order to identify materially misleading behavior, or wasteful spending practices, as well as identifying those operations that are above board and running efficiently. The objective is to limit consequences of scams and prevention of fraudulent activity, promote better allocations of giving, encourage intelligent questions of organizational structure, financial health, and advance the idea of organizational transparency and best practices.

What Do We Mean By Calling Ourselves "Independent"? [ top ]
Wall Watchers is independent in two ways. In the first instance, the organization's independence is based on the fact that it is not owned or controlled by any entity with a vested interest in any ministry or ministries. In the second instance, Wall Watchers is independent in the sense that it does not derive financial support from the ministries that it researches.

What Kind of Entity is Wall Watchers? [ top ]
Wall Watchers was founded in July 1998 as a North Carolina nonprofit corporation pursuant to section 55A-2-02 of the General Statutes of North Carolina (N.C.G.S.) It is also recognized by the Internal Revenue Service (IRS) as tax-exempt under Internal Revenue Code (IRC) section 501(c)(3) and as a Public Charity under IRC section 170(b)(1)(A)(vi).

What Is Wall Watchers Motivation? [ top ]
Wall Watchers is convinced that donors armed with credible analysis from a reliable, independent source will respond with larger and more frequent giving. Wall Watchers is driven by donor needs. By providing quality information services, Wall Watchers seeks to contribute to the enlightenment of the philanthropic community while empowering donors with charity-specific knowledge that will lead to increased giving and enhanced accountability.

The Need For Ministry Research [ top ]
A key ingredient to any well functioning marketplace is a free flow of information that is easily accessible, accurate, low cost, comprehensive and of high quality. Wherever goods or services are exchanged, there is a marketplace in operation. Those who are involved in an exchange make transactions based on some level of knowledge about the benefits of participating in the "trade." The greater the knowledge each participant in a transaction has regarding the potential benefit of making an exchange, the more likely a "trade" will take place. Additionally, the perceived value of having engaged in the trade will be higher for both parties involved.

Some may argue that there is not a marketplace in the nonprofit world due to the absence of a profit motive. Despite this absence, there remains an exchange of donor dollars for the satisfaction of knowing that those in need have been cared for. With this gift comes a stewardship responsibility to both the giver and receiver to see that it has been administered appropriately and not wasted. Givers will not donate if they believe their gift will be wasted or misappropriated. Even though there is not a "bottom line" net profit measurement of success or failure in the nonprofit world, there are a variety of methods of gaining understanding about how efficiently and effectively donations are utilized. Donors will naturally utilize such measures to gain assurance that their giving was administered wisely. Accordingly, the marketplace transaction for nonprofits is simply the exchange of donor dollars for knowledge that the donation will likely achieve its desired goal of helping those in need.

Some may be troubled by the notion that a marketplace indicates a competitive environment exists for Christian ministries. Several observers have expressed concern in the past that competition is inappropriate in a Christian ministry context. Wall Watchers believes that regardless of one's beliefs about such competitive forces, competition undeniably exists in the realm of Christian ministries. Ministries are clearly vying for donor dollars and regularly use standard business practices to attract as much money as possible to their ministries. Ministries with competitive advantages in terms of scale or distribution regularly exploit these for their own benefit while smaller, arguably more worthy ministries, are unable to match the efforts of the larger ministries. Wall Watchers seeks to help donors obtain accurate, unbiased information about all Christian ministries to help level the competitive playing field in the Christian Ministry Marketplace. If competition exists, it should at least be fair.

It is also quite natural to at first be repulsed by the idea of a marketplace in the realm of giving. Giving is a very personal, and hopefully prayerful, activity. Talk of marketplaces and competition seem to be out of place in this area where the spiritual dimension should take precedence. Nothing in this article is meant to diminish the spiritual aspect of giving. Wall Watchers acknowledges that any marketplace or information service that seeks to aid the Christian donor is ultimately subservient to the Holy Spirit's leading - "Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver" (2 Corinthians 9:7). It is entirely possible that despite a large quantity of evidence that a donation should not be made to a particular ministry, a donor might feel lead by the Lord to give anyway. At the same time, however, we are confident that the Lord can and does use the tools that are available to donors in the Christian Ministry Marketplace to help align their gifts with His eternal purposes. By remaining faithful to the teaching of the Bible and sensitive to the Holy Spirit's promptings, donors can know if, how and when to best utilize the growing information available to donors about the ministries that they support.

The Example of the Successful Financial Marketplace

Because of the success of the world's capitalist-based economies, most people are familiar with stock exchanges such as the New York Stock Exchange or NASDAQ, perhaps the most effective marketplaces in the world. Here stock certificates representing ownership in public companies are exchanged between buyers and sellers based on each individual's expectations on the future value of the company in question. These stock marketplaces are very highly developed and benefit from the following entities and systems:

Government Regulation - Government regulations are comprehensive and set up a framework in which both buyer and seller can be treated fairly.
Self-Regulation - Self-regulators, such as the exchanges themselves, place further constraints on the behavior of their members to ensure trustworthy service to those who access the stock exchanges to trade shares.
Independent Advisors - Corporations selling shares can rely on wide variety of accomplished investment bankers and other consultants to advise them on how to best promote their shares to investors so that they can raise capital to grow their business.
Investment Research - Investors in a corporation's shares can, in turn, rely on a multitude of information sources (stock brokers, mutual funds, Morningstar, Value Line, rating agencies, financial planners, the Internet) - often offering conflicting advice - to help them determine whether purchasing the shares would likely be profitable.

While an investor's decision to purchase a stock may or may not ultimately prove profitable, each party to the transaction enters the exchange feeling highly confident that they are making the right decision. This confidence reflects the quality and depth of the marketplace infrastructure that makes accessing worthwhile advice and information quick, easy and affordable. Accordingly, participants in the stock, bond and currency markets are willing to make transactions each day, which combined, measure in the trillions of dollars. As a result, financial marketplaces like stock exchanges are amazingly effective at efficiently directing investments to where the highest return is expected to be found, thereby spurring progress, growth and innovation. This represents a good example of what might be achieved with a more developed and robust Christian Ministry Marketplace. The Highly Effective MarketPlace

The Current Dysfunctional Christian Ministry Marketplace

The Christian Ministry Marketplace is nowhere near as effective as that of the financial markets. The Christian Ministry Marketplace remains very underdeveloped and might best be described as dysfunctional:

Government Regulation - First, the framework for the market's operation as established by government regulations, notably from the IRS, is weak. Regulations are often not effectively enforced and audits are infrequent. The IRS has little incentive to spend its limited resources in the nonprofit arena, as any fines assessed for infractions by most nonprofit organizations would be paltry in comparison to what similar IRS efforts might yield in the for-profit world. Moreover, even when the IRS uncovers a problem, donors are unlikely to ever find out about it, as such matters are generally resolved behind closed doors as an entity tax issue, rather than an issue important to donors.
Self-Regulation - Second, while the Evangelical Council for Financial Accountability (ECFA) provides the best self-regulation to be found in the nonprofit sector for its more than 1,100 ministry members, there is much more that could be done to tighten the standards it promotes and give donor's greater confidence and representation in the ministries they support.
Independent Advisors - Third, consultants and other advisors to both Christian ministries and donors are not as prevalent or skilled as those available to corporations in the financial markets. Therefore, both groups are less likely to obtain the quality advice they need when making important decisions.
Ministry Research for Donors - Finally, the donor to Christian ministry has far fewer places than a typical investor to turn to get an unbiased assessment of the worthiness of individual Christian ministries. Wall Watchers' free website www.MinstryWatch.com is the only entity that focuses entirely on analyzing Christian ministries and offers an independent view on their merits. The chart below highlights some of the shortcomings of the nonprofit marketplace relative to the corporate marketplace.

While the Christian donor is much better served than the secular donor due to the industry leading efforts of the ECFA and Wall Watchers, there is much work yet to be done in order to achieve a comprehensive and fully functional Christian Ministry Marketplace. Moreover, it would be appropriate and commendable for the Christian community to continue to lead the way to greater accountability and effectiveness in the philanthropic world.

The Potential of the Future Christian Ministry Marketplace

What could the future Christian Ministry Marketplace look like? Here are a few ideas:

Ministry Research - Groups like Wall Watchers should continuously seek to improve their research techniques, provide more value-added subjective research on ministry effectiveness, produce more topical research reports to help educate donors to key issues in the Christian Ministry Marketplace and increase the number of ministries covered. Donor advocate organizations like Wall Watchers should proliferate, thereby giving donors a variety of high quality, independent sources of information to interpret the enhanced data released by ministries.
Ministry Mutual Funds - Ministry mutual funds might arise, advised by experts like Wall Watchers, National Christian Foundation and Geneva Global, which would help some donors, who are too busy to do their own in-depth ministry research, to optimize their giving. Larger donors might regularly hire personalized donor advisors like Calvin Edwards & Co. and Excellence in Giving in order to prepare highly specific, customized long-term giving plans and targeted ministry research that would maximize the impact of their donations. Large Christian foundations could seek ways to share with the entire Christian community the research they have done on ministries. Christian community foundations like the National Christian Foundation and Christian Community Foundation would prosper as Christians sought out their wise counsel and tax-efficient gifting strategies to increase the amount of money available to the kingdom.
Self Regulation - The ECFA might tighten its membership requirements even more, seek means to constrain unusually high spending on fundraising and overhead, increase the number of audits performed, propose means to measure ministry effectiveness and begin to publicly censure those ministries that egregiously breach its standards to further insure that Christian ministries are above reproach and operating in a godly manner.
Government Regulation - Perhaps a charitable version of the Securities and Exchange Commission (SEC) might be developed to promote a better framework for which non-profits, including the Christian Ministry Marketplace, to operate within. Preferably, this would be adopted via self-regulation but this is not likely to occur. We believe that not all ministries would willingly subject themselves to such self-regulation just as many currently are not ECFA members, thus government regulations may be required. This could include:
1. More frequent reporting of financial performance
2. Requirements to measure ministry effectiveness in comprehensive annual and quarterly reports
3. Requirements for larger organizations to prepare consolidated financial statements, segment reporting for larger, complex nonprofits
4. Giving donors a voice through participation in the annual election of board members
5. Full disclosure on executive compensation
6. Serious fines and criminal penalties for failing to notify donors of material information affecting the operations of the organization.
7. Greater disclosure of Conflicts of interest
8. Greater disclosure of related party transactions
9. Greater disclosure on royalty arrangements

All these are already present in the financial marketplace and are one of the reasons why it works so effectively. None are present in the Christian Ministry Marketplace and thus higher levels of giving, modernization and development are undermined. While costs for larger organizations would rise somewhat to abide by these regulations, the return would be even greater as the financial markets for public corporations have proved.

Future Christian Ministry Marketplace

All this is currently possible and, if implemented, would assuredly lead to more and wiser giving by donors and smarter spending by ministries. The net result would be potentially enormous financial blessings for the Lord's work. Accordingly, it is imperative that donors and ministries alike pursue the objective of a fully functioning Christian Ministry Marketplace with intentionality and vigor.

Only a functioning Christian Ministry Marketplace will cause donations to be targeted to the most worthy ministries and motivate ministries to manage their operations as wisely as possible. Below is a chart that contains a partial listing of those organizations that already exist to help make giving a more rewarding experience for Christian donors.

Christian Ministry Marketplace Participants

Christian Ministry Marketplace Participants