Under the change, to be eligible for BBB accreditation, at least 55 percent of a nonprofit’s expenses must be used for its charitable programs, as opposed to fundraising and administration. That’s down from 65 percent. Also, spending on fundraising now can be 45 percent of contributions, up from 35 percent. The relaxed standards apply to fiscal years 2008 through 2010.

The BBB took the move, it says, because the poor economy has made it more difficult for non-profits to raise money. Even if charities spend the same amount on fund-raising, it says, reduced contributions would drive the spending percentage up. Also, with fewer donations, some groups may need to spend less on programs but maintain or increase efforts to raise money, the BBB says.

The Giving USA Foundation reported that giving from all sources, after adjusting for inflation, dropped 5.7 percent in 2008, the largest reduction in 50 years.

“BBB Wise Giving Alliance recognizes that donations are just not coming in as they have in the past, and this will negatively affect the financial ratios for many organizations that do fantastic work,” said Art Taylor, the organization’s president and CEO.

He added that the group also is sending a message that in a bad economy “donors who fail to look beyond overhead ratios can unduly penalize good charities.”

He said, however, that the leeway in the group’s standards won’t be automatic. Charities that have poor records won’t be eligible for evaluation under the new criteria.

Because the Wise Giving Alliance evaluations charities using a pass/fail system, groups that don’t meet even one standard aren’t eligible for accreditation, which donors may rely on to decide whether to contribute. The two other major watchdogs use star- or letter-based grading systems.

The BBB’s decision to relax its standards drew criticism from another charity watchdog, the American Institute of Philanthropy.

“A forty-five percent fund-raising cost, I don’t think that’s going to fly with the public,” Daniel Borochoff, AIP’s president, said.

He said he fears the decision may lead many charities that had planned to maintain their program spending to shift money to fund-raising instead.

AIP standards call for at least 60 percent of a charity’s expenses to be used for programs. AIP is more restrictive than the BBB Wise Giving Alliance in what it allows charities to count as program expenses.

A third watchdog, Charity Navigator, says it’s monitoring the economy’s effect on non-profits to see whether there’s a need to revise its spending standards, which vary by the type of organization. Charities typically are a year or more behind in preparing their tax returns and other documents watchdogs use in their evaluations.

Charity Navigator Vice President Sandra Miniutti said most groups the watchdog gives its highest, three- and four-star ratings devote 75 percent or more of their spending to programs.

In a poor economy, donors shouldn’t necessarily expect charities to cut their spending on programs any more than on fund-raising or administration, she said.

“I think charities are having cuts across the board,” she says. “I think for many charities, programs would be the last to go.”

WHAT TO DO. When deciding whether a non-profit is worthy of your donation, check with more than one watchdog group. They all provide the financial details on which their evaluations are based. It’s up to you to decide whether a particular watchdog’s standards seem reasonable.

Charity Navigator in particular has many resources you can use when checking out a group, including a section in each group’s evaluation for donor comments.

Finally, as the BBB Wise Giving Alliance says, don’t just look at financial percentages, which a charity can manipulate those to some extent with aggressive accounting. Check out what a group actually does by looking at its annual report and other information you typically can find on its Web site and elsewhere on the Web.—Anthony Giorgianni