Nonprofits have long relied on public trust and confidence that they are operating with good intent. But in recent years, that trust has been eroding. While, generally, the nonprofit sector still continues to be more trusted than (for-profit) business, government, and media, the public trust issue is a serious one that needs to be addressed to preserve a strong and vibrant nonprofit sector – one that continues to lead us toward greater equity, inclusiveness, and global health.
Mother, motherWhat’s Going On? – Al Cleveland, composer
There’s too many of you crying
Brother, brother, brother
There’s far too many of you dying
You know we’ve got to find a way
Why do people trust nonprofits?
Various polls have long shown that people trust nonprofits more than other entities and agencies in other sectors. Here are my thoughts about the reasons for such trust:
- Historical goodwill.
- The absence of owners (who would presumably have a profit motive that might conflict with the publicly state mission of the organization).
- Transparency – the requirement that they file an annual information return that is an easily accessible public document.
- Laws protecting against self-dealing, private inurement, private benefit.
- Board members (mostly independent) who provide oversight and act as stewards protecting the public’s interest.
- Donors and volunteers who may also be positioned to hold leaders and organizations accountable (e.g., as potential whistleblowers).
Why do people not trust nonprofits?
Despite the greater trust in nonprofits than for-profits and government, according to the Edelman Trust Barometers, the trust percentage in nonprofits dropped from 58 percent in 2017 to 49 percent in 2018 before moving slightly back up to 52 percent in 2019. Here are my thoughts about the reasons for the distrust of nonprofits:
- A few bad actors who lead nonprofits to provide themselves with undeserved and/or unlawful benefits.
- Board members who fail to meet their fiduciary duties, allowing the nonprofits they govern to operate ineffectively and inefficiently without reasonable direction and oversight.
- A lack of diversity and inclusion in leadership positions within nonprofits.
- Big institutions (e.g., foundations, health care systems, colleges and universities) that reflect and fail to adequately address broader inequities.
- Media stories that tend to focus on scandals and problems (e.g., power imbalances, unethical donors) but rarely on the good work and positive achievements of nonprofits, giving readers a false perception of the nonprofit sector.
- Social media posts that are used as forums for criticisms and complaints without reasonable knowledge of the facts and circumstances and without care of how they might be misinterpreted.
- Organizations that fail to speak out or advocate on major issues that are central to their missions or operations.
Why do nonprofits rely on public trust?
No question, nonprofits are reliant on the public’s trust. Here are some reasons why:
- They rely on the trust of donors about how donated funds will be used and more generally about the effectiveness and efficiency of their plans and operations.
- They rely on the trust of consumers about the quality and effectiveness of their goods and services.
- They rely on the trust of the persons they serve to help assure the believability of their communications and educational content.
- They rely on the trust of prospective and current employees, board members, volunteers, and others to carry out the work.
- They rely on the trust of their peer organizations and others in building organizational relationships, alliances, and partnerships.
- They rely on public trust as a competitive advantage they may have over for-profit (social enterprise) competitors.
- They rely on the trust of the public, legislators, and media to help assure they can maximize the effectiveness of their advocacy, including their legislative advocacy for helpful laws and against harmful laws.
- They rely on the trust of all in believing they are independent and not simply agents of their donors, funders, and clients.
How can nonprofits improve public trust of the nonprofit sector?
It’s imperative for nonprofit leaders and advocates to work toward improving public trust of the nonprofit sector. Here are some ideas for how they can do that:
Taking Care of Their Own Stuff
- Investing more in courageous and engaged governance and distributed leadership focused not only on the mission of the organization but on its core values and long-term sustainability and intergenerational equity.
- Adopting and dutifully enforcing a conflict of interest policy that helps assure board members and persons in positions of authority do not abuse such authority to benefit themselves or related persons/entities.
- Generally avoiding interested director transactions except if legally permissible and where good, services, and/or property is offered to the nonprofit at below fair market value or with some other advantage not reasonably obtainable from another party.
- Providing greater transparency as to the nonprofit’s governance, organization, operations, financials, and performance (e.g., program-related metrics).
- Completing and filing Forms 990 with sufficient detail and professionalism (as they may be reviewed by major donors, grantmakers, media, charity review organizations, philanthropic advisors, allies, and opponents).
- Developing and complying with communications policies that include attention to priorities for the broader sector and greater responsiveness on significant public issues deserving of the nonprofit’s action.
- Placing greater emphasis on diversity, equity, and inclusion throughout the organization.
- Encouraging collaborations (including joint ventures with for-profits and public-private partnerships) that ensure the nonprofit’s involvement and participation are designed for compliance and effectiveness.
- Developing and enforcing policies regarding donor influence that factor sources of funds, consistency with the organization’s values, and what privileges or rights expected in return.
Looking Beyond Their Organizations
- Supporting better public understanding of the overhead myth and why it is often meaningless and destructive to compare nonprofits based on overhead ratio.
- Investing in greater education of organizational decision-makers to understand broader policy issues that may affect the organization’s operations, its beneficiaries, and/or its environment.
- Investing in stronger advocacy efforts, including those targeted at laws affecting the sector and policies affecting the planet.
- Promoting stronger self-regulation by their particular subsector (e.g., donor-advised fund sponsoring organizations, fiscal sponsors, colleges and universities, hospitals).