Issue 32, Fall 2013
A Few Bad Apples Bruise the Brand of the Entire Sector
In the communications business perception is reality.
And lately the media has provided the giving public a large dose of perception that many nonprofits are often less than accountable or honorable in the use of the funds they raise, as well as the tax-exempt status the government bestows on them to do public good.
The sad fact is that there is truth in many of these stories.
Sadder yet is that the skepticism stories such as these generate makes it increasingly difficult for the overwhelming majority of trustworthy nonprofits to raise funds, especially during these harsh economic times.
The Issue
In June, CNN, in partnership with the Tampa Bay Times and the Center for Investigative Reporting, ran a long, detailed story on the results of their year-long investigation to identify “America’s worst charities”.
The CNN story named names and gave specific examples of how some “charities”, in particular those that employ for-profit companies to raise their donations, use names similar to those of legitimate charities to fool donors, lie to donors about where their money goes, secretly pay themselves consulting fees, spend an inordinate amount on fundraising, along with other questionable practices.
More recently, The Washington Post published a front-page story entitled “Millions lost by nonprofits, with little explanation” that has spurred federal and state officials to launch numerous investigations into whether hundreds of nonprofits properly reported financial losses to authorities, including hundreds of millions of dollars in the aggregate lost to fraud and employee embezzlement.
This does not include the one-off stories about mismanaged organizations that fall under the rubric of “nonprofit” that tarnish the entire sector’s trusted brand image every time they are mentioned in the media.
Not a pretty picture for donors seeking to ensure that their donations serve the greatest good.
The Challenge
Some within the sector fault the media for airing the dirty laundry of what they rightfully note turns out to be a relatively small number of “outliers” that give the public the impression that the entire nonprofit world teems with such dubious activities.
Outliers or not, these marginal nonprofit organizations are still legally part of the sector, taking advantage of their tax-exempt status—and donors.
Besides, we who work in or for the sector can’t blame the media for exposing these bad apples. It’s the media’s job to investigate and report such things.
In fact, as citizens whose taxpayer dollars subsidize the tax-exempt status of the sector, we should all take heart when outliers are exposed. Every dollar donated to one of these problematic organizations is a dollar a legitimate nonprofit—and the communities and people they serve—is doing without.
However we care to rationalize this situation, it should not absolve us from asking what should be done to reaffirm the public’s trust in the sector and its all-important work.
Some Suggestions
Educate the public
Educate your staff
Understand the difference between doing what’s legal vs what’s ethical
Be accountable and transparent
Don’t be afraid to blow the whistle
In most cases, the giving public does not do its research nor does it always understand exactly to whom and for what they are giving. Many people simply give based on a nonprofit’s name or to appeals that come through e-mails, social media or heart-wrenching TV commercials.
It’s incumbent on the sector to educate the public about “responsible giving,” to inform donors to check with organizations such as GuideStar.org, Charitynavigator.org, giving.org, and the Better Business Bureau (bbb.org), among others, before they make a donation, regardless of how large or small that donation might be.
Giving to responsible, trustworthy nonprofits deprives the outliers of funding and helps ensure that generously donated financial resources are put to the best and highest uses.
The overwhelming majority of people employed by nonprofits come to the sector because they are honest, honorable, often passionate people wanting to do good by helping others.
What’s at risk, however, if they become sloppy with their financial oversight or ethics?
Everything, including their jobs—as well as the jobs of all their co-workers—should the organization be forced to close its doors because of public distrust.
Lots of organizations get themselves in trouble here.
If you’re sitting around a conference table wondering if the decision you and your colleagues are about to make is legal or not, a red flag should immediately shoot up.
Doing what’s legal does not always translate into doing what’s right.
There’s nothing illegal, for example, to spend what the public could conceive as an inordinate amount of resources on direct-mail or telemarketing fundraising instead of on the constituents your organization is missioned to serve, a not infrequent allegation the media has made against numerous nonprofits.
Rather, ask yourself, what would my mother think if the decision we’re about to make finds itself on the front pages of newspapers or on the six o’clock news.
The sector can do without any more negative stories.
Poor bookkeeping is no excuse.
Yearly, if not monthly, budget reviews are a must, not a luxury! And dual sign-offs on invoices is a wise internal financial control policy.
If you know of someone in your organization—or any other nonprofit, for that matter—who is doing the wrong thing, don’t be afraid to blow the whistle.
You’ll be doing the entire sector—including the hundreds of thousands of nonprofits doing all the right things, as well as the millions of honorable people who work for them and the people they serve—a big, big favor.
This is the sector in our economy that I’ve been most proud to serve for nearly four decades. Let’s not let a handful of bad apples take that pride from us.
My thanks and appreciation to GuideStar for republishing this article in its Jan. 9, 2014, on-line newsletter.
Bits & Bytes
- If you are confused by the issue of income inequality in this country, the following video may help clarify things for you: http://www.utrend.tv/v/9-out-of-10-americans-are-completely-wrong-about-this-mind-blowing-fact/
- Internet radio talk show host, Tim Danahey, recently invited me to be a regular Washington, DC, contributor on his show. For stimulating conversation and valuable insights into the pressing issues of our time listen to Tim on The Tim Danahey Show (www.danahey.com)
- There are countless ways to scam the most vulnerable among us, including tax-lien auctions that lead to foreclosure. Check out the following column on "Capitalism vs Cannibalism at http://www.accountability-central.com/nc/single-view-default/article/capitalism-vs-cannibalism/
As always, I look forward to receiving your feedback, questions, success stories and branding challenges. Also, if you are in need of a motivational speaker, trainer, branding consultant/coach, or management consultant who can help you answer the questions: Who are we? What do we do? How do we do it? And should anyone care? I invite you to for more information.
In the meantime, good luck with your branding! — Larry
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