The Nonprofit Marketing Blog

Lack of Public Trust in Charities and What to Do About It

The 2015 Giving USA report announced that giving levels across the United States returned to record highs, finally restarting the philanthropic pause triggered by the 2008 recession.

If donor confidence seems to have been restored and all is right in the charitable world again, why does a recent Chronicle of Philanthropy poll point to stalled levels of confidence in nonprofits? Of the 1,000 or so people surveyed, 64% said they had a great deal of confidence in charities. More than 50% is pretty good, right? So what’s the problem? Donor trust levels have stayed about the same since 2002, when Paul Light, a professor at New York University, started studying donor confidence.

 Since 2002, donors increasingly believe that charitable organizations “waste” money—on staff salaries, fundraising expenses, or other core costs considered administrative or not directly benefiting programs.

Furthermore, nearly half of those polled were mostly concerned about how organizations use their money. This was also the top concern in the Money for Good study released last year. Since 2002, donors increasingly believe that charitable organizations “waste” money—on staff salaries, fundraising expenses, or other core costs considered administrative or not directly benefiting programs. You know what comes next: Donors favor organizations with low administrative and fundraising costs. In fact, 54% of donors like charities that get good ratings by validators like Charity Navigator or the Better Business Bureau, which seem to reward the “lean and mean” organizations. And now we are squarely back in the thick of the Overhead Myth.

Quite a bit has been written and discussed about the Overhead Myth and the charity “watchdogs” or validators, so I won’t add to that debate here. Without a doubt, the measure of nonprofit performance has gotten stuck on financials. This is only one part of the story of an organization’s effectiveness. Nonprofits that have the resources to invest in talent, systems, and infrastructure are more likely to be successful, which is directly seen in their programs’ impact and results.

So, if we know donors are scrutinizing charities more than ever and questioning how nonprofits are using their money, how can we restore donor confidence? Change the conversation. Share your vision and plans for the future. Celebrate your successes, and be honest about your challenges and how you are addressing them. Quantify your results and impact, both in numbers and stories.

If donors see that you are doing good work with visible results, then the “administrative” costs and how you spend money on staff and fundraising, for example, fit within a broader context of organizational effectiveness. It then makes sense that having the financial resources to pay competitive salaries to hire talented and experienced staff will lead to stronger programs and results. Fundraising expenses become part of your organization’s overall strategy for growth and reinvestment of revenue to create a stronger foundation for innovative and expanded breadth of services. You get the picture.

Donor trust should never be assumed. It’s earned. While you may not be able to shift your donors from restricting their gifts to specific programs, you can inspire greater investment by positioning everything you need—from vision to staff to resources—to continue doing your work well.

 

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About This Blog

Linda Lombardi

We’re here to help you win hearts and minds—and donations.

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