New survey data indicates the actions of a few 'bad apples' put donor dollars at risk.
Recently, wave after wave of news stories about some of the best known and beloved charities embroiled in scandal, mishandling of funds and service delivery, and blatant infringement of human rights has rocked the world of philanthropy.
Here are just a few of the recent, high profile nonprofit “walk of shame” headlines:
- Oxfam: “Dirty Helping Hands”
- UNICEF: “In December 2015, an international panel blasted the United Nations for indifference and cover-up in the investigation of sex crimes against children …”
- International Red Cross: “International Red Cross says 21 staffers paid for sexual services since 2015”
- Save The Children: “Save the Children admits 'unsafe behaviour' in workplace”
- Wounded Warriors: “Wounded Warrior Project's top execs fired amid lavish spending scandal
And a new contestant vying for “despicable nonprofit leader” in the news:
- Katrin Vanclas: “Feds: Tech Darling Katrin Verclas Defrauded the U.S. State Department” (and The Knight Foundation) to the tune of over $1.2 million dollars, taking those grant dollars via her sham nonprofit and spending the funding on her personal expenses.
Will this bad behavior hurt all nonprofits?
MissionBox staff wanted to know if the loss of trust in these venerable charities will have a negative impact on all nonprofit giving. Donors could be thinking, "If this can happen in nonprofits with plenty of resources, what is going on at smaller organizations?”
To gain insight into the possible effects these scandals have had in the nonprofit landscape, MissionBox sponsored an online survey of over 1,000 women from the Midwestern U.S. The goal: to quantify the impact that charity scandals might have on all giving in 2018, and assess ways in which nonprofits can address this topic — whether they have been guilty of less than careful management practices or acting with total operational integrity, as most nonprofits do.
If results showed that the "mud" does indeed splash on all organizations in the nonprofit sector, how can nonprofits repair the damage to their reputations caused by these disgraceful acts of neglect and mismanagement?
Who were the survey participants?
Many research studies conclude that women are more likely to donate, and donate larger amounts, to charities than their male counterparts. In one study, baby-boomers and older women gave 89 percent more to charity than men their age, and women in the top 25 percent of permanent income gave 156 percent more than men in that same category.
Midwesterners, on the other hand, tend to reflect the levels of charitable giving that occur across all areas of the U.S. One Chronicle of Philanthropy study concluded that affluent residents of five Midwestern states are about as generous as most other well-off Americans.
MissionBox found that of the 1000+ surveyed:
- 690 made donations in 2017, with the number of charities receiving donations ranging between 1 and 10+
- From the group that did donate, 45 percent indicated that they gave more in 2017 than they did in 2016
- While 42.1 percent gave from 5 percent to 25 percent more in 2017 over 2016, almost 5 percent reported that they gave 75 percent or greater in 2017
Giving by individuals totaled an estimated $281.86 billion in 2016, reflecting a rise of 3.9 percent (2.6 percent adjusted for inflation) over 2015. In 2017, these numbers rose by 4 percent, totaling an estimated 2017 donations by individuals at $292 billion dollars.
Our survey also found that 42.5 percent of donors reported that they will lower their donations and that 21 percent report that they will stop giving in 2018, which represents a staggering potential loss of billions of dollars overall in individual donations to charities and nonprofits in the U.S.
The steady stream of nonprofit and charity scandals has the potential for a significant drop in activity from traditionally generous donors. Nearly 60 percent of survey participants indicated they will be giving less in 2018, a reduction directly influenced by news of nonprofit and charity scandals related to financial malfeasance or exploitation of charitable contributions.
Regaining donor confidence
So what can nonprofits do to regain and/or keep the trust of their loyal supporters? Over 50 percent of respondents selected options related to regular audits, both of operations and performance, as well as transparency as provided in periodic updates to the public to win back trust.
This survey indicates that it is indeed likely that scandals do bleed across all charitable sectors. That said, trust is difficult, but not impossible, to rebuild.
All nonprofits can learn from the bad behavior of a few organizations caught up in scandals. Nonprofits should prioritize being transparent, forthcoming, provide quantitative data on how money is allocated, and the quantity and quality of services delivered. Nonprofits should frequently communicate the impact of those services in annual reports, newsletters and general communications to supporters and donors.
Here are some helpful articles on how to achieve optimal transparency and accountability for your donors:
- Financial Transparency for Nonprofit Organizations: Taxes and More
- Mitigating the Risk of Fraud
- Nonprofit Financial Management: Avoid Fraud With Internal Controls
- US Nonprofits: The Power of the Annual Report
- Charity Financial Reports
- Donors: Once You’ve Got Them, How Do You Keep Them?
This survey was conducted the week of March 26th, 2018 by MissionBox.