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A Few Bad Apples Bruise the Brand of the Entire Sector

Reprinted from Branding Bytes

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 that 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, 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.

Then there are 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 legitimate nonprofits—and the communities and people they serve—are 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.

    In most cases, the giving public does not do its research, nor does it always understand exactly to whom and for what it is 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 entire sector to educate the public about responsible giving to inform donors to check with organizations such as GuideStar, Charity Navigator, the Case Foundation's giving.org, and the BBB Wise Giving Alliance (give.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.

  • Educate your staff.

    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 coworkers—should the organization be forced to close its doors because of public distrust.

  • Understand the difference between doing what's legal vs. what's ethical.

    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, with spending what the public could perceive as an inordinate amount of your resources on direct mail or telemarketing fundraising instead of on the constituents your organization serves, a not infrequent allegation the media has made against numerous nonprofits.

    Rather, ask yourself, what would my mother think if this decision I'm 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.

  • Be accountable and transparent.

    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.

  • Don't be afraid to blow the whistle.

    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, the millions of honorable people who work for them, and those whom 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.

Larry Checco, Checco Communications
© 2013. Reprinted from Branding Bytes, issue 32, fall 2013. Reprinted with permission.

A Few Bad Apples Bruise the Brand of the Entire SectorLarry Checco is president of Checco Communications and a nationally recognized public speaker, workshop presenter, and consultant on branding and leadership. His books, Branding for Success: A Roadmap for Raising the Visibility and Value of Your Nonprofit Organization and Aha! Moments in Brand Management: Commonsense Insights to a Stronger, Healthier Brand, have sold thousands of copies both here and abroad.

Topics: Nonprofit Leadership and Practice