Nonprofit University Blog

Trust.  It is such a huge word for the nonprofit sector yet one we spend little time talking about.  Our whole currency, if you will, is based on trust:  our clients, donors, collaborators, and others trust that we will do a good job, deliver a valuable product, protect and steward our dollars, fulfill our mission promises, etc.  If these stakeholders stop trusting us, we are doomed.

Yet, when was the last time the staff and board of your organization talked about trust? What does it means to be a trustworthy organization? How do we execute and demonstrate that trust to all of our various stakeholders, from ourselves to donors to clients to competitors?

The issue of trust is one that I think about a lot, but particularly this time of year when every nonprofit is asking for those end of year gifts and so many individuals are thinking about where to give their precious dollars.  But two events coincided with the time of year to raise this question even higher on my list of “internal dialogues.”  First, I recently had to visit the nuclear medicine department at my local hospital for a test.  I trusted that this injection of nuclear compound into my system was safe; I trusted the nurse’s response to my question of how long the compound would remain in my system.  Why?  Not simply because the hospital is ranked as one of the top 100 in the country (and has been there for a good number of years), but because I can look up the research that demonstrates the overall risk and addresses the ratio of risk of the injection to benefit of medical diagnoses and any consequent needed corrective action.  In other words, I can read for myself—the basis for the ranking, the research—and determine if the trust is warranted.  I am not taking anyone’s word, no slick advertisements, no leaps of faith.

Second, I receive daily Google alerts for nonprofits, which can include links to anywhere between five  and 25 headlines.  On an alert last week, 1/3 of the headlines had to do with an employee—executive director or chief financial officer—or board member “misappropriating” funds.  Not a behavior that instills trust in people, but a behavior that is, unfortunately, increasingly all too common in the sector.   Hope those organizations are talking about trust now!

But the time to talk about being a trustworthy organization, like so many other things, is not when the negative spotlight is focused on you.  The time to talk and, more importantly, the reason to talk about being a trustworthy organization is so that the negative light never shines on you.’

The new year is right around the corner.  People will make personal new year resolutions, most of which, statistics show, are short-lived.   You would serve your nonprofit well, however, if you make a new year resolution to make being a trustworthy organization front and center—and stick to it.  Have those discussions at the board and staff level of what it looks like for your organization to be trustworthy. Where is our evidence of that trustworthiness, from our own impact evaluation data to our testimonials to our board-developed policies that protect our money to our Form 990 that paints a truthful and positive picture?  What do we do to ensure that all individuals associated with us understand and value integrity? How do we demonstrate our commitment to honesty?

Trust is not something to which any nonprofit can afford to give lip service.  We must embrace it and demonstrate our constant commitment to it.

Last month, Newsweek printed excerpts of an interview with William Powers, current President of the University of Texas.

And while not belittling either the title or responsibilities of a president of a large university (as both are huge), what is important about Mr. Powers in the context of this blog is that prior to becoming university president, he was asked by the Board of Enron to head a special investigation into the company’s collapse in order to uncover what went wrong—and why.

The focus of Newsweek’s excerpted conversation is those “lasting lessons” that Powers believes we should take from the Enron collapse.  Enron was—or at least it should have been—a learning opportunity for every nonprofit, as well as every for-profit.

Nonprofits had the opportunity, especially with the passage of Sarbanes-Oxley that, with the exception of two provisions applied only to for-profits, to affirm what it was already doing very well and to take note of areas where they, too, needed to ensure independent oversight.  (And, as an aside, and kudos for the nonprofit sector, a good number of for-profits looked to the nonprofit sector to learn its best practices of board governance.)  And reading Powers’ conclusions, Enron’s collapse should continue to teach the nonprofit sector.  His identified lessons, eight years later, are equally applicable to nonprofits as they are for for-profits.

Here are some of his lessons that are equally applicable to nonprofits.

1. “The good times do end.”  Thus, nonprofits, instead of relaxing in those good times, we need to enjoy the good while simultaneously preparing for the bad times that are coming.
2. “You need to surround yourself with good people who are competent, honest—and are not going to take shortcuts.”  Which means that we must hire good, qualified, honest people and not hesitate to release those who are not.  And this applies equally to board members as it does to staff and other volunteers.  Powers adds that we must evaluate “…the people, not just their talent, but their culture—including how they conduct the rest of their lives.  Are they honest?  Are they trustworthy?”
3. He has several pertinent observations for boards.  In responding to the question of how he would be a different board member today than pre-Enron, he says that he would not succumb to the fear of making “…a fool of myself by asking a stupid question.”  He would ask that question and push to understand.  He observes that at Enron many of the board members has been there “for a long time.  They had grown up with the company; they had come to trust the company and had disengaged a bit.”
4. “…it is likely that each generation is going to forget its values.”
5. We must instill “in young people the idea that they should do honest, hard work for a fair return, whether that’s a financial return or the other kinds of returns we get.  ….  We can teach students that earning rewards fairly is the way to live your life, rather than a get-rich-quick mentality.”

The sad part about these lessons to which Mr. Powers rightfully points is that none is earth shattering; all seem to be basic common sense.  But apparently these days, we need to remind people just what common sense entails.

News Alert:  An estimated 111 million people plan to use the web to donate to nonprofits this holiday season (Nonprofit Times).

A Minnesota nonprofit fundraising campaign, GiveMN, raised a remarkable $14 million via the Internet with its 24-hour “Give to the Max Day” event on November 17. The money, donated by 39,000 people, will support 3,400 Minnesota nonprofits, reports the Foundation Center.

Between now and the end of the year, we will be asked by every charity we know—and many we don’t—for our gifts—or investments, as I prefer to think of them.  (After all, there is no quid pro quo with gifts; we send a thank you and nothing more is expected to the giver.  But with an investment, the giver expects to see a return and the charities should be expected to demonstrate that return.)

According to Convio, preliminary results from their research on people’s plans for holiday giving show that “61% of online consumers plan to give online this year, up from 51% last year—that’s more than 106 million Americans giving online in the last 4 weeks of the year.”  (Connection Café, Posted by Tad Druart)  To many nonprofits, this will sound like good news.  So, to put some parameters on that potential good news, Convio’s 2008 eNonprofits Benchmarks Study found that the average online donation in 2007 was $57.

I know this all sounds wonderful—and it is.  But I wonder and I worry about the influence of technology on what has always been a high-touch task for nonprofits.  Will technology advance philanthropy the way it has politics (think of the role texting, tweeting and photo sharing played in the days after the most recent Iranian election;  the Dean and Obama presidential campaigns;  and the most recent Afghan election where a candidate had James Carville as his political consultant and created an “Obama-like” website)?  And despite the proliferation of sites like boardnet.org and volunteermatch.org, being successful at finding and keeping good board members and other volunteers remains, in the end, a high-touch, face-to-face activity.  Technology can definitely make the introductions, but it cannot make the assessment of the match and it should not make the ask.

At this juncture, the same must be said of technology’s role in philanthropy:  it can make the introductions—as Give to the Max Day surely did for many—but it cannot do the cultivation, the relationship building or the big ask.  Nor should it.

So, let’s get excited about what the end-of-the year flurry of giving—on-line and off—might bring for many nonprofits.  But when the new year starts, let’s return to the basics and build those relationships that will perpetuate and sustain continued—and we would hope growing—investments in the important work of our nonprofits.