In my last couple of posts, I considered the oft repeated concern about “too many nonprofits” (I just heard it again this week). Basically I restricted my observations to the implications regarding startup nonprofits but I think people also frequently raise the alarm about “bad” nonprofits. It’s definitely a valid concern because bad nonprofit organizations can do irreparable harm to the repetition of the nonprofit sector and tarnish the critically important charity brand.
Being able to spot a bad nonprofit means knowing what a good one looks like. I think that there are a few clear identifying characteristics that make the good ones easy to recognize. They have active, engaged boards that provide vigorous oversight. They are forceful and zealous about their work and the need for it. They are as frugal with contributions as they are generous with their time and energy. And they have a rock solid commitment to high ethical standards.
But if you ask me, clearest indication of a good nonprofit is transparency; the more open and direct the accountability, the more likely it is that the nonprofit is sound. In fact the best nonprofits are probably those that can produce lots of information in writing at a moments notice about the need they serve, their operations and costs, and their ability make progress against the promises explicit in their missions.
So what about bad nonprofits? Over the past couple of decades some devious, unethical nonprofit operators have taken advantage of the trust and good will associated with the sector for personal benefit. They mishandled funds and/or used organizational resources as their personal bank accounts, cheating donors, funders, and the clients they claimed to serve in the process. Their lack of transparency covered a flagrant exploitation of the kind of trust that is essential to the functioning of most nonprofits.
Fortunately, these bad apples have been the rare exceptions. Unfortunately, bad news is more newsworthy than good news so the few bad apples have made big waves making the problem seem much larger than it is. This situation makes it vital that organizations work harder than ever to be transparent and ensure confidence in the nonprofit sector.
The sector is, without question, far more complicated than the for-profit world. The difference between for profit and nonprofit performance is a lot like the difference between a track meet and a soccer match. With nonprofits there is usually an indirect relationship between the customer and the consumer as well as a complicated relationship between the value of the financial contribution of the donor/investor and the value of the social benefit.
Public confidence regarding nonprofits has eroded due to a few bad nonprofits. At this point turning the tide of public perception probably has as much to with communication about performance as anything else. How can worthy nonprofits get better at measuring and communicating performance? One way is for nonprofits to be collaboratively “self-policing” by actively sharing and encouraging best practices. Another is a pro-active commitment to transparency regarding operations and outcomes.
