September 2006

The August 2006 Question of the Month asked, "Do you believe that the public has more or less confidence in the nonprofit sector than it did five years ago?" We compared last month's responses to those from August 2004, when we asked, "Do you believe that the public has more or less confidence in the nonprofit sector today than in the past?"

	August 2004	August 2006
Less	58%	51%
More	19%	35%
About the same	18%	12%
Don't know	5%	2%

Why Confidence Has Decreased

Participants who said that confidence has decreased identified the following reasons (respondents could select more than one reason):

Why Confidence Has Decreased
Scandals in the sector	73%
People don't understand the complexity of the sector	48%
Nonprofit executives' salaries	45%
Low program ratios	12%
It's much easier to get information on nonprofits today	9%
Other	6%

Two anonymous participants suggested additional causes: "Departure of founders and those with passion for the mission, with replacements more interested in power of running a business, and taking advantage of naive boards," and "People believe that there are too many organizations addressing the same broad issues and that there is duplication of effort as a result."

Why Confidence Has Increased

Respondents who said that confidence has increased identified the following reasons (respondents could select more than one reason):

Why Confidence Has Increased
It's much easier to get information on nonprofits today	61%
Nonprofits are more transparent	43%
People understand the sector better today	39%
People trust other sectors less today, so they trust the nonprofit sector more	35%
Donors have a better idea of how to evaluate nonprofits today	26%
Other	17%

Mark Cole of the Aspen Valley Ski/Snowboard Club suggested, "Competition within the sector has forced us to do a better job of communicating our stories to our constituencies." Carol Painter of the University of Auckland pointed to higher standards of nonprofit management. Randy Turner of the Smith County Chapter of the American Red Cross agreed: "Successful track records & better efficiency." An anonymous participant mused, "I think big disasters such as tsunami & katrina have increased information about nonprofit work."

Recommendations for Increasing Confidence in the Sector

Two years ago, participants suggested several ways to improve confidence in the sector. So last month, we asked, "What can be done to increase the public's confidence in the nonprofit sector?" We listed the eight ideas mentioned most often in August 2004 as well "Other"; participants could select more than one response:

Ways to Increase Confidence in the Sector
Every nonprofit must be transparent	62%
Every nonprofit should adopt a code of ethics	54%
Every nonprofit should help educate the public about the sector	54%
Every nonprofit should have a self-evaluation program	43%
The laws we already have should be enforced better	40%
A ratings system or seal of approval should be created	37%
New laws governing the sector should be passed	19%
More resources should be given to federal, state, and local regulators	17%
Other	11%

Participants also offered other ideas. Randy Turner of the Smith County Chapter of the American Red Cross called for "increased accountability to donors." Nancy Nehr of Silver Spring Dance stated, "Non-profits should communicate clearly with the community in which they serve." Miami Beach, Florida, grants consultant Karen L. Oleet suggested, "Increase in media relations/communications proportionate to fin. size of org."

One anonymous participant advocated not allowing nonprofits to be established as tax shelters. Another unidentified respondent urged, "Run them [nonprofits] more like a business and demand accountability." A third wrote, "Organizations should seek out partnerships & coalitions to minimize duplication."

Conclusions

Diane Menio of the Center for Advocacy for the Rights and Interests of the Elderly (CARIE) pointed out that this issue reflects the complexity of the sector itself: "Unfortunately or fortunately, the sector is large and diverse. This leads to many misunderstandings about operations, salaries of CEOs, etc. As a director of a smallish nonprofit we struggle to respect our staff and respond to the demands of our funders."

An anonymous participant asserted that the problem requires a new approach: "Nonprofits will be successful only if they balance the 'mission' with the generation of revenue which is directed to the attainment of the 'mission.' It is a paradigm shift that requires a rethinking that business, revenue/money is evil and capitalism and individual achievement is bad. Executive compensation and transparency is a smokescreen for a lack of efficiency, success and accountability."

Finally, another unidentified respondent suggested, "Education and ethical behavior are key to improving public confidence."

Suzanne E. Coffman, September 2006
© 2006, Philanthropic Research, Inc. (GuideStar)

Suzanne Coffman is GuideStar's director of communications and editor of the Newsletter.