Accountability

It’s time for us to help donors more accurately evaluate nonprofits as they choose organizations to support. Enter the DMA Nonprofit Federation's Nonprofit Dashboard.

Last month, the American Red Cross was under the microscope again, this time for questions surrounding how it raised funds for Hurricane Sandy relief and, subsequently, how it spent those funds. I did an admittedly unscientific poll of more than a dozen people, asking simply, "What are your thoughts on the Red Cross?" Here's a sampling of their responses: "All we ever hear about anymore is how they're not using the money they raise the right way." "What are they trying to hide?" The word "suspicious" came up a lot. And save for a few folks who had positive associations with the organization and three others who were ambivalent, the majority of responses were negative.

Bad things happen to good nonprofits. During my career in nonprofits, I have been involved in handling a client's death during my organization's program, a product tampering that threatened our biggest fundraiser, an athletic scandal and a mass shooting on a campus.

I was naive until the first time. After that I became obsessed with being prepared.

Here are my suggestions for better crisis management by your nonprofit: Don't wait. Realize that crises take many shapes. Develop a logistical plan and communications plan. Get your social-media house in order. Prepare to speak. Provide media training.

How do you respond when donors ask about how much of their dollars go to funding your overhead? For many folks, this can be a tricky question and one that brings some tension to the conversation. In this week’s episode, Peter Drury from Splash shares a terrific tip on answering the question about your overhead ratio. And perhaps after you watch the video, you will actually want donors to ask you that question.

No one likes a crisis. Especially nonprofit leaders like you. With life already overly busy, increased demand for your services, a constant push to increase funding and more ideas being suggested than you can possibly implement, when do you have time for a crisis? Never.

Alas, that’s the nature of crisis. Things happen when they happen, and usually when you’re least expecting it. So what do you do? Push the worry away and deal with problems if and when they happen? No, instead, you should plan. Here’s a high-level view to get you started.

Your nonprofit’s credibility is directly tied to your reputation. The more credible you are the better reputation you have. Strong credibility is especially important when asking for donations. An integral part to a donation decision lies in whether an individual feels an organization is credible or not — essentially asking, will my hard-earned money be used legitimately? Donors assess your credibility as a way to manage risk. Here are six ways to build your nonprofit's credibility …

Open data and transparency can make a significant difference in the success of an organization. Sharing meaningful data and collecting feedback strengthen the work and the long-term impact, allowing organizations to address what is working and what is not and making them agile and able to correct course early on.

Companies do this all the time. In the for-profit world, customer feedback drives business development and innovation — think Amazon and Yelp. Companies that neglect customer feedback often stagnate and shrivel over time.

Will we ever be rid of the idea that nonprofits can somehow achieve a nirvana where very little (or no) money goes to boring things like salaries, technology, infrastructure, fundraising, leadership development, planning, R&D? I wonder if we could gain more traction by talking less about the negatives of an overhead myth and talking more about the positives of nonprofit organization building.

After enduring some criticism over its performance during Superstorm Sandy, the American Red Cross has agreed to make changes in the way it solicits donations after major disasters to avoid potential confusion over how that aid money is likely to be spent. The relief organization agreed to modify the language it uses on its website in a way intended to give donors more information about whether their gifts will be used to assist victims of a particular catastrophe or for Red Cross operations in general.

This summer, three major charity watchdogs launched the "Pledge to End the Overhead Myth" aimed at urging donors to look at more than administrative costs when giving to nonprofits. Now, that talk has turned to action. Charity Navigator, an 11-year-old leading nonprofit watchdog, currently determines the health of a nonprofit by comparing how much money an organization spends on its programs with how much it doles out for overhead. But soon it's going to include another criteria in its rating system: how nonprofits' results stack up against one another.