Monday, February 9, 2009

When Can Donors Trust a Charity?

Charities have gotten a bad reputation thanks to the scandals at some of the larger charitable institutions. So what qualities of a charity can inspire your trust? The definition of trust in Merriam-Webster online is as follows: 1 a: assured reliance on the character, ability, strength, or truth of someone or something b: one in which confidence is placed. I think each of the key words in these definitions can be helpful in identifying the qualities of a trustworthy charity.

Here are the questions I think need to be addressed by a charity to answer the question of their trustworthiness:

1. Character - What is the character of the leadership, especially the CEO, like? Do they show evidence of honesty and integrity? Do they have the style of a servant leader? Do they have a set of core values that exemplify good character for a charity leader?

2. Ability - Does the organization show evidence of an outcome-driven culture? Does it show the public very real results that demonstrate that it is client/mission driven? Is the charity actively engaged with volunteers, donors, other nonprofits, the business community and government?

3. Strength - Is the charity financially strong? Does it have its eye on the money and maintain financial health as reflected in Charity Navigator’s measures of financial efficiency and capacity? How does the charity answer our Six Questions to Ask Charities Before Donating?

4. Truth - Does the charity evidence honest and open communication with all audiences – clients, funders, staff and the general public? Does it have a willingness to acknowledge not just the accomplishments, but the failures and challenges? Does the organization evidence transparency and accountability in its actions? For example, does it have a whistle blower policy? Does it review executive compensation in an objective manner?*

5. Confidence - Does the leadership know where the charity needs to go and how it needs to do it? As noted in last week's entry - Advice to Charities in Hard Times - the CEO needs to provide the vision, hope and passion for the mission to lead the organization. This is not just a recipe for the hard times, but all the time.

If the answers to the majority of the questions posed above are positive, I believe donors, volunteers and the public at large will progressively develop more and more faith in the organization. As the authors of Forces for Good would say, individuals will become "evangelists" for the charity because of their faith in what they see in the actions of the organization in all of the elements noted above.

THAT is when a charity can be fully trusted!

*Note: Charity Navigator intends to begin to document suggested practices, which help answer questions that reflect transparency and accountability, starting later this year.

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