To gauge the impact, prevalence and rise of online charity “watchdogs” these days, look no further than the recent headlines about the Wounded Warrior Project (WWP). Amid allegations of controversial spending and accounting practices, the not-for-profit organization has experienced a serious shake-up in leadership, sharp decline in donations, and a significant increase in views of its online rankings.
The media storm of coverage was ignited by poor rankings given to the organization by Charity Navigator and CharityWatch. Critics of these online resources, including many nonprofit leaders, have pointed to inconsistencies among the various watchdog groups to question the validity of their results. WWP itself has a history of fighting negative rankings, according to an article recently published by Peter Miragliotta, Jr. of MASST Associates, LLC.
Living with the Watchdogs
Miragliotta urges not-for-profits to find a way to live with these watchdogs – without the need to love them. WWP’s board waited a whole week before finally announcing they would hire an independent advisor to investigate the concerns, but by then the damage to both their reputation and donor loyalty was done. What transpired before and during that week can teach some valuable lessons to nonprofit leaders, as Miragliotta points out:
Lesson #1: Donors are listening to charity watchdogs
The public’s reaction to the WWP story and the backlash that followed speak to the influence that online evaluators have on donors. This was compounded by the WWP media coverage, which enlightened an even broader segment of the population to the existence of these watchdog groups.
Lesson #2: Donors are concerned that their dollars are making a difference
Donors are taking advantage of what they deem to be an accessible and reliable measurement of how their dollars will be spent by charities. Never before have not-for-profits and their spending been so scrutinized, benchmarked and compared.
Lesson #3: Not-for-Profit leaders should educate themselves
Nonprofits can actually benefit from the existence of multiple charity reporting agencies if they educate themselves on the similarities and differences between the various groups. By taking a strategic approach to each one, they can optimize these online profiles to work to their advantage.
Lesson #4: Not-for-Profits need to be vigilant and proactive
Ultimately, it is up to not-for-profits to make sure what is being said about them is true and to challenge what they disagree with. Advocate for your online profile to confirm its accuracy and make sure donors can readily find the reasons why your organization is deserving of their confidence and financial support.
The Limitations of Transparency
This rise in technology, epitomized by these online watchdogs, is forcing not-for-profits to find ways to be more transparent. However, this transparency is complicated by a series of limitations.
First, the information itself is often very limited and easily misconstrued. Financial documents don’t tell the whole story, outcomes are given more emphasis than output, and much of the data is simply lost in translation when consumed by the public.
Donors themselves are limited in the time they invest in learning about a not-for-profit organization, as well as their skewed understanding, personal biases and tendency to assume the worst.
There are inherent problems in the evaluation process itself, as evidenced by the WWP controversy. The poor evaluations by Charity Navigator and CharityWatch conflicted with a much more positive rating issued by the BBB Wise Giving Alliance. Think of it like the Rotten Tomatoes website for movie reviews – viewers and critics have drastically different opinions of even the best movies because their evaluation criteria and preferences differ.
Charity Navigator, CharityWatch and the BBB Wise Giving Alliance each use their own set of standards and measurements to evaluate not-for-profits. GuideStar, on the other hand, is an objective evaluation tool that provides you with pure data on which to make donor decisions, not opinions or ratings.
It is helpful when the reporting agency provides a clear picture of why and how they judged a charity in a particular way, but unfortunately the “secret sauce” is not always apparent. Not-for-profits can optimize their online reputation by uncovering how each individual agency operates.
Adjusting to a New Normal
So what’s a not-for-profit leader to do in the face of this new scrutiny and heightened demand for transparency?
Seek help from a qualified not-for-profit consultant to assess and update your organization’s online profiles
Understand the similarities and differences between the various reporting agencies
Monitor online profiles regularly and challenge negative ratings in a constructive way
Remain focused on your organization’s outcomes, not outputs
Donors should also tread carefully and knowledgeably in this new environment. Understanding that ratings can vary significantly from one website to the next, it is unwise to take any information at face value. Ask questions of the not-for-profit and, in cases where a large or recurring gift will be made, get involved in the organization to become more intimately aware of their operations and mission.
The Road Ahead
One thing is sure – the not-for-profit watchdogs are here to stay, and I predict more will be coming out of their cages soon. Along with that expansion will come more refinements in measurements and additional methods of evaluation. I wouldn’t be surprised to see a Yelp-type forum of donor feedback become the next technological advancement in online charity assessments.
The WWP debacle ended in both the CEO and COO being dismissed. Many people argue they did nothing wrong, but the appearance of impropriety and lack of strategic response were enough to create serious problems for the whole organization. How a not-for-profit adjusts and responds to this new world of accountability and transparency will be what separates the most successful ones from the rest.