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May 9, 2011

Trust Between Donors and Nonprofits: Part 1

My latest column for Business First appeared in their Corporate Caring Issue. Every year Business First sponsors the Corporate Caring Awards, which recognize area for-profit corporations who stand out in a variety of ways. Some provided time off for extensive volunteer days for their employees. Some established special partnerships with a particular nonprofit while others complemented the individual efforts and dollar gifts of their employees through match programs. In many small ways, these corporations created a special bond with a nonprofit. This aspect of trust and mutual respect was notable.

This prompts the questions of what it takes for trust and mutual respect to rise to a much larger scale. The current poster child for this is characterized by the success of the Arts & Science Council of Charlotte, North Carolina. This group succeeded in raising $83 million of private money and $150 million of public money to build and endow the operating costs of new museums and a performing arts center along an underused section of downtown Charlotte. And this occurred in a regional banking center that was rocked by the financial meltdown of 2008. Committed leadership and a sound 25-year cultural master plan were critical factors in their success. Also key was the high level of trust the Council had developed with corporate and political leaders over the years.

Trust between donors and nonprofits has been problematic the last decade as donors have increasingly added restrictions and reporting requirements rather than trust nonprofits to use their gifts wisely. Nonetheless, the remarkable success in Charlotte suggests that a coordinated and sustained focus on building trust may pay long-term dividends. The sixth chapter of More Than Just Money devotes 43 pages to issues prompted by the erosion of trust and mutual respect between donors and nonprofits that has resulted in added costs and reduced resiliency.

Why do we feel that restrictions and reporting requirements are necessary components of gifts to nonprofits? Why do we feel that nonprofits will not use gifts well unless the donors give them advice and stay on top of the use of the gift? That is a complex topic with many dimensions, but part of the reason is that nonprofits are not the greatest communicators. With the advent of social media, pervasive internet use and powerful search engines, nonprofits have an unprecedented way to communicate broadly and cheaply if they make it a priority.