IN THE TRENCHES
By Kimberlee Roth
The United Way in East Lansing, Mich., broke some bad news in 2003, news that quickly had the rumor mill churning some 45 miles away — in Washtenaw County, where one of the charity's former staff members owned a horse farm.
The East Lansing group reported that the employee, a former vice president of finance for the organization, appeared to have taken nearly $2-million from the charity — a crime to which the worker eventually pleaded guilty.
"On television, you'd hear, 'United Way scandal here in Washtenaw County,'" recalls Charlotte Luttrell, senior director of marketing at the Washtenaw United Way, in Ann Arbor, Mich. "Or you'd hear 'United Way scandal hits home' — things like that. It was confusing to people, even though the scandal had nothing to do with the Washtenaw United Way. It was a difficult time for us."
The reports generated concerned phone calls and e-mail messages from United Way donors, volunteers, and grantees, but ultimately the news-media coverage did not have a significant impact on her group, says Ms. Luttrell. (Most of the charity's fund raising for its annual campaign had been completed by Thanksgiving, more than a month before the announcement of the theft.)
But what Ms. Luttrell also believes helped minimize damage was swift action taken by the Washtenaw United Way. Besides staff members responding personally to the inquiries the group received, the organization released statements to the local news media clarifying its complete autonomy as an independent, local United Way, and explaining its financial safeguards. It also sent letters and a chart outlining those safeguards to board members, charity leaders, and donors, and posted the information on its Web site.
"We put the safeguards online so people could see how our checks and balances work," says Ms. Luttrell.
The public has a long memory when it comes to financial scandals among nonprofit organizations. According to a report published in October by Public Agenda, a public-opinion research group in New York, in collaboration with the Kettering Foundation, in New York, and Independent Sector, a coalition of charities and foundations in Washington, most donors — defined by the report as those who had contributed at least $300 in the past year, volunteered at least once, and were members of a civic organization — had specific memories of highly publicized scandals at charities. In most cases the scandals led them to avoid future donations to those groups — for good.
Public confidence in charitable organizations is at a contemporary low, writes Paul C. Light, a professor of public service at New York University, in a his study about the subject issued last October. Just 15 percent of Americans in a study Mr. Light led in 2004 reported that they had a "great deal of confidence" in nonprofit organizations; almost 20 percent said that charities were not good at spending money wisely.
The Senate Finance Committee has held hearings investigating abuses at nonprofit organizations, and Independent Sector had developed a "checklist for accountability" and other tools to help nonprofit organizations deal with increasing calls for accountability and openness.
In such a climate, more foundations are hiring seasoned communications officers to help get their messages out. And some prominent grant makers, such as the Annenberg Foundation and the California Endowment, are supporting efforts to teach charities about improving their ability to communicate with the public. (See this previous Chronicle story on those efforts.)
Regaining Public Trust
Nonprofit leaders and communications experts say that well-planned, audience-specific communications can help charities meet the demand for accountability and recover public trust in times of crisis.
"Not engaging your different audiences exposes a nonprofit to having its motives, operations, values defined by others," says Amber Khan, who earlier this year began a communications consulting business after leaving her post as executive director of the Communications Network, in Silver Spring, Md., a membership organization comprised mainly of communications professionals at foundations. "For nonprofits, because the currency we work in is trust, you must communicate or else you make your agency vulnerable."
Mr. Light says the data about charities and their efforts to convey their messages to the public are quite clear: "Communications that make the biggest difference in terms of public confidence are those about results and performance. The most powerful predictor of confidence is the belief that you're spending money wisely and delivering services efficiently and actually helping people. Americans don't have significant doubts about nonprofit priorities or programmatic content. They'll tell you the bigger problem is inefficiency."
He recommends two fixes for charities that seek to strengthen their communications efforts.
First, given the surge in online fund raising, he suggests that every organization put a link on its Web page to a discussion of results, focusing on tangible improvements in the quality of life of those served.
Secondly, he suggests, add a link to financial information, including the Form 990 (the informational tax return charities must file annually with the Internal Revenue Service) and audited financial statements. "You need to be maximally transparent about where your money goes," he says.
By way of example, Mr. Light cites environmental groups. "Their Web sites tell you they've saved this bird, that piece of property, this number of trees," he says. "The more specific you can get, the more comfortable your donors — and for that matter, staff and oversight agencies — will be."
Charities that emphasize what donors' money will buy — x number of nails, y pieces of lumber — "aren't quite there yet," he adds. "What I look for in my own giving is organizations I've fallen in love with because they're able to use metrics and stories to show me how they make the world a better place."
The Washtenaw United Way does just that on its Web site, which includes a page titled "What Matters," which lists specific results achieved with donations, including 565 safety devices installed in homes of low-income and frail elderly people to help them live independently. The site also mentioned that 99 percent of 449 mothers in a program for new families received prenatal care, that 86 percent of 350 children born to program participants were at or above normal birth weight, and that the organization provided 7,800 nights of shelter for domestic-violence victims and their children. The information about the Washtenaw United Way's financial safeguards is still available online, as are its most recent Form 990 and annual report.
"The communications model for nonprofits should be two people having a conversation over the backyard fence," advises Art Feinglass, author of The Public Relations Handbook for Nonprofits (Jossey-Bass, 2005, $48). Tools such as e-mail newsletters, which are relatively inexpensive, immediate, and offer a human tone, he says, can "convey the sense that the message is coming from a trustworthy entity."
Endorsements from charity clients work well too, he adds, giving an example: "'Thanks to ABC organization, my children now have shoes to wear to school' — all of a sudden you're looking at a picture of kids with shoes; it's not an abstract concept. Donors say, 'I can actually put shoes on their feet, and this organization is the instrument that allows me to do that.'"
It's good for a charity group to blow its own horn, says Mr. Feinglass, but "better yet is for someone else to do the tooting."
While experts cite the importance of telling the public about the concrete results of a charity's work, charity leaders themselves aren't always so keen on the idea. When Mr. Light speaks around the country to executive directors, he says, "I hear a lot of, 'Enough with outcomes already.'"
Part of the frustration, he believes, is that leaders, particularly of smaller charitable groups, have difficulty measuring what they do. One executive director challenged Mr. Light to define how her group, which seeks to reduce pregnancy among teenagers, should measure the results of its work.
"You can talk about what it means to a teen not to get pregnant, to the health of the baby, all sorts of things," he says. "You can talk about the economic and social impacts of almost every nonprofit program I know of. I haven't been stumped yet."
Kelly Parisi, vice president of communications for the American Foundation for the Blind, in New York, agrees that demonstrating impact may be more difficult for nonprofit organizations that don't provide direct services.
In addition to 13 pages of financial information, the foundation's 2005 annual report also shows how funds are used — and how that makes a difference, says Ms. Parisi.
"You have to put a face on and create emotional resonance with the work you do," she says. "What we do, while not direct service, does have a tremendous impact on people with vision loss and their families, so we tell those stories."
For example, her organization devote a lot of effort to lobbying to strengthen the federal Individuals with Disabilities Education Act, which was renewed by Congress in December 2004. In its annual report for that year, the foundation wrote about a blind schoolchild and her mother's efforts to secure Braille textbooks, actions that were successful because of the federal law.
"That story demonstrates our advocacy work," says Ms. Parisi. "It explains a very complicated piece of legislation in a very real way."
Since the nonprofit field is so large and diverse, expectations of accountability, openness, and effectiveness vary, says Ms. Khan.
"Expectations of what a large hospital should do will be different than those of a two-person soup kitchen working in space donated by a local church," she says.
Differing expectations are why it's so important for a charity to know its audience, says Gail Sifferlen, director of marketing and communications at the Central Indiana Community Foundation, in Indianapolis. Ms. Sifferlen says the current push for accountability "means a great opportunity for community foundations — and other nonprofits — to educate their constituencies about how they're different and what they do."
That education requires making sure marketing efforts are tailored, she says. "We're starting to apply some of the strategies that the for-profit world has been using for years," she says. "You have to know who you're talking to — donors, the public at large, financial professionals who advise wealthy individuals about charitable giving — and carve out specific communications strategies for each so that they'll want to take action on your message."
Communications officers cannot act unilaterally to help an organization get its message out, says Anya Karavanov, senior communication specialist at the American Institutes for Research, a nonprofit social-science research organization in Washington. Instead, she cautions, "the decision to be transparent is a business issue that the CEO and board have to stand behind.
"I think the communication staff has a hard time because they often don't get to make organizational executive decisions and have little say in formulating a strategic plan for the organization," says Ms. Karavanov. "They need to sit at the grownups' table."
Too often, she says, communications staff members are out of the loop. "Half the time what happens is a scandal hits and then senior managers say, 'Oh, no, where's the PR person? What do we need to say, and how do we need to spin it?'" she says. "When it's time to do damage control, it's too late."
Charities need to spend more resources on conveying their messages in a thoughtful way, says Ms. Khan, but that's a challenge for many organizations. "Many nonprofit agencies are resource-strapped, time-strapped, often operating with less than one full-time body," she says. "The real challenge is to figure out where and how best to use limited time and dollars to communicate with different audiences who expect to hear from you."