A not-for-profit entity’s (NFP’s) greatest asset is unquestionably its reputation. When an NFP’s reputation suffers, it does not just affect that particular organization, it affects the constituencies and communities served by the organization. Indeed, citizens rely on NFPs to accomplish a mission⎯whether to strengthen and build communities, advocate on behalf of important causes, provide educational opportunities, help the most vulnerable in our society, or enrich our lives in other countless ways.
Charitable organizations that rely on contributions from the public to do their work, more than any other type of NFP, live in the public eye. An NFP’s failure, whether real or perceived, elicits a visceral reaction, leaving an organization’s supporters feeling betrayed and its clients abandoned. Left unaddressed, reputational damage can set an NFP on the path of self-destruction.
Fortunately, NFPs can proactively address reputational risk by using a proven risk
management approach that touches all four categories of organizational objectives set forth in the COSO Enterprise Risk Management - Integrated Framework: strategy, operations, reporting, and compliance. This article will help you develop a reputation risk management approach.
About Reputational Risk
Reputational risk is the potential loss due to damages to an organization’s reputation
that can result in lost revenue, increased costs, and a decrease in constituents’
perceived value of services. Reputational damage can severely compromise an NFP’s ability to accomplish its mission. An organization with a reputation issue will find it increasingly difficult to attract and retain talented, well-connected board members. It can destroy the morale of volunteers and employees who are vital to accomplishing the organization’s programs. Further, a bad reputation can have some major financial consequences. It can hinder an organization’s ability to secure grants and contributions, attract new members or clients, or even put the organization at risk of heightened scrutiny from regulatory agencies and watchdog organizations.
Your reputation is not only what is true about your organization, but what is
perceived⎯and how you react to both.
10 Ways to Monitor Your Organization’s Reputation
To monitor your reputation, you must first know what your reputation is, both internally and externally. Here are some tips to get started:
1. Google your organization and look at the top 10-25 results. These are the first things the general public will see about you. Are they aligned with your vision?
2. Take an objective look at your website to see how your organization is being presented. Is it easy to navigate and find your location and contact information? Is the information up-to-date and consistent with your marketing materials? Are you transparent with financial and operational information? Can you provide more? Consider providing copies of your annual audit, Form 990, and annual report for download, if you don’t already. Can users get to those downloads within 2-3 clicks? If someone has questions about the financial information, is it clear who to contact?
3. From a risk management perspective,
Do you have proper insurance coverage? As you engage in new activities, make sure that your insurance coverage keeps up with changing needs.
Are there any legal claims against your organization?
Are you aware of, and following, all federal, state, local, and international laws and regulations applicable to your organization?
Are you aware of, and following, compliance requirements from lenders, funders, and accreditation agencies?
Are your human resource practices in compliance with federal and state requirements?
4. Review your social media strategy. Ensure that you are clear on how and when you respond to comments about your organization. Provide guidelines or adopt a policy on social media activities and make sure that volunteers and employees are clear on what is and isn’t acceptable on social media, particularly those who use a professional identity to represent the organization. Be sure to regularly review your policy—and enforce it.
5. From a customer service perspective, provide regular and easy opportunities for your members or customers, volunteers, and employees to provide feedback about your organization and programs. Be sure you respond to feedback received, making changes when warranted.
6. From a finance perspective, have you looked at how your organization is depicted on third-party websites? Besides the state charity departments that have searchable information, consider the following:
Better Business Bureau Wise Giving Alliance: A nonprofit organization that evaluates charities’ governance, effectiveness, financial reporting, and fundraising practices using a list of 20 Standards for Charity Accountability. Its purpose is to help donors make informed giving decisions and promote high standards of conduct among organizations that solicit contributions from the public.
Charity Navigator: A nonprofit organization that is a charity rater. Their rating system currently examines two broad areas of a charity’s performance, Financial Health and Accountability & Transparency, and will eventually examine a third, Results Reporting. The ratings are intended to show givers how efficiently they believe a charity will use their support; how well they have sustained their programs and services over time; and their level of commitment to good governance, best practices, and openness with information.
Guidestar by Candid: A nonprofit organization that gathers, organizes, and distributes information about U.S. nonprofits to a broad audience at no cost. They encourage nonprofits to share information openly and completely. While many NFPs know that Guidestar provides copies of the Form 990, some are not aware that Guidestar also allows NFPs to provide a host of other information, ranging from board leadership practices, to financial data and program descriptions and results, to diversity strategies.
Internal Revenue Service Exempt Organizations Business Master File Extract: Includes cumulative information on exempt organizations. The data are extracted monthly and are available by state and region.
7. Identify a champion in your organization who will be ultimately responsible for monitoring your NFP’s reputation. Different staff may evaluate and share information with the champion, as well as the individual in charge of risk management at your organization and the audit committee.
8. Set up alerts (e.g., Google Alerts) or subscribe to a newsfeed service that allows you to monitor the internet for content published about your NFP.
9. Contact charity ratings organizations to discuss any concerns about your organization’s rating. Understand what can be done to improve your rating.
10. Consider hiring a public relations firm, particularly if your NFP receives (or expects to receive) negative attention in the press. Some organizations may hesitate before spending funds on an external consultant. It is usually best to confront a situation (or potential situation) before it comes to a head.
Conclusion
Now that you have a sense of what the perception of your organization is, determine if you need to change it. Consider whether your current reputation is consistent with your overall vision and strategy. If you need to make changes, put together a plan to improve. Whether you need to improve your organization’s reputation or not, it is important to ensure that you have steps in place to monitor it on a regular basis.
Reputation issues, whether real or perceived, can compromise an NFP’s ability to fulfill its mission; raise contributions and support from donors, members, and volunteers; and operate successful programs. By taking a proactive approach, it is possible to mitigate reputational risk. Successful organizations monitor their reputations and respond to concerns, whether real or perceived, that pose a significant risk to the organization.