Click here to listen to the audio recording of the event. 

Minnesota Versus National Perceptions

In his introduction of Paul Light, executive director, Rich Cowles, stated that the Charities Review Council used Paul Light’s national survey to establish a baseline to see if local organizations are making a difference – comparing Minnesota data with the national data.  In some areas, the Minnesota sector is making a difference. The survey found that:

• Minnesotans are very generous; 94 percent give their time and/or money
• Minnesotans have a strong connection between trust and giving
• Minnesotans have higher levels of trust than our national counterparts

The survey also found that overall there are clear places for improvement:

• There is a strong perception of wasted money in the sector
• More Minnesotans expressed having a low level of confidence in the sector than those who expressed a very high level of confidence
• Minnesotans have a shallow understanding of how nonprofits work

The Charities Review Council also gave the survey to a smaller group of its Smart Giver Network users. The survey found that the users:

• Have a much higher level of trust in nonprofits
• Have a much higher level of giving
• Have a better understanding of nonprofits

“Restoring Confidence in Charities”

There is a lot of denial about what is happening to the nonprofit sector.  People don’t look at the sector now and say all good things occur in charitable organizations, they are suspicious. The last 10-years have been brutal for the sector regarding its reputation with donors, the public and Congress. The State Attorneys General and the Internal Revenue Service can’t resist the temptation to regulate the sector even more deeply.

According to Light, pressure is occurring and it was building well before September 11.  He partially attributes the pressure to three areas: the baby boomers getting older, the transfer of wealth beginning from their parents and the technology boom.  Baby boomers focused on social entrepreneurship, making a difference and solving problems, instead of just treating them; and September 11 exacerbated all of this pressure.  He stated that 75 percent of Americans volunteered, gave blood or gave a gift to a September 11 cause or organization.  Six weeks after September 11, Bill O’Reilly criticized the Red Cross for not distributing its Liberty Funds more effectively and the media began watching the sector more closely.

Light also stated that the sector has significant challenges to face in the future.  Social Security and Medicare are headed for significant meltdowns – Medicare sooner than Social Security – and the government is facing some of the same issues as the nonprofit sector and the same goes for State government.

There is a lot of negotiating for funding going on with government agencies.  More and more responsibility is shifting to the nonprofit sector for programs and services for which there is increased need after the economy sagged and as income and quality of life decreases.

There needs to be more advancement in the nonprofit sector in productivity.  The sector has had productivity gains but not as significant as it should have or could have been.

The nonprofit sector has the best workforce in America because people come to work to make a difference.  They come to work highly motivated but they leave worn-out.  The turnover rate is high, partially because of the aging rate of baby boomers but also due to the downturn in the economy.

Three trends for the nonprofit sector

1. There will continue to be an increase in demand for programs and services
2. Baby boomers are getting older and are going to retire; the sector has to deal with the aging generation
3. There is a sharp decline in confidence; research shows that the charitable sector did not benefit from the surging competence that city institutions enjoyed following September 11.

Confidence levels were measured again in December, March and May and they kept going down; and every institution was down.  On the first anniversary of September 11, the confidence level was less than it had been before September 11, and it was already dragging prior to that time.

Nonprofit Sector Perceptions

• Most Americans do not know what a nonprofit is – they say it is like a failed business.  So, the sector is defined by something it is not.
• Forty percent of Americans think that charitable organizations do a very good job of spending money wisely
• Forty percent say that the charitable sector does a somewhat good job of spending money wisely
• Fifteen percent say the sector does a very good job of being fair in its decisions
• Seventeen percent say the sector does a very good job delivering programs and services
• Twenty-five percent say the sector does a very good job helping people – however, that number is down – In October 2003, it was 35 percent – which is starting to corrode the sector’s reputation
• Sixty percent of Americans say they have a fair amount of confidence in charitable organizations
• Donors and regulators believe the sector is leaking and the sector is not a wise steward of its resources
• Seventy percent of Americans feel that the charitable sector is wasting a great deal or fair amount of money

How to Gain Public Trust

• Trust in charitable organizations comes from one thing – does the organization spend money wisely? Charitable organizations have to prove that they spend money wisely.  They have to look for transparency within their organization.
• Visitors need to be able to find financials on the organization’s Web site in one click. Charitable organizations need to honest about their audited financial statements
• The organization’s results should appear somewhere on the home page
• The organization’s mission should be linked to its results
• Look for results-oriented language and things that can be measured for results
• Demonstrate that the organization is making a difference
• Show how the money flows into impact
• Organizations have to spend money to spend money wisely; they have to invest in their infrastructure. They have to work to develop a results-oriented argument in favor of capacity building
• Charitable organizations need to make donors understand what they need in order to have success in achieving their mission
• Measure, measure, measure

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