How Accusations of ‘Financial Mismanagement’ Impact All Fundraisers

March 3, 2017 Pamela Barden

I recently read another “vindication” of a nonprofit that had been subject to a media expose. In this case, a thorough investigation by BBB Wise Giving Alliance (WGA) revealed that splashy accusations of financial mismanagement reported by multiple media sources had no merit.

It’s been disappointing to see that media outlets are less aggressive about reporting the outcome of this investigation than they were of the original, and apparently, false claims — but it’s not the first time we in the nonprofit sector have seen a story like this. It makes me mad that the media is not rushing to set the record straight.

And frankly, it should make anyone who is committed to fundraising for a nonprofit organization angry, too, because we all take some hits when another NPO is maligned. Even if it’s found that the criticism was unmerited, the reputation of a single organization – and the entire segment – still is impacted.

My brief review of this situation leads me to three important conclusions that impact every fundraiser:

  1. Negative media coverage of a single nonprofit organization can affect any of us. It’s not fair, but it’s life. That’s why proactively educating our supporters and sphere of influence about what we are accomplishing is so critical.
  1. You have to spend money to raise money. My conclusion is the nonprofit grew its revenue year over year because they intentionally made investment decisions to grow their donor base. (I base this on the amount of acquisition mail I received and their average of 25% overhead each year.) We’re all going to experience attrition of our donor file; the only sustainable response to attrition is acquisition to offset it.
  1. Proactive transparency is critical. The Leaven, a nonprofit for which I have a lot of respect (and that is one of my clients), has done an excellent job explaining their transparency without being asked. Other organizations have taken similar steps, knowing that when accusations are flying it’s often too late.

There are no perfect nonprofit organizations. We make mistakes, sometimes deliberately but usually without intent of malice. The media doesn’t cut us a lot of slack and the public often won’t either. So as a sector, let’s celebrate that WGA took the time to do a deep dive on the nonprofit, that the nonprofit cooperated fully, and that the end result was a positive report.

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