Reprinted with permission of The Chronicle of Philanthropy.

Public confidence in charitable organizations, which declined after the September 11, 2001, attacks, continues to stagnate and shows no signs of recovering, according to a new report by the Brookings Institution, a Washington think tank.

The report, released September 13, drew a reaction from the leaders of the Senate Finance Committee, who said the public attitudes reinforce their interest in promoting sweeping new regulations to stamp out financial and other abuses by nonprofit organizations.

More than a third, or 524, of 1,417 respondents to an August Brookings survey said they lacked confidence in the ability of charities to spend donations wisely and to deliver services.

Whether organizations spend their money wisely is the top determinant of donors' confidence in charitable organizations, the study found.

Nearly the same percentage of people expressed doubts about charities as did so in an October 2003 survey.

The stagnation in confidence suggests that prospective donors might pull back their support of nonprofit organizations, said Paul C. Light, a professor of public policy at New York University and a senior fellow at Brookings, who wrote the report. "Confidence in charities is intimately related to how much money donors are willing to give to charity and how many hours they will volunteer with groups," Mr. Light said. "This is a wound that is not healing, and it demands the attention of the nonprofit sector."

Fifteen percent--or 213 of those surveyed for the August study--said they had a "great deal" of confidence in charities, down from 18 percent last October and 25 percent in July 2001.

Red Cross, United Ways
Scandals that surfaced after the 2001 terrorist attacks have continued to alter what people think of charities, Mr. Light said.

Soon after September 11, for example, the American Red Cross drew criticism for saying it would spend more than $200-million of the donations it received in response to the terrorism attacks on future disasters rather than spending it on efforts to help the attack's victims and their families.

Confidence in the American Red Cross has improved slightly, the latest Brookings study found. Just 14 percent of respondents to the August survey said they had little or no confidence in the organization, compared with 17 percent who said so in the October 2003 survey.

The public's view of United Ways, which have experienced several high-profile scandals in the past few years, also rebounded this year, Mr. Light said.

Although contributions to the organization's annual on-the-job fund-raising campaign have declined over the past two years, its efforts to transform itself into an organization that focuses on solving social problems have improved its reputation among those surveyed, Mr. Light said.

But articles written in the past year about the financial inefficiencies and scandalous activities at many charities, Mr. Light said, have contributed to a continuing public perception that the nonprofit field fails to spend money prudently and lacks adequate oversight.

How to Improve Reputation
Although Mr. Light described the decline in public confidence in charities as "durable," he said that nonprofit organizations could improve their reputations with the public--and possibly raise more money than they do now--by spending money more shrewdly.

Rather than complaining about negative coverage by the news media and trying to distract the public by publicizing what charities do to help people, Mr. Light says, charities should improve their financial and operating systems, find a way to work together to penalize poor-performing groups, and embrace efforts by Congress to step up regulation of nonprofit groups.

Diana Aviv, president of Independent Sector, a national coalition of nonprofit organizations, said that government regulators can also play a large role in helping to shape public opinion about charitable organizations.

"The public's confidence in charities could improve," she said, "if there is a clear, swift reaction on the part of federal and state officials to enforce the law so that bad actors who misuse funds and don't operate properly are separated from the charities that act appropriately."

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