Accountability

After enduring some criticism over its performance during Superstorm Sandy, the American Red Cross has agreed to make changes in the way it solicits donations after major disasters to avoid potential confusion over how that aid money is likely to be spent. The relief organization agreed to modify the language it uses on its website in a way intended to give donors more information about whether their gifts will be used to assist victims of a particular catastrophe or for Red Cross operations in general.

This summer, three major charity watchdogs launched the "Pledge to End the Overhead Myth" aimed at urging donors to look at more than administrative costs when giving to nonprofits. Now, that talk has turned to action. Charity Navigator, an 11-year-old leading nonprofit watchdog, currently determines the health of a nonprofit by comparing how much money an organization spends on its programs with how much it doles out for overhead. But soon it's going to include another criteria in its rating system: how nonprofits' results stack up against one another.

We operate thanks to the public trust. Countless hurting people depend on nonprofits. Countless donors entrust their resources and their dreams to nonprofits. We must never be afraid to do what’s right. As Dr. King pointed out, society’s punishments are small compared to the wounds we inflict on our soul when we look the other way.

When a nonprofit is too lean it can be inefficient, spending a lot of energy filling in for absent infrastructure, making do with inadequate resources, unconnected to the networks needed to get the job done. We encourage donors — individuals, foundations, corporations and government — to think carefully about this issue, and to do the work necessary to make an accurate and realistic assessment. It is hard work. Perhaps that’s why the notion that a simple ratio or percentage could hold the answer is appealing. There is no easy or magic bullet.

When confronted by nationwide headlines about some of charities’ worst practices, the overwhelming response of nonprofit leaders has been to bury their heads in the sand and try to pull the hole in after them. What these leaders fail to appreciate is that when the scandalous behavior of their colleagues is exposed, silence is neither golden nor in their own interest. Charities’ leaders need to stand up and speak for the common good even when that means denouncing some of their peers. Their own organizations’ interests and those of the public require it.

My nonprofit friends, it’s time we changed the conversation about “the overhead ratio”: the percentage of your organization’s expenses that go to administrative and fundraising costs. For too long, we’ve let a few bad apples confuse donors about what matters when judging a nonprofit. This confusion is actively harming the nonprofit community. Experts agree that many nonprofits should invest more in overhead, particularly administrative costs. You all know this as well as I do: You need to invest in your organization to be able to effectively serve your missions.

Most “evaluations” of charities’ work are done by the charities themselves and are a waste of time. Perhaps this is a surprising view for an advocate who thinks that charitable work should be based on evidence — but it’s true because charitable activity should be based on good, quality, robust evidence, which isn’t what many charities can reasonably be expected to produce.

As I look back over my years in politics and philanthropy, I consider there to be three cardinal rules of crisis management. Think of a crisis as a grease fire in a frying pan on your stove. Your objective is to cut off the oxygen that feeds the fire and put the fire out as soon as possible. Otherwise, your house might burn down. Here’s how leaders successfully put out crisis fires.

We've finally reached the deepest pit of Fundraising Hell. A place so vile, degraded, and horrific that all the levels above seem pleasant by comparison. These guys in Level 9 — they weren't about raising funds. They broke the very idea of fundraising. In fact, some of them were very good fundraisers. They didn't commit any of the sins of the higher levels. They knew exactly how to motivate donors to give. Except for the most important part of all: The money didn't do what they told donors it would do.

You thought Fundraising Hell couldn't get any worse after seeing what's happening to the Brand Cops? Think again. (Evil laughter.) It gets worse as we drop down a massive cliff to the level of the Fraudulent — fundraisers who lied to donors. These fundraisers were loose with the truth. They knew what kinds of stories moved donors to compassion, so they told those stories. Even when the stories weren't true.They fudged a statistic here, exaggerated a truth there. They failed to tell the truth.