Rebuilding trust in charity

Even as the Red Cross and United Way approach the finish line in disbursing funds to victims of Sept. 11, public trust in charitable organizations continues to sour.

Since September, the number of Americans expressing no confidence in charitable organizations has more than doubled, according to a poll by the Brookings Institution's Center for Public Service. As of May 10, roughly 1 in 5 Americans says they have no confidence in charitable organizations.

It's unsurprising that confidence in charitable organizations has declined. Trust in almost all civic institutions and leaders – from Congress to federal government workers – has declined over the past several months.

However, trust in charitable organizations did not improve post-Sept. 11, unlike the public opinion bounce experienced by virtually every other organization and institution. Dampened by concerns over the Red Cross and United Way disbursement delays, public confidence in the charitable sector began declining last fall, and continued to drop even after the Sept. 11 funds began flowing. At a moment when President Bush called on every citizen to commit 4,000 hours over one's lifetime to volunteer service, Americans appear ready to believe the worst about the very organizations they would serve.

Part of the decline reflects heightened scrutiny of the sector. Charitable organizations used to get a "bye" from hard-hitting coverage. Newspapers didn't cover them, state attorneys general didn't investigate them, and neither paid much attention to watchdog groups such as the Better Business Bureau's Wise Giving Alliance.

Those days are over. Newspapers have created new charity beats, state attorneys general have taken their lead from New York's Eliot Spitzer, who made a national reputation from beating up on the Red Cross and United Way, and watchdog groups have seized upon the disbursement crisis as proof that the sector needs stricter oversight.

Part of the decline involves the lack of a national debate about what went wrong in New York City. Americans believe the worst about the Red Cross and United Way in part because they have been given no other story to believe.

The lesson of the disbursement crisis is that charitable organizations must invest money to spend money wisely. Unable to raise or sequester funds for administrative infrastructure before Sept. 11 – because of increasingly restrictive giving by donors who specify precisely how funds should be used – the Red Cross decided to set aside some of the millions in unanticipated generosity to strengthen the organization for the future. The reason it took so long for the United Way to start disbursing funds, if three weeks can be called a long time, is that it needed to create a new organization from scratch.

Neither organization made that case effectively, in part because they rightly felt they could not spend money on advertising. But no one else made that case for them, or for the sector as a whole. Government and philanthropic funders were apparently too busy responding to Sept. 11 to notice the declining confidence, and did very little to stop it.

No amount of advocacy can disguise the fact that at least some of the decline in confidence is linked to actual poor performance.

Comparisons among the nonprofit, federal, and private sectors reveal that the first is one of the nation's most talented, motivated workforces. They not only showed up for work the morning of Sept. 12, they also didn't leave early on the 11th. They continued delivering meals, caring for patients, and ministering to the poor.

The charitable workforce is under-staffed, under-equipped, and over-stressed. Workers often must cope with hand-me-down computers and antiquated financial systems. The spirit for high performance is strong, but the administrative infrastructure is weak.

The way to rebuild public confidence in charitable organizations is to invest in performance, while defending the vast majority of nonprofits from unwarranted attack. That is what the Minnesota Council of Nonprofits did last winter, fighting a $300 million across-the-board cut in state funding, while promoting its standards of excellence for nonprofit management.

The Minnesota Council has adopted a new golden rule of charitable life: "Do unto yourself toward improved performance before the media, state attorneys general, and watchdog groups do unto you through investigation."

Higher trust can only follow.

• Paul Light is vice president and director of governmental studies at the Brookings Institution. He is the author of the book 'Pathways to Nonprofit Excellence.'