Nonprofit Reputation Management: Bridging the Gap

The story was shocking. A respected nonprofit organization that had received millions from the U.S. Department of Agriculture to feed children was caught using the money to pay exorbitant staff salaries and bonuses. Just like that, with one story in a national news outlet, years of good work and a solid reputation were damaged, likely beyond repair.

A positive reputation is built upon trust, which is an essential component of every nonprofit’s success. A good reputation helps organizations attract and retain loyal supporters, recruit talent, form collaborations, and meet community needs.

The word reputation derives from the Latin reputatio, meaning “consideration,” and ultimately from reputare, “to reckon up or to think over.”

What people think about your organization matters. It matters a lot.

Rise of Distrust

Unethical behavior, poor performance, and lack of accountability have become too common in the charitable sector. High-profile stories of stealing, abuse, and other illegal activities have eroded public trust.

A recent survey conducted by the Independent Sector showed that nearly half of Americans do not trust nonprofits. The report tied distrust to perceived mismanagement and cases of corruption.

The 2023 Edelman Trust Barometer, a global study of trust and credibility, reported a 1% drop in the public’s trust of nonprofits, which is an improvement over the previous year’s decline of 5 percentage points.

Another study, Most Trusted Brands, found in its national 2023 study that Americans appear to be losing trust in nonprofit organizations.

Managing a Reputation

Reputation management is about perceptions and influence. It is a nonstop process of monitoring, influencing, and improving how an organization’s brand is perceived by various stakeholders. It involves listening and responding to feedback and addressing any issue or crisis that could negatively impact how others perceive you.

Reputation management is not only a reactive strategy but also a proactive one. Organizations should not wait until their reputations are tarnished to take action; they consistently build and maintain a strong reputation that can withstand challenges and changes.

Reality Gap

A nonprofit’s reputation is found within its supporters, employees, volunteers, boundary partners, elected officials, benefactors, and others. These individuals and groups develop their perceptions around key areas such as organizational performance, governance, transparency, and responsiveness to issues.

A reality gap occurs when the behavior and performance of an organization do not align with its claims.

For instance, if an organization promotes, “We’re eliminating poverty,” it must have the data and personal testimonies to prove that its programs and services are truly eliminating poverty. Or, if an organization claims to be the region’s leading authority on a specific topic or issue, it must have credible information to defend that position.

When organizations lack self-awareness and believe they are something other than reality, there is a gap that poses a threat to their reputation.

Bridging the Gap

There are four steps every nonprofit can take to help gain self-awareness and bridge the reality divide.

1. Know thyself.

Studies have shown that most leaders tend to overestimate their own organizations’ capabilities and public reputation.

Utilizing an objective third party to conduct an in-depth assessment can be a reality check. Every aspect of the organization can be benchmarked against peers and competitors to determine its current position and capacity for improvement. It helps answer the congruency question: Do our actions align with our words?

Stakeholder trust can be built and sustained when organizations consistently deliver on their promises and use qualitative and quantitative data to demonstrate results. These include data on the nonprofit’s governance, operations, financials, and performance (program-related metrics).

2. Listen and learn.

For-profit corporations understand the importance of listening, learning, and modifying their tactics to be most effective.

Nonprofit organizations exist to serve public causes or needs. For that reason, their work is most effective when they take time to listen and learn from various audiences. This can be done through conversations, interviews, focus groups, surveys, and other methods to inquire about satisfaction with the organization’s programs and services.

When nonprofits fail to consider outside perspectives, they can become myopic or nearsighted. Take time to get feedback from program participants, donors, collaborative partners, and government officials, as well as your own staff and board members.

For example, last year we conducted a public perception study for a large social service organization. We did dozens of interviews, launched online surveys, and conducted multiple focus groups. When we presented the findings to the organization’s key leaders and board members, they were somewhat surprised. The findings revealed a reality gap.

To bridge the gap, their team used those study findings to improve internal processes and shape their marketing strategy. The organization plans to do another public perception study in two years to measure the impact of the changes.

3. Monitor movements.

We live in a rapidly changing environment. As the pandemic showed us, situations and expectations can change drastically almost overnight.

A single event, story, or situation can jeopardize a good reputation. As Benjamin Franklin once said, “It takes many good deeds to build a good reputation, and only one bad one to lose it.”

Reputations are most at risk during crises or high-profile events. The events could be broad in scope, such as emergencies or widespread disasters. Or, they could be internal crises, such as a negative media story about your organization that threatens your credibility. These could include reports of fraud or mismanagement, sudden departure of a leader, loss of a major funding source, etc.

4. Respond rapidly.

When an organization fails to respond to public situations, the lack of response speaks volumes.

No response is a response—a profound one.

People form opinions on the information they receive. When organizations fail to actively participate in the communication process, individuals are left to form their viewpoints from other sources. These viewpoints may not be based on accurate information and may not be ones that place your organization in the best light.

Nonprofits can be instrumental in shaping opinions on critical issues by proactively engaging with traditional and social media. Use these tools to provide data, personal stories, and other information to help the public understand issues that are relevant to your mission.

Social media is a powerful force in the formation of an organization’s reputation. Social media can amplify or alter information globally within minutes (or seconds). This means your responses must be rapid.

Nonprofits can use social media to engage with their stakeholders, share their stories, and raise awareness. However, these platforms come with risks and challenges, such as negative comments, misinformation, or trolls. Organizations should monitor social media accounts frequently and respond to feedback or questions in a timely and respectful manner.

Nonprofits also should have a branding guide that outlines the tone, voice, and guidelines for all of their communications to provide consistency and clarity. This can be used on your website, social media, promotional materials, and newsletters.

Every interaction, in-person and electronically, has the potential to strengthen or weaken your nonprofit’s reputation.

Your approach to reputation management can have a lasting effect on your organization’s relationships with key individuals and groups. Investing the time and resources into nurturing and protecting it can result in long-term stability and success.

If you have any questions or need assistance, please reach out to a professional at Forvis Mazars.