The veterans' charity Wounded Warrior Project has been making headlines in 2016. Unfortunately, it’s the kind of press that can damage a nonprofit's reputation. The group came under fire for what The New York Times describes as a hostile work environment and lavish spending, including millions spent on staff retreats, food, and drinks. The report states top executives were fired and the senate Finance Committee has requested details on the organization's travel and meeting expenses.
You can imagine how this scandal might impact WWP’s fundraising efforts. Nonprofit organizations live and die by their ability to raise money, and donors usually won’t support a group with questionable spending habits. Sadly, the effects can reach beyond the C-suite to hurt the very people an organization is dedicated to helping.
Let’s take a look at some ways you can keep your good name intact.
How Transparency Protects Your Nonprofit’s Reputation
Braden Perry (@bradenmperry),
partner at the business and litigation law firm
Kennyhertz Perry, credibility is essential to NPO fundraising.
“Most people research an NPO on the Internet, and the many charity watchdogs can quickly cloud a charity's name,” Perry says. “The accusation alone will deter those looking to contribute."
And while fundraising concerns may be front and center, he says a loss in credibility might also create additional harms, like high turnover and inexperienced management.
Protect your NPO: Perry says a nonprofit organization can protect its reputation by being transparent and forthcoming with all the information a donor may need to ascertain the group's strengths and weaknesses.
“Reports detailing fundraising metrics, including the amounts paid to the directors and management, is key,” he notes.
Transparency is the heart of fundraising. Be upfront about how much money you raise and what you spend it on, and make sure the information is available to your donors.
Make a Plan before Trouble Hits
Minimizing the chance someone could accuse you of wrongdoing is a smart move, but you may still want to prepare for that scenario.
Michael Semanie (@MASemanie),
a partner with the law firm
Killgore Pearlman Stamp Ornstein & Squires, recommends NPOs create a response plan that's flexible enough for management to implement under a variety of circumstances.
For example, you may want to:
- Establish an incident response committee.
- Add morality clauses to contracts with high-profile personnel and endorsers.
- Monitor online references carefully.
- Involve legal counsel.
Semanie adds, “One of the most important parts of the plan is having a well-defined chain of command for any responsive action.” Knowing who is responsible for what usually makes for a quicker, more efficient response.
Protect your NPO: When it comes to your NPO’s reputation, time is of the essence. Create a plan tailored to your organization’s risks so you can implement it at the first sign of trouble.
Insurance for Your Nonprofit’s Reputation
Even small nonprofits can benefit from purchasing Directors and Officers Insurance. The policy can cover claims that a director or its board…
- Discriminated against an employee.
- Misused funds.
- Mismanaged employee benefits.
- Failed in their duties to the organization.
According to Perry, most D&O policies also cover criminal and regulatory inquiries. However, no policy can cover intentional illegal acts.
Donors are the lifeblood of your nonprofit, and that means you need to take special care of them and their money. Learn how to protect their contributions in “Take Online Donations? Make Sure Your Cyber Liabilities Are Covered.”
About the Contributors
is a regulatory and government investigations attorney with Kansas City-based law firm Kennyhertz Perry
. Perry has the unique tripartite experience of a white-collar criminal defense and government compliance investigations attorney at a national law firm, a senior enforcement attorney at a federal regulatory agency, and the chief compliance officer of a global financial institution.
is a partner at the law firm Killgore Pearlman
in Orlando, Florida, and he is the editor of FloridaAdvertisingLaw.com
. Semanie dedicates his practice to helping businesses navigate an increasingly complex business landscape.