Governance Conference

Thanks to NPQ’s Nonprofit Newswire, published daily by the folks at the Nonprofit Quarterly, I’ve just read an interesting but disturbing article. The key statement is that the authors (university researchers) found that consumers perceive nonprofits to be “less competent than for-profits.” This belief makes people “more likely to buy products from for-profits than non-profits.” [Click here for the full article.]

So why am I writing about this in an article about governance?

Because changing this perception is ultimately up to you as board members!

And you do want to change these perceptions because, in our world, “buying products” is equivalent to making donations. True, donations are grounded in shared passions. But, more and more, that is not enough. I attended a fundraiser for a small nonprofit recently, and, because I believe in the value of what these people do, I was prepared to make a donation of $50. Not a lot of money, but a decent-sized gift for me.

I didn’t make that donation. During the course of the event, I realized that the people involved in this organization, while deeply committed to their work, were not knowledgeable about financial matters. It came down to the fact that I felt no assurance that my credit card information would be treated with confidentiality.  The gift envelope is still in my purse.

So what’s a board to do?

At the very least, recognize that your organization will be much more effective if it has a good level of management competence. The more you have built the capacity of your staff to manage finances, human resources, operations and evaluation well, the better use you can make of the contributed resources given to you.

You need to build your capacity too. All board members need to beef up their financial knowledge, for example. I cannot count the number of board members who have said to me, “I can’t understand financial reports, but I don’t have to. Our Treasurer takes care of that.” If you say this, you are violating your legal Duty of Care as a board member.  All board members must understand the financial reports and their implications for the future of the organization.

But it doesn’t end there. Once you have built your agency’s capacity to operate effectively, and once your board is skilled at its responsibilities of planning, budgeting, financial oversight and policy setting,  you need to let people know. Start with your donors. Tell them how you are investing in improvements so their gifts are better used. Tell the whole community as well. The more you tell the story of your commitment to competence, the stronger will be the community’s support of your work.

You can change consumers’ (donors’) perceptions. It’s not easy, but it is essential.