Donor trust: Hard to get, easy to lose

Trust is a top motivator when giving to a charity. It’s also increasingly in short supply: charities are often perceived as wasteful or inefficient. But within the broad sector this is a myth, writes ntegrity CEO Richenda Vermeulen. 

According to Edelman, the number of Australians who say they trust NGOs to do the right thing fell from 62 per cent in 2021, to 58 per cent in 2022. Donors are increasingly sceptical that charities are doing the right thing, and we see this play out in questions about employee salaries, marketing spend, and overhead rates. 

I’ve worked in the charity sector for 20 years – as a social worker, then a marketer, now as head of a leading Australian agency serving not-for-profit organisations. Rarely have I seen the kind of fraud people worry about most – charities misusing or wasting donor money. 

What I do see is charities failing to communicate their work clearly. We have told ourselves donors have to have everything simple – they want to see big impact numbers and low, low overhead. 

Why the disconnect? 

We’ve shied away from talking about the complexities of eradicating global poverty, tackling climate change or ending homelessness. We need to start having a very different conversation with our donors. Relying on the same old formulas and messages will only further erode trust. 

If we want our donors to trust us, we need to trust them. We need to trust that they’re up for a more nuanced conversation about not-for-profit operations.

Let’s talk about overhead. 

The dreaded overhead rate. It’s the last thing most charities want to discuss with donors.
The prevailing assumption is the higher your overhead (that is, money a charity spends on its people, operations, marketing etc), the less there is for the “real” work; the boots-on-the-ground programming. 

Everyone in the not-for-profit sector knows this is a false dichotomy. 

It takes investment to effect change. It takes hiring capable, skilled people and paying them fairly. It takes building the kind of workplace culture that keeps employees engaged, because high turnover affects charities’ ability to deliver programs and effect sustainable change. It means investing in research that informs programming to effect greater change, and marketing to grow your donor base and increase your capacity for impact. It means investing in digital and technology capabilities that improve efficiency and effectiveness. 

All this (and more) has a direct, tangible impact on a charity’s ability to achieve its core mission. Yet if we talk about overhead at all, mostly it’s to brag about how low it is. We’ve all seen the pie charts on charity websites, and in annual reports showing overhead as a tiny slice of total expenses. 

Overhead is one of the most important parts of how a charity operates, and we need to start discussing it realistically. 

The good news is, many donors are up for this conversation. Our research partners at McCrindle found that nearly two thirds of donors want organisations to report on things like staff morale and wellbeing – that’s overhead. 

Why charities need to play a long game.

Charities face a unique dilemma in that much of their revenue can come in response to a big campaign or a sudden crisis. Yet most of the issues we care about require a sustained commitment over time to solve. We absolutely need to make the most of these “in the moment” opportunities, but we also need to bring donors along for the rest of the journey. 

We need to get comfortable talking about how much time it takes to make an impact, the complexities of achieving long-term change, and even some of the setbacks we experience along the way. World Vision’s model for lifting communities out of poverty, for example, requires about a 15-year commitment. IJM forms decades-long partnerships with law enforcement and justice system officials to combat human trafficking.

Another great example, this time from the for-profit sector, is New Zealand’s eco-conscious clothing company Icebreaker. They’ve committed to making their apparel 100 per cent plastic-free by 2023, but they’re also committed to showing customers how far they have to go. 

This kind of transparency builds enduring trust with supporters. It can help you achieve long-term donor value and long-term social impact. 

Working on tight budgets.

There’s a perception that charities are not as efficient as they could be with donor money – that they spend more on themselves than the people they’re meant to help.

In reality, virtually every not for profit operates on an extremely tight budget. Staff may be required to do the jobs of two or three people – for a fraction of what they could earn in the for-profit sector. Training budgets are meagre, if they exist at all. And forget flying to industry conferences to invest in your professional development. Many of the charities we work with have to get board approval before investing in ntegrity’s services. 

Fiscal oversight is stringent. Every employee knows they rely on donor money to do their work – and if you’re not seen by donors as thrifty and efficient, they’ll take their dollars elsewhere. 

The solution is not less transparency with your donors, but more. It’s bringing donors behind the curtain, letting them see how your organisation operates. Make the case for investing not just in programming, but in people, infrastructure, and marketing that make your programming possible. 

Leverage the latest advances in digital storytelling, data visualisation, and personalised communications to give supporters a window to your work – for a fraction of the cost of old-school marketing methods. 

NFPs could deliver what supporters are really looking for – transparency and authenticity – at the same time. Think live streaming from an anti-whaling ship, or a realtime dashboard showing current demand for homelessness services. 

It’s time to cast a bigger vision for our donors. Remember, the more you trust them, the more they will trust you.