A not-for-profit entity’s (NFP’s) biggest asset is unquestionably its reputation. If the reputation of an NFP is damaged in any way, it doesn’t just directly affect the organization in question but also the constituents and communities that are served by the entity. Citizens rely on NFPs to fulfill their mission, whether to strengthen and develop communities, fight for important causes and provide opportunities for education, aid the most vulnerable members of the society or enhance our lives in many other ways.
Charitable organizations that depend on donations from the public to fund their job, more than any other NFP are in the spotlight. Failures of NFPs, real or imagined, cause an emotional response, leaving its supporters feeling disappointed and their clients feeling abandoned. If not addressed, reputational damage could set an NFP in the direction of self-destruction.
It is a good thing that NFPs have the ability to take on reputational risk using an established risk management strategy that covers the four main categories of organization objectives as laid out in COSO Enterprise Risk Management – Integrated Framework which includes strategy and operations, reporting and compliance. This article will assist you to design an approach to managing reputation risk.
About Reputational Risk
Reputational risk can be defined as the possibility of loss resulting from damages to the reputation of an organization that could lead to loss of revenues, higher costs, and a decline in the number of constituents. The perceived value of the damage to reputation can seriously affect an NFP’s ability to carry out its goals. A company that has a reputation issue may have a harder time to find and keep talented and highly-connected members of its board. It could affect the motivation of volunteers as well as employees that are crucial to achieving the goals of the organization. Additionally, a negative reputation could have serious negative financial effects. It could hinder the ability of an organization to obtain donations and grants, or to draw in new clients or members or expose the company to the risk of increased scrutiny from regulators and watchdog agencies.
Your reputation goes beyond the truth about your company, but also what it says about you and how you respond to them.
10 Ways to Monitor Your Organization’s Reputation
To keep track of your reputation, it is important to first understand what your reputation is both externally and internally. Here are some suggestions to start:
1. Search for your company on Google and check the most popular results between 10 and 25. They are among the very first things people see about your company. Are they in line with your mission?
2. Look at your website to determine the way your business is represented. Are you able to navigate and locate your address and contact details? Are the details up-to-date and in line in your advertising materials? Are you clear with your financial and operational data? Are you able to provide more? Think about giving the annual report, audit Form 990 and your annual report to download, if not already have. Are users able to access those downloads in just a couple of clicks? If someone is unsure about the financial details Is it obvious who to call?
3. From a perspective of risk management,
- Are you covered by valid insurance coverage? When you are involved in new activities, be sure your insurance policy adapts to changing requirements.
- Do you have any legal rights against your business?
- Are you conscious of, and in compliance with all state, federal, local, international and laws and regulations that apply to your company?
- Are you conscious of, and complying with the requirements for compliance from the funders, lenders and accreditation organizations?
- Are your practices in human resources conforming to the federal and state regulations?
4. Re-evaluate your strategy for using social media. Make sure you’re aware of how and when you will respond to any comments made regarding your company. Establish guidelines or an official policy regarding social media and ensure that employees and volunteers are aware about what’s acceptable on social media, especially those who have a professional image to represent the company. Make sure you regularly review your policy and apply it.
5. From a service-oriented perspective In terms of customer service, you should provide frequent and easy opportunities for your employees, members, customers, volunteers and employees to give feedback on your business and its programs. You must take note of feedback and respond and make changes as needed.
6. From a financial standpoint Have you looked into the way your organization’s image is displayed on websites of third parties? Apart from the state charities with searchable data Consider the following:
- Better Business Bureau Wise Giving Alliance: is a non-profit organization that reviews charities’ effectiveness, governance in financial reporting, governance, and fundraising methods using the list of 20 Standards for Accountability of Charity. The goal of the organization is to help donors make informed decisions about their giving and to promote the highest standards of conduct for organizations that seek donations to them from people.
- Charity Navigator: An organization for nonprofits that functions as an official charity rater. Their rating system currently analyzes two main areas of a charitable organization’s performance, Financial Health and Accountability & Transparency as well as soon to be examining a third area report on results. The rating system’s goal is to let donors know how effectively they think a charity can utilize their funds and how they have kept its programs, services and initiatives over the years and the extent of their dedication towards good governance best practices and transparency with information.
- Guidestar by Candid: An organization for nonprofits that collects, organizes and disseminates information about U.S. nonprofits to a vast audience at no cost. They urge nonprofits to share their information freely and in full. Although most NFPs know that Guidestar gives copies of Form 990, few are aware that Guidestar also permits NFPs to disclose a range of other data, ranging from the practices of board leaders along with financial data, description of the program and its results, as well as diversity plans.
- Internal Revenue Service Exempt Organizations Business Master File Extract: includes cumulative information regarding exempt entities. The information is extracted every month and is accessible by region and state.
7. Choose a person within your organization that is ultimately accountable for ensuring the reputation of your NFP. Different staff members can review and discuss information in the presence of the leader, and the person in charge of the management of risk within your company along with the audit committee.
8. Create alarms (e.g., Google Alerts) or sign up to news feed services that allow you to look on the internet for news related to your NFP.
9. Contact charities’ ratings agencies for any questions regarding your company’s rating. Learn what you can do to increase your rating.
10. Think about hiring a PR firm, especially if your NFP is receiving (or anticipates receiving) negative publicity from the media. Certain organizations might be hesitant about investing in an outside consultant. It is generally recommended to face a situation (or possible scenario) prior to it coming to a point.
Conclusion
Once you have an understanding of your perception of your business, consider whether you’re required to alter it. Take a look at whether your reputation is in line with your overall goals and strategy. If you’re required to make adjustments, create an improvement plan. Whether you are looking to improve the reputation of your company or not, it’s essential to make sure you are able to keep it in check regularly.
Reputation-related issues, whether they are actual or imagined, can affect an NFP’s ability to achieve its goals; collect contributions and donations from members, donors, and volunteers; and run effective programs. Through an approach that is proactive there is a way to reduce the risk of a negative reputation. Effective companies maintain their reputations and respond to issues, whether real or not which pose a serious threat to the company.
