Michigan Nonprofit Association Blog

MNA’s Blog is designed to give you, the nonprofit community, an informal look into the issues currently facing Michigan’s nonprofit sector and an opportunity to share tools, resources and best practices. It’s also a way for us to get to know each other a little bit better through candid discussions of the topics, challenges and opportunities that our sector deals with on a regular basis. Check back daily and participate in the discussions by posting a comment or emailing our bloggers. We love hearing from you!

Earning the Public’s Trust Every Day: Lessons from Wounded Warrior Project’s Recent Actions

By Tim Delaney, President & CEO, National Council of Nonprofits

As nonprofits, we are healers. We are protectors. We educate and we enrich lives. And much more. But we can’t do anything without the public's trust. As a result, the failures of one nonprofit can negatively affect public opinion and harm the ability of thousands of other nonprofits to advance their missions.

When one nonprofit is in the news for questionable actions, it affects all nonprofits. Such is the case now with the news accounts about spending and other practices at the Wounded Warrior Project (WWP). In my years on the planet, I’ve learned that sensational news reports usually tell only part of the story. We don’t have the full facts, so we don't intend to pass judgement on the WWP.

Tim Delaney, President and CEOYet, from what has been revealed, including that some courageous employees stepped forward to express serious concerns and then WWP’s board hired a prominent law firm and forensic accounting firm to conduct an independent review that led to the board taking initial corrective actions, it seems appropriate to commend those employees and board members for recognizing the solemn duty they hold, as part of the nonprofit community, in earning the public’s trust every day. We hope that the WWP board’s next steps will include reviewing its own role in oversight in the past so the organization can move forward demonstrating its accountability to its mission to serve those who have served our country.

Historically, such news stories lead to predictable calls for certain actions. Let’s review those before identifying tangible steps that need to be taken. And again, there is a true need, because every charitable nonprofit has to work each day to earn the public’s trust.

Is more regulation the solution? The answer is no. The problem isn't lack of regulations, of which there are many at both the state and federal levels. If there is a problem regarding regulations, it’s not for lack of laws but lack of resources dedicated to enforcing the various state and federal laws. The IRS has been woefully underfunded for years and continues to suffer budget cuts. State charity regulators are similarly hamstrung by limited budgets. We don't need new laws on the books; we need those charged with enforcing existing laws to have the capacity to do so.

Is condemning “overhead”/administrative costs [1] the answer? No. Nonprofits and those they serve are seriously hampered by a lack of investment in their own infrastructure. Stories focused on WWP’s overhead just reinforce the false narrative that overhead or administrative or infrastructure costs are evil and must be minimized. On the contrary: nonprofits, just like for-profit businesses and governments, need to invest in strong financial management and internal control systems (which is all overhead). A recent autopsy of the collapse of New York City’s largest human services provider, which left 120,000 people in need of another service provider, revealed that much of the problem concerned lack of internal systems caused in part by failure to be paid for necessary administrative costs. The rhetoric condemns overhead, but the reality is administrative costs are essential for any organization to function efficiently and effectively.

So what's the solution? The day when regulators are adequately resourced and the overhead myth is fully busted is not yet at hand, and calling for more external laws and external arbitrary limits on essential costs will not make a difference.

The solution begins at the human level, with every person within the nonprofit community revisiting core values and using the WWP story as a reason to recommit ourselves to sound governance, financial, and ethical practices. Here are some steps nonprofits can take today, next week, in the coming months, and always, to embrace and nurture a culture of accountability and transparency [2] so we all earn and maintain the public’s trust.

First and foremost, ask yourself “what am I doing today to advance my nonprofit’s mission?” If something feels more of a personal benefit than a mission necessity, rethink it.

At the next staff meeting (and on a regular basis), devote time to reviewing and reiterating existing policies on such things as conflicts of interest, whistleblower rules, reimbursement policies, etc.

At the next board meeting, review the concerns raised by the WWP news stories and ask whether there are revisions to old policies or new policies that are appropriate for your organization. And actively explore whether your systems are strong enough to block or at least identify problems.

Staff and board members alike should take advantage of the resources we have at our fingertips. In many states, there are programs built around Principles and Practices [3] or Standards for Excellence® that provide proven guidance on how to operate efficiently, effectively, legally, and ethically.

Every individual in the nonprofit community should revisit the truth that we exist to serve others, that each of us must be a responsible steward for our organization’s mission - and for the nonprofit community as a whole - and that we each must earn the public’s trust every single day. Our communities are counting on us.