By Rachel Sams
Has your nonprofit ever had a situation where part of your team felt that making a public statement on an issue could ruin your reputation, and the rest of your team felt that not making a statement could ruin your reputation?
Many nonprofit teams have, especially in recent years. When those disagreements arise, it can be helpful to remember that everyone at the table agrees on one thing: Your nonprofit’s reputation is precious, could be harmed by one bad decision, and your actions should protect it.
What is reputation? According to Rethinking Reputational Risk by Anthony Fitzsimmons and Derek Atkins, it’s the sum of how your constituents perceive you. Reputational risk, in their view, is the risk that constituents come to believe you are not as good as they thought you were. That could happen because of poor performance by your nonprofit, or because of the behavior of people associated with the organization.
In an era of political division and social media firestorms, it’s helpful to think through the elements of reputation risk—and how to close the gaps that may arise between how your nonprofit wants to be viewed and what you do.
Factors That Heighten Reputation Risk
Holding tax exempt status under Section 501(c)(3) of the Internal Revenue Code brings responsibilities, such as the responsibility to be organized and operate for exempt purposes, and ensure that the organization does not operate for the benefit of private interests. That status also means people hold nonprofit organizations and leaders to a very high standard.
The public expects nonprofit leaders will consistently live up to the sector’s “higher purpose.” Behavior they might tolerate in business or government might garner scorn in the nonprofit sector. That’s not a bad thing—all leaders, especially in the charitable sector, should observe a high standard of behavior. But it is something for your team to pause and consider as you make decisions: What would a constituent or outside observer think of a nonprofit making this choice?
Nonprofit organizations also frequently work with partners, from vendors to donors and suppliers. Nonprofit leaders may want to believe that when they outsource a task, they relinquish all the risks that accompany it. But you can’t divest reputation risk. If there’s an outbreak of food poisoning at your gala, many people will shudder at the thought of attending next year, even if you hire a different caterer.
Reputation Risk Management Strategies
The best way to protect your reputation is to open up every possible channel for leaders to receive bad news.
This is a challenge. The power of a C-suite title makes many employees and some outsiders hesitate to tell leaders things they don’t want to hear…
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