January 06, 2011

Why Admitting Mistakes Can Help Charities Educate Donors

A series of posts about the misconceptions created by charity Web sites continues today.

Misconception No. 1: Nonprofits always succeed, and their work has no negative consequences

All too often charities hide their mistakes or evaluation findings from the news media, the public, and even foundations and other nonprofits. The reason is simple: Organizations fear that admitting to mistakes could lead to bad press and fewer donations.

For the public, this has created the mistaken impression that all projects are equally successful and that any charity effort is better than none. Donors I work with are constantly amazed to hear the number of things that can and do go wrong with charity projects. The only problems they have heard from the press deal with corruption and with help arriving too slowly.

This misconception affects the nonprofit world in two ways. First, if all projects appear to be equally successful, then any startup charity will be just as successful as any established charity. In fact, many people feel that startups are more effective than established charities because they can work faster and with lower overhead costs. So why not do it yourself?

Second, if all charity projects are successful, there’s no reason for donors to spend time and money evaluating an organization before making a gift, and there’s no reason for nonprofits to spend time and money evaluating their work. In 2004 the Stanford Social Innovation Review conducted research to determine what type of data would be most useful to donors. The answer was not what the researchers had expected:

“Only four of the 22 interviewees were strongly interested in getting better data on the performance of nonprofit organizations. Much to our surprise, the rest expressed skepticism – or even outright disapproval of the concept.”

The article went on to say that individuals considered evaluating charitable work a waste of their donations.

It’s understandable why donors would feel this way. If no organization ever admits that things can and do go wrong, then why would donors see the value of evaluations? The result is that there is no financial reward for an organization to evaluate its work and improve its practices. In fact, nonprofits may even be punished by donors for following best practices.

To break through this donor misconception, nonprofits must share with potential donors that things can go wrong. Here are two examples, one from a charity and one from a foundation, in which organizations acknowledge mistakes:

  • The annual Failure Report produced by Engineers Without Borders Canada admits that despite best efforts mistakes happen and things go wrong. One problem highlighted in the 2010 report was the failure to keep staff members from the funding organization informed and involved in the project development process. This put financial support at risk and pitted the donor group against Engineers Without Borders and the local government office. The situation was eventually resolved but could easily have gotten worse. One of the lessons learned from this mistake, according to the report, is “understanding the political context of a situation is key before suggesting or instigating an intervention.”
  • In May, the Case Foundation wrote “The Painful Acknowledgement of Coming Up Short” as a posting on its blog, in which the grant maker admitted to mistakes made in supporting PlayPumps. PlayPumps is a water pumping system that uses merry-go-rounds to move the water instead of traditional hand pumps. Unfortunately, this system works only in areas with a large number of children, who power the merry-go-rounds by playing on them. In light of these findings, the Case Foundation stopped supporting PlayPumps exclusively and instead now supports Water for People. Water for People will use PlayPumps as one of a range of solutions, not the only solution.

In both of these examples, the organization admitted to making a mistake and explained its efforts to resolve the problem. Stories like these help donors understand the complexity of aid and demonstrates that the charity invests in solving problems and learning from its mistakes.

Has your organization shared its mistakes with donors? Share your story in the comments space below.