Confidence in Charities Rises, but Not to Levels Before 9/11

Donors’ confidence in charities is rebounding from the hit it took after the September 11, 2001,

terrorist attacks, according to a new study. But researchers say the news about donor perceptions isn’t entirely positive for nonprofit organizations.

The controversy about how relief funds would be used after September 11 triggered a significant drop in contributors’ confidence in charities.

In September 2002, 60 percent of Americans said that they had a great deal or a fair amount of confidence in nonprofit organizations, down from 90 percent in a survey conducted before the terrorist attacks.

But a new survey conducted in July found that the percentage of Americans who said they had a great deal or a fair amount of confidence in charities had risen to 69 percent, up from 64 percent a year before.

Concerns about the distribution of September 11 relief funds were not the only cause for the drop in confidence, according to Paul C. Light, professor of public service at New York University. He says subsequent scandals involving the Catholic priesthood, the Nature Conservancy, and United Way of the National Capital Area — and even scandals at corporations like Enron and WorldCom — contributed to skepticism about the integrity of all types of institutions.

“The sector was just like Velcro — every piece of bad news out there stuck to it,” says Mr. Light, who is also founding director of the university’s Organizational Performance Initiative, which commissioned the survey.

But while the most recent survey shows an increase in overall confidence in charities, it also found that Americans have serious reservations about the performance of nonprofit organizations.

Seventy-one percent of survey participants said that charities waste a great deal or a fair amount of money, up from 66 percent in 2005 and 60 percent in October 2003, when the question was first asked. Forty-four percent said they believe nonprofit leaders are paid too much, roughly the same amount as last year.

Even people who expressed confidence in nonprofit organizations overall share in those underlying concerns.

Among people who said they had a great deal or fair amount of confidence in nonprofit groups, 66 percent said charities waste a great deal or fair amount of money, 57 percent said charities do only a somewhat good job or a poor job of running their programs and services, and 37 percent said nonprofit leaders are paid too much.

“There’s this reservoir of distrust in terms of charitable ability to spend money wisely, and I find that extremely troubling,” says Mr. Light. “That acts as a brake on increased confidence and increased giving. If Americans believed that charities did a good job spending money wisely, I think they’d give more.”

Red Cross

Despite intense criticism of the American Red Cross’s response to Hurricane Katrina last year, the survey found that confidence in the organization dropped only in degree.

Forty percent of respondents in the July survey said they had a “great deal” of confidence in the Red Cross, down from 46 percent the year before. But the percentage of people who said they had a “fair amount” of confidence in the organization rose from 35 percent in 2005 to 42 percent this year.

The percentage of respondents reporting limited confidence in the Red Cross — 11 percent — or no confidence — 6 percent — remained the same from 2005 to 2006.

In their studies of public attitudes, the researchers have found that perceptions of two big charities — the American Red Cross and United Way — strongly influence how Americans feel about charities overall.

“Now there’s virtually nothing that a local charity can do to increase confidence in the Red Cross,” says Mr. Light. “The best thing they can do is focus on the other predictors of confidence, which are spending money wisely, delivering programs and services, being fair in their decisions, and helping people.”

Mr. Light worries, however, that charities don’t take measures of donor confidence seriously.

“They just keep going as if confidence is somehow fixed, and that these attitudes don’t exist,” he says. He says charities look at reports that show donations are on the rise and say, “‘See, we don’t have a problem.’ And I look at the same data, and I say, ‘No, you do have a problem. The dollars could be even higher if you were better in reassuring donors.’”

A report on the study, “Confidence in Charitable Organizations, 2006,” may be found online.