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How do charity scandals hurt the nonprofit sector? How can we address this problem?
Gleb Tsipursky is an assistant professor at Ohio State Newark’s history department and serves as president of Intentional Insights, a nonprofit that provides education in effective giving and rational thinking.
Anger and dismay greeted the March 10 announcement that the Wounded Warrior Project (WWP), a nonprofit that helps wounded veterans, fired its top staff. The WWP’s marketing convinced donors to part with their hard-earned dollars, over $372 million in 2015, because of emotionally compelling stories about how they could help wounded veterans.
However, investigations revealed that the organization spent millions of donor dollars on first-class airfare, employee retreats and extravagant salaries. The programs it did create for veterans served more as showpieces useful for marketing than addressing the actual needs of veterans.
Besides devastating both WWP donors and wounded veterans, this news undercut public support for the nonprofit sector as a whole. Nonprofits rely on the trust of their donors, so whenever a scandal occurs at any charitable organization it impacts the entire sector.
The problem is the “horns effect,” one of the many thinking errors that are a consequence of how our brains are structured. When we dislike one member of a group, our dislike spills over to other members of that group. The horns effect around WWP will inevitably reduce trust in nonprofits as a whole, including very effective ones.
Such unjustified distrust of high-quality nonprofits undermines our society. The nonprofit sector provides social services that governments can’t or won’t provide, ranging from food and shelter for the poor to support for wounded veterans. To continue getting these social needs and address the distrust caused by nonprofit scandals, we need to improve our nonprofit sector.
Each of us can make a difference by combining the impulses of giving from the heart with the direction of the head to become a more effective donor. The easiest way to do this is to take the perspective of a savvy investor and research your donation options to make sure you do the most good per dollar donated.
You can do your part by pressuring nonprofits to be transparent and measure the impact of its work well. As part of focusing on measurement, give numbers priority over emotionally compelling stories. Ask how representative these stories are of actual clients, and then multiply the typical stories by the actual impact, as measured in numbers of clients or other relevant metrics. This helps prevent another common thinking error called scope neglect, in which our brain fails to ensure that our emotions correspond to the actual impact made by our donations.
Fortunately, you do not have to do all this work yourself. Recently, a social movement called effective altruism has been pushing the nonprofit sector to do the most good per dollar. Several organizations, such as The Life You Can Save, GiveWell and Animal Charity Evaluators evaluate rigorously the most effective charities. Some of their top picks include the Against Malaria Foundation, which protects families in the developing world against deadly malaria-carrying mosquitoes, and GiveDirectly, which transfers money directly to some of the poorest people in the world.
We all have the power to prevent future WWP scandals and improve our society. We can be effective donors by adopting the attitude of savvy investors, and not only encourage our favorite nonprofits to be more transparent and accurately measure their impact, but also ensure that we can truly trust that nonprofit to spend our money wisely.