Building a great reputation

How do you create a great reputation? Is it simply the case that great reputations follow from great work? Hardly, Bernie Madoff and Icelandic banks had great reputations until a few years ago. Such reputations are a product of effective communication, but they quickly fall apart under scrutiny. To build a reputation on a solid foundation takes more than effective communication. It takes a clear understanding that communicating the difference that your organisation makes generates long-term trust and confidence.

There are three stages to building and maintaining a great reputation. Firstly, you must engage your stakeholders and find out what they want to know about your organisation. Secondly, you must be proactive and transparent about demonstrating the difference your organisation makes. And thirdly, you need to posses an understanding of how people receive information about your organisation. Let’s explore each stage in more detail.

All your stakeholders will have questions about your organisation, but they won’t necessarily ask them. And questions that remain unanswered will be filled by assumptions, colouring the perception of your organisation, and therefore your reputation. A good example is direct mail. Many charities use this fundraising method to generate income, yet only 9% of the public believe that it works. The discrepancy is due our failure to communicate how effective this direct mail is at generating income. It seems that when most people receive direct mail they assume it’s a waste of money, and the logical conclusion is that ‘this charity wastes money, so I won’t give to them’.

We must address stakeholder concerns wherever possible. We tend to get pre-occupied tinkering with the tone and structure of key messages while neglecting to engage stakeholders on issues that, while seemingly minor, can fundamentally effect how they see our organisations. It’s simple: ask them what they want to know and answer them.

Equally important for building a great reputation is to communicate the difference you make, and do so with openness and honesty. New Philanthropy Capital recently released a study, Talking About Results, in which they compared how well charities communicate the difference they make. The paper found that charities still struggle to communicate the most important information.

Slogans, logos and branding can create a great reputation, but relying on these techniques alone leaves your reputation vulnerable. Talking about your impact is the difference between saying your organisation’s great and proving your organisation’s great. Subsequently, it’s the difference between building fragile good will and building trust and confidence. As charities, we possess the former, but we desperately need the latter.

Once you have addressed your stakeholders’ questions and concerns, and communicated the difference your organisation makes with openness and honesty, the final stage of creating a great reputation is to understand how information is delivered.

Information about your organisation will reach people in one or more of four ways: by direct experience of your organisation, through your communications, through the media, or by talking to friends and family. The media and the public (friends and family) are the most powerful drivers of opinion and reputation, and we have the power to harness them by taking a big picture look at the purpose of our communications. Actively targeting the local media and the public with messages about your effectiveness will build your reputation over time, while limiting your communications to service users and funders will also limit the number of potential advocates of your work.

Sadly, when charities begin tightening their purse strings the communications budget is often an early casualty. We need to resist this temptation. Now more than ever we need to shout about our success; we need to demonstrate the difference we make with openness and honesty.

How much should charities care about transparency?

The ImpACT Coalition is all about encouraging charities to become more transparent to their stakeholders. But how seriously should charities take transparency? And if you do get serious about transparency—signing up to the ImpACT Coalition’s Transparency Manifesto, and taking practical steps to being more open about your work—will anyone notice?

In particular, will donors care? At New Philanthropy Capital (NPC), we’ve been working with donors for the past nine years—helping them to focus their giving on creating the greatest impact. But there’s no one-size fits all model for understanding why and how people give, and little research (so far) on how charities’ transparency influences their giving.

So what do we know?

Well, the Charity Commission’s survey of public trust in charities, launched this month, shows that charities are among the most trusted institutions in society, coming closely behind doctors and the police. It also tells us, worryingly, that the most important factor influencing people’s trust is the proportion of donations that ‘gets to the end cause’. Concerns about cost ratios were seen as more important than making an impact—a reversal from the last survey in 2008.

There is also a brilliant piece of research by Hope Consulting in the US, which looks at donors’ motivations for giving. It found that donors can be segmented according to different motivations. The report suggests a segmentation into six types of donor—Repayer, Casual Giver, Faith Based, See The Difference, Personal Ties, and High Impact. It also finds that ‘major donors’ share the same motivations as regular donors within these different segments.,

On a straightforward reading of these findings, charities would be forgiven for thinking three things:

1. that transparency isn’t an urgent priority because donors already trust them;
2. that any efforts to be more transparent should focus on showing how little money is spent on overheads; and
3. that any efforts to be more transparent about impact can focus purely on High Impact donors, rather than regular donors.

I’d warn against drawing these conclusions. Acevo’s survey last year showed that many donors’ perceptions of charities, and therefore of factors contributing to trust, are somewhat divorced from reality. Those that don’t work in the sector often have antiquated visions of charities staffed only by volunteers and funded only by donations, which should all be spent at the front-line and not on wasteful things like offices and chief executives.?

There is a big discrepancy between what donors say they want to know (how the money’s spent) as opposed to what they need to know (what that spending achieves). And charities often don’t make efforts to challenge this. It can be a lot easier to stick to working out your admin costs than it is to work out your impact. As NPC’s forthcoming paper on impact reporting shows, charities are not yet routinely communicating their outcomes or impact in their annual reports, annual reviews, impact reports or websites, tending to talk instead about outputs and internally-focused objectives.

So how much will donors care if charities get more transparent, particularly about what’s important—what they achieve? Some may not care too much, as long as a scandal doesn’t emerge that destroys their trust. But some will, particularly the High Impact segment of donors. And greater transparency may encourage donations from those that aren’t giving now because they don’t trust charities. In time, greater transparency will help all donors to become more informed donors (just like all consumers become more informed consumers), and their trust will become more directly linked to how well charities communicate the difference they make.

If I were a fundraiser, I wouldn’t be encouraging my board to invest in more of the same old fundraising techniques, with ever-decreasing returns. I’d be encouraging them to get ahead of the game and meet the informed donor’s needs. My message to fundraisers is this: Work hard to capture and communicate the difference you make. Use that to start an honest dialogue with donors based on trust and understanding. And don’t throw all your hopes into a major donor campaign—see what happens if you kick off an informed donor campaign instead.

Study of Navels? We might be onto something.

Last week I spent most of the week at the Leadership Trust with my Clore Social Leadership Programme, exploring my inner navel. Whilst my navel is still very similar to the last leadership course I went on to study it... there was a little something else that caught my eye.

The Leadership Trust has a 'step' model for helping you review your strengths and areas for development as a leader, nothing new there... but what is interesting is the link they have made between trust in leaders and their ability to honestly review their own performance and act on what they find. For mere mortals the process starts with doing something successfully or failing miserably but rather than just leaping back into the next task taking time out to ask yourself how did that go? how do I know? From this point of becoming self aware about what we are doing and the impact we are having we go on to decide what we need to change and exert some self control to make those changes.

Linking this step back to transparency I wonder how many of our organisations, despite confidentially reviewing our performance are failing to take this step of really changing our behaviour as a result of what we see and hear. is this why we sometimes lack the courage to publish that critical evaluation online?? Because we can't promise it won't happen again?? It isn't easy - no change programme is -but it is an essential step before we can achieve the real value of facing up to what is good and what isn't, developing greater 'self-confidence'.

Those organisations I have seen recently that are striving to become more publicly transparent seem to making a step beyond simple organisation improvement as a result of feedback but are developing a sense of confidence about their ability to accept feedback and improve as a result. Take someone on a diet, it isn't realising your over weight or even starting the diet that makes you feel good - it is seeing the pounds come off and knowing you can.

Several CEO's have told me recently that they worry that becoming more transparent will create a culture of risk aversion in their organisations... but if you think about it, that isn't what happens when we become more confident - we actually try new things and take more risks. Innovation thrives in a confident environment.

As the confidence of the organisation grows another magical process begins to happen, 'self-realisation'. The point on the journey where you become comfortable with who you are, the ability to open yourself up, actively seeking advice, feedback, we ask for support where we are weak, gaining the respect of others. ......And these are the people we trust, these are the people we want to collaborate with, the people we want to succeed. Imaging your organisation here.



NB:
The best part of dieting (anyone that says otherwise is not transparent) is actually when some else notices - this too is self-realisation through the respect of others and also feels great!

Does your impact have impact?

As a matter of transparency, all charities should host their annual report on their websites, but let’s be honest, not many people trawl through these reports, so it might be better to start elsewhere. If you want to begin improving accountability and transparency, start by thinking about who your stakeholders are, what they want to know, and what the best way to communicate with them is.

Each group of stakeholders has a slightly different perspective on your organisation, they will therefore want different information. Unfortunately, there isn’t a one-size-fits-all approach to demonstrating impact; you need to present information in a variety of ways if it is to hit its mark. Funders will want detailed analysis of the outputs and outcomes of your projects, beneficiaries may look for evidence that they are being listened to, and that improvements to existing services have been made. Similarly, supporters and staff may want ‘softer’ information, for example, anecdotal evidence of the change your organisation has made to people’s lives. But don’t guess what they want, ask them!

A good place to begin is to consider the kind of language you use to explain the difference your organisation makes. The language used in monitoring and evaluation reports is fine for funders, they have to read them, but they’re paid to do so. If you use the same language in impact literature, then you are likely to send your audience to sleep, or worse still, alienate them. It’s encouraging for stakeholders to hear that your organisation has hit all its targets, but it’s not very inspiring. This is the point at which you need to take off your performance hat and put on your marketing hat. The aim is to breathe some life into what can often be quite dry information. Think about using snappy quotes to illustrate qualitative information, there is nothing quite as powerful as a beneficiary explaining the improvement in the quality of his or her life.

Next is the amount of time a person will spend reading about the impact your organisation has made. At the risk of appearing to slide into an infinite regress, you have to be aware of how much of an impact your impact is making. What do I mean? Ask yourself how many impact reports you have received over the last year, and then how many you have read, and then how many you remember. I imagine for most of us it’s a dismally small number.

Room to Read, an NGO that builds schools and libraries in developing countries, has a novel approach to tackling this problem. It too produces an annual impact report, but it also demonstrates its impact by including a very brief ‘live’ summary of achievements on it website and below the signature of every email it sends out. At time of writing it read ‘Our impact: 1,128 schools, 10,000 libraries, 433 books published, 7.4 million books distributed, 8,944 girls scholarships, 4.1 million children benefited’. This information is included one the 'About Us' section of their website in every email a Room to Read member of staff sends, and with offices all over the world this means that their impact message is delivered thousands of times each day. Granted, it lacks the emotional edge of anecdotal evidence, but it is nonetheless a very powerful and effective way to demonstrate impact.

Demonstrating the difference your organisation makes creates a lasting positive impression, but it’s not easy. Finding new and inventive ways to get your message across can be challenging, but as Room to Read shows, it’s not impossible, and it need not be expensive.

Being the change we want to see...

The ImpACT coalition is shortly to launch its transparency and accountability manifesto, calling on leaders across the sector to get serious about the commitment to being honest and open about our business and how we operate.

Number 8 on the list is for organisations to agree that it is important that they publish an easily accessible suggestions and complaints procedure for beneficiaries and supporters.

I was reminded of the necessity for this only too clearly whilst visiting an elderly relative recently. She told me that a volunteer had been helping her from a local elderly care charity. Whilst the volunteer had been very successful at helping her get the benefits she deserved she didn’t like the way the volunteer often talked to benefits staff on the phone, “she was very rude to them and quite aggressive and on more than one occasion she said I was her mother, which I didn’t really like”. When asked whether she had complained her story was sadly too familiar, “I didn’t like too. She did get me the money I need; besides, I didn’t really know how… she gave me lots of leaflets about how to complain about my benefits but nothing about her organisation.”

It strikes me that we are often in the position of trying to advocate on behalf of those we work with, strengthening and empowering them, but we afford them the same view of our organisations are we are hoping they will get of the statutory services.

Morally most charities would find it hard to argue, but maybe we should also go further. What about publishing how many complaints a charity has each year? A short summary of the type of things and how the organisation plans to address them… True accountability starts at home; maybe it is time for us to take the lead in being the change we want to see…

Beware Comparisons

In April I spend a couple of weeks in the US attending various conferences and meeting with ACEVO’s partners. The topic of charity evaluation was mentioned in pretty much every single meeting.

At the GEO conference in Pittsburgh, foundations were fighting it out over the extent to which they should evaluate the performance of their grantees and what methods they should use. (Although interestingly they were rather less vocal about having their own performance evaluated.) While I was there I learned of two new donor advisory websites to add to the plethora on both sides of the Atlantic. (The new additions to the list are Philanthropedia and Givewell.)

There is a lucrative industry developing to service the sector’s evaluation, impact assessment, and performance management needs. This is of course welcome. There is no question that we need to be better at generating the evidence of the difference we make, and knowing as much as we can about what works and why. However, while much of this work is vital, some is harmful and we need to be clear what we are evaluating, why and who is doing it.

Firstly we need to ask why a charity wants to evaluate its own work. There are two main reasons. One is to get better and doing what you do, learning which programmes work and which don’t, and making sure your money goes where it adds the most value. The second is to convince others outside of the organisation (eg donors, funders, partners) of the good that you do.

These two motivations ought to be able to complement each other as long as the evaluation is sufficiently focused on assessing how well the organisation has achieved its mission. The right performance management framework should produce data which you can share with the outside world to show the impact you have had. However, it is unwise to focus only on gathering data to share with the outside world as you may end up with two systems, and if your performance management system is not concentrating on delivering your mission then it is not fit for purpose.

Secondly there is the question of who is doing the evaluating. A good performance management and outcome measurement framework developed for a particular organisation will tell you something about how well that organisation achieves its mission. (A great example of this is the work of St Giles Trust with Pro Bono Economics.)

Alternatively evaluations by be conducted by or through a third party often seeking to be a broker or a guide to help donors or funders identify the most impactful organisations.

In my view there is a huge amount of value in the work like that undertaken by St Giles. The evaluation they were able to develop demonstrated the outcomes they knew were important for the achievement of their mission. There is a danger though in evaluation frameworks being imposed on organisations where they may not fit, and particularly in being used to compare the relative impact of different organisations.

We should focus our attention on improving performance management in organisations, which would allow each organisation to communicate more effectively the difference they make. We should be wary of efforts to compare organisations for some key reasons.

Firstly, what choices are we actually talking about? If you are worried about the homeless in your home town and there is only one organisation supporting them then who are you going to compare them with? The only real choice is between this organisation and a potential organisation which doesn’t exist in that area. It would be wrong to automatically assume that for each need there is a choice of charities working to meet it.

Even if there is a choice of organisations, for example supporting excluded young people in your area, the approaches and philosophies of those organisations, driven by their missions, may be very different. One may see sport as the route to employment, one may see faith as a way of staying out of prison. Both Kids Company and Eastside Young Leaders Academy, for example, specialise in building the self confidence of troubled children and teenagers. However, their philosophies couldn’t be more different. Both produce the same results (well adjusted young people who can rise to their potential) yet if you swapped the performance management frameworks around both would fail by each other’s standards. A potential donor would be deceived in thinking that there is a straight choice between these two organisations.

Secondly we have to dig a little deeper into what actually motivates people to give. I am not a professional fundraiser but very few people who give to charity do so because they have read evaluations and come to a dispassionate objective judgment. People give because they have an emotional relationship with a cause and in many cases also with an organisation.

Paul Carttar who heads the Social Innovation Fund at the White House talked at the GEO Conference about the dilemma of on the one hand wanting to focus money at the innovations which work and yet on the other the reality that people value organisations in other ways. That does not mean that we shouldn’t prove to donors that we use their money wisely (and indeed keep that conversation live and fresh), but it may mean that we have to think more about how we use qualitative data as well as quantitative, in other words get better at telling our stories. This is much more sophisticated than a traffic light or a percentage score on a comparison website.

Even for more formal processes of choosing between organisations such as a public procurement process, I think we have to be realistic that hard evaluative data is still only part of the picture and subjective personal judgements come into play. Chris Stone, Head of the Hauser Institute at Harvard argued when we met that evaluation reports are unlikely to be what really secures the deal. Public officials are going to be thinking things like ‘do I like and trust the CEO?’, or ‘has the organisation delivered before?’

Thirdly, there is the danger of thinking that one methodology for evaluation or comparison is the holy grail. Tools like SROI are very useful, but they have their limits (as shown by NPC) and it is important that we understand those limits so we use them effectively. We have all railed against inappropriate methods being used to judge charities (such as overhead costs) but we are in danger of reinventing others if we don’t use the right tools in the right context.

The truth is that comparing charities is really really difficult. But even if it were possible it may still not be desirable. We are much better employed on getting better at demonstrating the difference that organisations make in working towards their missions. The Impact Coalition will shortly be launching its transparency manifesto and member organisations will commit to greater accountability and transparency in their work. This is the best start to achieve that goal.

The third sector needs a dose of cautious optimism

What do you feel when you hear the words accountability and transparency? I fear that to some ‘being accountable’ is the feeling of sheer panic that sets in when you realise there is only one week remaining to submit your return to the Charity Commission (I’m sure very few of you do this, of course). And ‘being more transparent’ is something that is demanded of an organisation that has been up to no good. Yet to many the whole process is about setting out your stall and shouting ‘look what we’ve done!’

It’s the latter attitude that underpins the work of the ImpACT Coalition, a positive ethos of openness and honesty. The Coalition takes the view that third sector leaders should seek to embed accountability and transparency practices into the culture of their organisations as a matter of routine, and that we should dispense with the narrow view of accountability as a process that happens once a year.

Clearly, this is a lot easier said than done. Being accountable implies responsibility to another party, and, like any responsibility, it is often accompanied by the fear of failure. It therefore follows that many well intentioned leaders are reluctant to improve accountability and transparency because of a fear of failure.

But what are we really afraid of? I think it breaks down into two broad concerns: one internal to the organisation and the other external. Firstly, to make an organisation more transparent one must review internal processes, and this could mean, among other issues, uncovering poor performance. How would you explain this to your colleagues and to the board? How would you tell your longest serving employee that his project has been underperforming for the past 10 years? It doesn’t take long for the objections to stack up.

Second is the fear of exposure, or more precisely, the fear of being judged too harshly. When you open up your organisation to greater scrutiny what will people think and say? What if others think what you consider to be a success a failure? What if people criticise your strategic plan? Worse still, what if you actually have bad news to deliver? Such concerns accumulate to create a feeling of a loss of control over your organisation’s reputation, and who wants that?

These concerns are well founded. I would suggest that any responsible leader would - indeed should - have similar concerns, but simply being concerned about the right issues is not enough. The most adept leaders reframe concerns as challenges and overcome them by adopting an attitude of cautious optimism.

So how would a cautious optimist go about improving accountability and transparency? Well, when it comes to the possibility of uncovering poor performance, she would first communicate to the staff and board that it’s about a collective effort to improve communication with stakeholders, she would emphasise that it’s about asking what we can learn, and would not rush to ascribe blame (of course, if the poor performance continues once identified, then action needs to be taken!).

Building an atmosphere of openness is absolutely critical to the success of improving accountability and transparency: external transparency is a reflection of internal transparency.

And what about exposure? It must be understood that the choice on offer are not limited to zero transparency one day and absolute transparency the next; we’re not out to expose poor practice for the sake of it (this should be reserved for persistent offenders!). The cautious optimist would commit to improving accountability over a period of time to mitigate potential fallout, with the ideal goal being the highest level of transparency in the shortest time possible. It would be unfair to expect an organisation with, say, limited resources and a modest turnover to expose every aspect of its operations at the drop of a hat without first allowing it to make improvements.

We do, of course, actively encourage organisations to share what they have learned from their failures, but such lessons are learned in the months spent reflecting after a failure, not in the midst of it. Demanding absolute transparency at such an early stage for the sake of it makes people defensive, exacerbates fears, and ultimately makes organisations less likely to be transparent.

This isn’t to suggest that we shouldn’t aim to be completely transparent, we should, and we should hold ourselves accountable to the highest standard. But if we want others to take up the challenge, we must be sensitive to the fears that accompany increased transparency, and understand that the first steps are often the most daunting; they are certainly the most critical.

The ImpACT Coalition wants third sector leaders to make a genuine commitment to improve accountability and transparency and not just a token gesture (a ‘commitment’ to improve over a five year period holds no weight). Improving accountability and transparency should be driven by a genuine desire to communicate more effectively with stakeholders, not just because it looks good.

It is this cautious yet optimistic approach to accountability and transparency in the early stages that ultimately dictates its success, and the ImpACT Coalition exists to support organisations on this journey. Is it daunting? Yes. Is it challenging? Yes. It is worth it? Absolutely!