New York City -- American donors are passionate and positive about the charities and nonprofits they support. But at the same time, according to focus groups, they are concerned when these organizations market themselves in ways that mimic big business. And the current Congressional debate over accounting changes and increased regulation and reporting for nonprofits scarcely registers at all with this group.

These are some of the findings in a new report, The Charitable Impulse, by the nonpartisan research organization Public Agenda. The study was designed to provide an in-depth qualitative exploration of gaps that exist between the views of typical donors (i.e. contributed at least $300; volunteered; were members of organizations) and those who lead the philanthropic sector.

Donor sentiment about charitable organizations, Public Agenda reports, is enthusiastic and positive, especially when it comes to smaller, local charities and human service organizations, and typical giving tends to be based on personal experience and emotional connections. But givers also have a long memory for scandal and waste. Focus groups took past misdeeds quite personally and the breach is nearly impossible to repair, the report states.

Givers also had strong and spontaneous negative reactions when nonprofits adopt big-business type marketing and sales techniques. Glossy brochures, unsolicited gifts, telephone solicitations, and high-pressure appeals all came in for criticism and generated a high level of annoyance.

The research was conducted in collaboration with the Kettering Foundation and with the Independent Sector, a national coalition of over 500 nonprofits and foundations, serving as an important partner. The Charitable Impulse is the result of six focus groups conducted around the country with donors and volunteers and with separate interviews with nonprofit and charitable leaders. The focus groups and interviews were conducted before hurricane Katrina and well after the Asian tsunami of late 2004.

According to Public Agenda President Ruth A. Wooden, We chose to talk to relatively modest donors so we could examine the 'heart and soul' of America's charitable givers. Most of these donors are positively and emotionally connected to charities and while they expressed concerns about some practices at nonprofits, for the most part they had much to praise. Their expectations are high for ethical behavior and these donors hold these groups in much higher esteem than they do the government, for example.

Since our findings are based on discussions with those already committed to nonprofits and charities, it is not surprising that they differ somewhat from other recent research that reveals a broader skepticism in the public at large. (After all, only four in ten Americans contribute $250 or more a year.) Our focus group participants voiced deep connections to their charities, but still, we found warnings and caveats that sector leadership should heed.

This study helps all of us in the charitable community better understand how the public perceives us, said Diana Aviv, President and CEO of Independent Sector. The research shows that communities deeply value and appreciate the nonprofit sector. At the same time donors and volunteers expect charitable organizations to behave in an honorable and ethical way if they are to maintain the public trust.

When Charities Go Bad

In nearly every focus group, the subject of misuse of funds by specific national charities spontaneously arose. Most, according to the report, said that when an organization was tainted in their minds, they never gave to it again. However, there was little evidence from the research that this colored their opinion of charities overall.

Like givers, the majority of philanthropic leaders Public Agenda interviewed believed that most nonprofits are well-managed by ethical leaders. While they acknowledged that a few bad apples exist, only a handful of sector leaders expressed serious concern about the loss of credibility and public trust. Leaders of smaller organizations, however, were more concerned, worrying that they might not be able to weather the fallout in credibility from the bad acts of others as well as larger organizations.

Do We Need More Regulation?

The issue of whether or not there should be more federal regulation of the sector is a hot topic in Washington and of great concern to nonprofit managers and professionals. But the issue scarcely registered on these donors' radar screens. Most donors interviewed had scant awareness of oversight and regulatory issues, and virtually no one had ever looked up an organization's 990 federal reporting form.

Many participants were also distrustful of government's ability to regulate, viewing government as bureaucratic and slow to react. Many donors specifically contrasted the helpfulness of local nonprofits with the lack of responsiveness of government. In terms of oversight, focus group participants tended to agree, with one Cincinnati participant who said I don't know how organizations audit these things. I don't want the government doing it.

While nonprofit leaders feel government needs to protect the public, most are wary of increased federal regulation. The sector itself needs to set standards for best practices, said one national service organization leader.

There was near unanimous agreement among the leaders interviewed that government focus should be on strengthening current regulations rather than completely overhauling charitable tax laws. The real issue, said one national association leader, is IRS enforcement -- the agency doesn't have the resources to enforce the rules already on the books.

Leaders were also worried that the costs of any new regulation would outweigh the benefits, especially for smaller organizations which could have a hard time managing new accounting costs.

Too Slick by Far?

One theme emerged strongly among typical donors: the more charities indulge in big business-like marketing and sales practices, the more they are seen to be just selling to people. Many focus group participants were concerned about expensive marketing costs, while others complained about aggressive solicitations, especially telemarketing calls.

Participants did concede that charities and nonprofits need to reach out effectively. And most the comments about over-marketing were aimed at large national charitable organizations.
In terms of executive compensation, participants generally felt that if people choose to work in the nonprofit sector, they should not expect the same level of reward as those in the for-profit sector. This was one of the areas of greatest contrast between typical donors and nonprofit leaders, many of whom think the public has limited understanding about how nonprofits are staffed and funded. Nor does the public, the leaders said, appreciate the talent and skill needed for organization leadership.

Nonprofits? Foundations?

For the most part, donors associated the term nonprofit almost entirely with the work of charitable, human services organizations. Many seemed surprised and even a little resentful that large nonprofits such as hospitals and universities (organizations that charge significant fees for their services) actually fall into this category.

Donors were generally unaware of foundations, but when they were, few questioned their tax-exempt privileges. Donors often gave foundations surprisingly wide latitude to how they used their money.

Lessons for the Nonprofit Sector

Sector leaders and the public spoke very differently about key issues. The report notes that leaders focused mostly on process, structure and on other business-like operations and concerns. They also felt that the public is not fully aware of how their organizations function.

But donors feel that while they may not know all of the facts, they do believe they know what's important and what seems right. They also were skeptical about organizations becoming too business-like and, instead, emphasized passion, mission and charitable purpose. There is an important balance here for nonprofits to maintain, said Ms. Wooden. Be certain to convey organizational effectiveness, but remember that the public expects you to be in the charitable purpose business.

Finally, the report highlights the key role of honest, credible communications in instilling and maintaining public confidence. For example, some donors spoke with admiration about an international aid group that had announced it had received enough donations for tsunami relief as a reminder that putting mission and effectiveness before rote solicitations is what givers value most.

Methodology

Public Agenda conducted six focus groups with civically-engaged men and women. Public Agenda defined civically engaged has having met three of the following criteria: Contributed at least $300 to charity in the past year; Were a member of a civic group (PTA, Rotary etc.); Volunteered at least once in the past year; Voted in the last election. The focus groups were held in Danbury, CT, San Antonio, TX, Phoenix, AZ, Cincinnati, OH, San Jose, CA, and Framingham, MA during January/February 2005.

Individual interviews were also conducted with 15 philanthropic leaders from a variety of nonprofit and charitable organizations during March/April 2005.

Public Agenda is a nonprofit organization dedicated to nonpartisan public policy research. Founded in 1975 by former U.S. Secretary of State Cyrus Vance and Daniel Yankelovich, the social scientist and author, Public Agenda is well respected for its influential public opinion surveys and balanced citizen education materials. Its mission is to inject the public's voice into crucial policy debates. Public Agenda seeks to inform leaders about the public's views and to engage citizens in discussing complex policy issues.