The Washington Post’s devastating investigative reporton the Trump Foundation, revealing that Donald Trump used $258,000 from his foundation to settle his businesses’ legal trouble, could pose big problems for many charities. It is stunning that when he was sued after refusing to pay the winner of a golf competition, he made a donation from his foundation to settle the lawsuit. Moreover, the Post’s reporting shows that apparently nearly all of the charity’s giving since 2008 came from other people, not Mr. Trump himself, despite his claims of giving millions of dollars to charity out of his own pocket.
These practices are not simply questionable ethically but may also violate actual laws on self-dealing that forbid the leaders of nonprofits from using charity money to benefit themselves or their businesses. By contrast, while some aspects of the Clinton Foundation have drawn scrutiny, there are no substantiated accusations of any legal impropriety.
The impact of Mr. Trump’s impropriety could be more devastating to a vast range of nonprofits than anybody realizes.
Negative publicity about one nonprofit not only hurts that nonprofit but also causes people to feel negatively about other nonprofits
This impact is not a charity’s fault; it is simply a result of how our brains work. When we dislike one member of a group, this dislike spills over to other members of that group, even if there’s no good reason to think badly of them. This is a particularly difficult problem for nonprofits. According to Stuart Mendel, director of the Center for Nonprofit Policy and Practice at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University,for nonprofits, “their whole ability to succeed is based on people’s desire to trust them.”
The unjustified distrust of high-quality nonprofits and foundations that could be caused by the Trump Foundation scandal undermines our society. Nonprofits provide social services that governments can’t or won’t. To continue solving these social needs, we need to improve the reputation of all nonprofits.
Savvy nonprofits and foundations can take steps to demonstrate to donors, clients, policy makers, and others why they deserve to be trusted. All of us need to encourage a cultureof constructive self-criticism and transparency throughout the nonprofit world and at each organization. If we had that, a staff member at a foundation like Trump’s would be more worried about being under scrutiny by fellow nonprofits for bad behavior.
It is also essential for nonprofits to show their effectiveness explicitly and for supporters to demand clear demonstrations of effectiveness. Hand in hand with that move, they must explain why it’s important to spend on fundraising, marketing, and other administrative costs and help donors understand that low overhead as a measure of effectiveness is largely a myth.
Research shows that donors care about impact per dollar and are not satisfied with the current information available. Moreover, they would be willing to give more based on information about the organization being cost effective.
We all have the power to ensure that we can truly trust nonprofits to spend our money wisely. Let’s act quickly to make sure no more Trump-style scandals tarnish Americans’ views of the importance of giving.
Gleb Tsipursky is president of Intentional Insights, a nonprofit that helps people understand behavioral economics and psychology, and is an assistant professor of history at Ohio State University.