The directors who form the guiding mind of a nonprofit organization are duty-bound to operate the organization to the highest standard—for the public good. They must each discharge their fiduciary duties by applying appropriate care and skill in good faith, and with undivided loyalty. One area that increasingly has the potential to put pressure on proper discharge of duty is fundraising: In the current moment of high-publicity “tainted” donations, it is increasingly difficult for directors to balance attracting the financial support required to operate, on the one hand, with safeguarding the nonprofit’s valuable reputation, on the other.
Not every nonprofit organization seeks funds from the public, but those that do spend significant time and energy to bring in the funds needed to pursue their charitable aims. They must do so, or their programs, interventions, or services would certainly be affected. Boards and the executives to whom they delegate authority may feel that their principle challenge is locating generous donors, particularly in a crowded nonprofit “marketplace” marked by a cacophony of asks. However, another significant challenge is how to navigate the risk that some donations represent to an institution’s valuable reputation. This issue has grown in prominence in recent years as nonprofit institutions have been caught up in the reputational controversies of their donors. These controversies have affected nonprofit institutions in the United States, UK, France and elsewhere, and this, as well as the central role that social media and online news has played, makes this an issue of truly global relevance.
Reputational Risk and Governance
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