Wise Giving Wednesday: Philanthropic Risk and Trust

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calendar icon Jul 17, 2020

Would you parachute out of an airplane to raise money for charity? My guess is most of us would not. While the proposed action exceeds our risk comfort level, the question does get your attention because it sounds daring and different. On the other hand, taking chances for the greater good is what some charities do every day in order to carry out their work. Whether it’s providing essential needs to refugees in a war-torn area of the world or battling the spread of contagious diseases, some organizations are engaged in challenging efforts due to the very nature of their missions.

There is another type of risk, however, that is essential to the success of philanthropy, in my view.  It is the risk of attempting new ways to address the problems a charity is seeking to solve and the important role that trust can play in that journey. Charities, like people, can sometimes become averse to risk taking because it shakes their comfort level.  Organizations can fall into routines that have proven track records but may be reaching a plateau that cannot be exceeded with the current resources available – for example, the number of families helped by a food assistance program. New approaches to delivering the program and perhaps new ways of raising additional funds can lead to expansion possibilities but that can involve taking a chance that is not guaranteed.  To that end, here are some tips for donors and charities to consider in assessing charity risk taking.

Be risky, not reckless. Taking risks on new approaches to problems needs trust building. Organizations need to build confidence from supporters as well as board members by experimenting on a small level before devoting significant resources to an unproven methodology. Think small before you go big.

Diversify. As the old adage goes, don’t put all your eggs in one basket. Risk taking should enable a charity to take chances without placing the entire organization in jeopardy. For example, it doesn’t make sense for a charity to choose a new method of fundraising and devote all its development efforts in that one approach. An organization can attempt several new development activities on a trial basis and diversifytheir revenue streams as best as possible, not relying on any one method for all its needs.  The same goes with experimenting on the program services side of a charity.

Measure and Monitor.   A charity should incorporate an accurate way to measure the results of new efforts taking into account all the variables that can impact its success. Some activities have clear measures (such as dollars raised in fund raising) but others can be more challenging to quantify (like the success of an advocacy campaign).

Consider Collaboration. Charities don’t have to do everything on their own, they can seek out potential partners (sometimes other charities) that might help them achieve a desired result that could not be accomplished by a single group.  Both organizations can benefit but partners should be checked out to help verify their trustworthiness. Third party evaluations such as those completed by BBB WGA can help.

Be Transparent. If a charity is transparent with donors about the risks involved, it will encourage support and donor trust but will also help in overcoming concerns when things don’t go as well as planned.

On a separate note, as part of our Building Trust Video Series we are pleased to provide a video that features Angel Aloma, Executive Director, Food for the Poor, a BBB Accredited Charity, which conducts relief and development programs in the Caribbean (Haiti, Jamaica and Guyana), Central America (Nicaragua and Guatemala) and the United States. Assistance is provided in the form of cash and gifts-in-kind, to churches and charitable organizations operating in these areas of need, as well as conducting some of its own programs. 

Finally, remember to let us know by going to https://give.org/ask-us-about-a-charity1/ if you are  interested in seeing a report on a charity not on the list and we will do our best to produce one. 

H. Art Taylor, President & CEO
BBB Wise Giving Alliance

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