How Nonprofit Organizations Use Reputational Risk Management

When an organization’s mission and message are about “doing good” — helping those in need or tackling an important social or environmental problem — it may be hard to imagine any reputational risk associated with their enterprise. Isn’t reputational risk management something that only private-sector, for-profit corporations need to be concerned with?

Although it might come as a surprise, the reality is that nonprofits — whether they’re development organizations, charitable bodies, or advocacy groups — have started to build fully-fledged reputational risk management systems similar to those employed in the private sector. Why? Because they meet challenges to their missions very similar to those faced by private-sector companies. First and foremost, they want to avoid a relationship with a controversial donor that might jeopardize their reputation.

Reputation as an Asset

A friend who advises the nonprofit sector recently explained it like this: “Companies have products and services. Even if a company is criticized, selling products and services will continue to generate revenues. Nonprofits, on the other hand, depend on donations that are primarily given on the basis of the organization being an honorable and effective one. Put simply, their reputation is really all they have.”

Here’s an example of the harm that comes from an attack on a nonprofit’s reputation. In 2011, the World Wildlife Fund (WWF) was criticized for its partnerships with industry in a German documentary with the audacious title, Der Pakt mit dem Panda — Was uns der WWF verschweigt. This roughly translates as “The Pact with the Panda: What WWF isn’t telling us,” but it was recast in English as The Silence of the Pandas, a reference to the thriller The Silence of the Lambs, insinuating that WWF was involved in an awful crime. The title alone was damaging in either language because it cast WWF as manipulative and dishonest; the film’s content itself, which according to WWF contained a number of significant factual errors, was even more so.

In its press release addressing the issue,WWF was able to prove that most of the claims made in the documentary were unfounded. However — and this is again similar to the situation of private-sector companies — dealing with the controversies absorbed valuable time and money. WWF Germany also lost members and donations.