Can declining trust in institutions be partially at fault for the overall decline in personal giving?

That’s a critical question international fundraiser Richard Pordes posed in commenting on our post reprinting  Tom Ahern’s Is Mass Fundraising Extinct? In Richard’s words: “But aren’t there larger societal trends that have caused the decline in numbers of households making donations? Just two mention two: the huge increases in income disparity? The accompanying rise in cynicism and lack of trust in our institutions, including our nonprofit organizations?”

I can’t claim to know the answer to that complex question. I’m fairly certain that indeed declining “Trust” in institutions plays a significant role.    What I am absolutely sure of is that readers interested in solving their organization’s fundraising and donor retention problems dig deeper and realize that an increasingly complex world poses new fundraising challenges that can’t be met by simplistic and pat “solutions.”

Like so many of today’s challenges “Trust” where donors are concerned isn’t some soft, nebulous challenge to be solved by guessing or simple instinct.  Rather, it’s a pretty well-researched concept and the task of enhancing trust, or taking steps to reduce mistrust, while complex and costly, are known and available.  What’s even more costly is not taking the complex steps to address the issue of donor trust.

That’s why today’s post is longer and more detailed than most. I’ll get to that shortly. But first, a word about the rising—and dangerous – level of cynicism in most of the world.

The Cycle of Distrust

This year the annual, and much touted,  Edelman Trust Barometer for 2022 is titled The Cycle of Distrust.  The firm summarizes its report as follows:

“ The world is failing to meet the unprecedented challenges of our time because it is ensnared in a vicious cycle of distrust. Four interlocking forces drive this cycle, thwarting progress on climate change, global pandemic management, racism, and mounting tensions between China and the U.S. Left unchecked, the following four forces, evident in the 2022 Edelman Trust Barometer, will undermine institutions and further destabilize society:

• Government-media distrust spiral. Two institutions people rely on for truth are doing a dangerous tango of short-term mutual advantage, with exaggeration and division to gain clicks and votes.
• Excessive reliance on business. Government failure has created an over-reliance on business to fill the void, a job that private enterprise was not designed to deliver.
• Mass-class divide. The global pandemic has widened the fissure that surfaced in the wake of the Great Recession. High-income earners have become more trusting of institutions, while lower-income earners remain wary.
• Failure of leadership. Classic societal leaders in government, the media and business have been discredited. Trust, once hierarchical, has become local and dispersed as people rely on my employer, my colleagues, my family. Coinciding with this upheaval is a collapse of trust within democracies and a trust surge within autocracies.

“The media business model has become dependent on generating partisan outrage, while the political model has become dependent on exploiting it. Whatever short-term benefits either institution derives, it is a long-term catastrophe for society. Distrust is now society’s default emotion, with nearly 60 percent inclined to distrust.”

 Corporate Hypocrisy Breeds Cynicism and Mistrust

I found what Edelman warns as the “excessive reliance on business” particularly notable.  Why?  Because more and more large corporations are hustling customers and burnishing their image with the type of bullshit and hypocrisy that will only feed the Cynicism and Mistrust Monster

Just a few examples using corporate ‘greenwashing’ on the issue of climate change and diversity and equality on the issue of women’s rights. [We’ll detail with more examples and details in future posts.]

Climate Change Hypocrisy. This week The journal Nature reports that in the run-up to the United Nations climate summit in Glasgow, UK, last year, many of the world’s most powerful businesses joined governments in pledging to reduce their carbon emissions to zero in the coming decades. But an analysis of publicly available corporate documents, such as annual sustainability reports, shows that 25 of those companies — which together are responsible for about 5% of global emissions — are actually making much less of a commitment.

Just 3 of the 25 companies — the Danish shipping giant Maersk, the UK communications firm Vodafone, and the German telecommunications company Deutsche Telekom — have clearly committed to deep decarbonization, according to the NewClimate Institute.

This science think tank, which has its headquarters in Cologne, Germany, published the analysis in collaboration with the non-profit organization Carbon Market Watch, based in Brussels. Thirteen of the 25 provide detailed plans that would, on average, curb emissions by just 40%, rather than 100%, over the next few decades; the other 12 companies have provided no clear details about their commitments. [ Check out the CBC’s Interview with one of researchers on its As It Happens show.]

Women’s Rights and Voting Rights Hypocrisy

Last year, here in the U.S., Republican-controlled state legislatures imposed a bevy of radical policies on millions of Americans. This was especially pronounced in two areas: abortion and voting rights.

None of this would be possible without the Republican State Leadership Committee (RSLC).

The RSLC bills itself as “the largest organization of Republican state leaders in the country” that helps “deliver wins for Republican state legislators.” It helps Republicans gain control of state legislatures through direct financial support, research assistance, campaign strategy, and policy development. The group says that it “consistently delivered positive results by targeting national resources to support state races” and takes credit for the fact that “Republicans currently hold majorities in 61 of 99 state legislative chambers.”

Nevertheless, numerous corporations that publicly declare their commitment to women’s equality and voting rights donated large sums to the RSLC in 2021. The information was buried in a 10,055 page PDF that the RSLC filed with the IRS and made public by watchdog organization Popular Information.

Again, just a few examples of this corporate hypocrisy taken from information prepared by Popular Information:

AT&T: $150,000 to the RSLC.

In AT&T’s 2020 Diversity, Equality and Inclusion Report, CEO John Stankey said one of the company’s “core values” was “gender equity and the empowerment of women.”

AT&T also celebrated “Women’s Equality Day,” saying it was “a day to reflect on the many challenges women in our society still face to achieve equity.” The company said that it believed “empowered women are key to the success of their communities.”

AT&T also presents itself as deeply committed to voting rights. The company, for example, posted a four-minute video to its corporate website documenting a trip that employees took to Selma, Alabama to honor John Lewis and others who fought for the right to vote.

In 2021, AT&T donated $150,000 to the RSLC.

Google: $155,000 to the RSLC

Google has also been outspoken about its support for voting rights. It was a corporate signatory to an open letter published on April 14, 2021 by the Black Economic Alliance. As a signatory, Google said it opposed “the 360+ state bills pending in 47 states that contain discriminatory voting measures” and “is willing and ready to unite in the fight to protect our democracy.”

Yet, after signing that letter and declaring its support for women’s rights, Google donated $155,000 in corporate funds to the RSLC in 2021. The donations were made by three different Google entities: Google Corporate Services ($10,000), Google Inc ($95,000), and Waymo ($50,000). These are not corporate PAC contributions. This is money directly from Google’s corporate treasury.

Google isn’t alone. Several other companies donated extensively to the RSLC in 2021 despite embracing women’s rights and voting rights.

Other major corporate donors to the RSLC in 2021

Other prominent corporate donors to the RSLC include Anheuser-Busch ($65,000), Diageo North America ($50,000), Farmers Insurance ($100,000), Home Depot ($50,000), Intuit ($100,000), Motion Picture Association ($50,000), Walmart ($70,000), and Wells Fargo ($50,000). Motion Picture Association declined to comment.

No wonder Edelman’s Trust Barometer, with massive understatement,  noted Government failure has created an over-reliance on business to fill the void, a job that private enterprise was not designed to deliver.

NOW…back to our nonprofit world

Why “Trust” Matters

In this age of “fake news”, “alternative facts” and general erosion of trust…

….why should we even care?

….And if we care what can we fundraisers do about it?

• Because “trust” is the lynchpin of a solid and sustainable relationship with a donor;
• Because there is a way to measure trust and identify those actions that can  increase donors’ trust–and significantly increase donor value and an organization’s net income.

In today’s climate of mistrust understanding the importance of trust and identifying what steps an organization can take to build donor trust is more important than ever.

Fortunately, thanks to more than 10 years research, testing and mass application by DonorVoice there’s a clear and proven process for building donor trust and improving donor retention and lifetime value. I believe it deserves a detailed description.

Relationship Fundamentals

Let’s start with some fundamentals about relationships in general and more specifically how these fundamentals apply to donors. In addition to the DonorVoice research that I used for my book Retention Fundraising there’s  a sizable body of work by academics and practitioners who’ve devised a framework called Relationship Theory to determine and describe the dynamics and essential ingredients of both personal and commercial relationships.

Hands-on experience coupled with decades of research make clear that the underlying elements constituting a healthy interpersonal relationship—the one you have with your best friend, your spouse or partner, and trusted colleagues at work—also apply to relationships in business to business (B2B), business to consumer (B2C), and nonprofit  to donor (N2D).

There are two key pillars that go into creating a positive nonprofit- to-donor relationship.  A relationship built on trust;  the very kind that leads to higher loyalty, commitment, and retention:

Functional Connection.

The journey begins with the desire on the donor’s part to establish a basic (what social scientists call “functional”) connection with your organization.

The main characteristics of a successful functional connection are reliability and consistency. The donor comes to know what he or she can reliably expect from you, and that experiences with your organization are consistent.

For example, you acquire a first-time donor using a powerful message to save the baby seals. It’s reasonable to assume the donor has a special regard for animals, in this case baby seals.

So your follow-up appeals would naturally focus on your work in this area. That would be consistent. What you shouldn’t do is acknowledge the donor’s original gift with an equally powerful message about the dangers of climate change and then follow up with a well-crafted appeal to help stop fracking.

There’s no consistency there.  And chances are, no additional gifts.

Or, say John Smith sends in his first contribution. His acknowledgment reads, “Dear John Smythe.” He calls and requests the spelling of his surname be corrected and is met with the uncaring voice of a rude clerk.

No reliability. No additional gifts.

 If an organization fails to deliver both reliable and consistent experiences, not to mention accurate information it will fail at building trust.  Fail at retention. Fail at building lifetime value. Period.

Conversely, when the organization achieves a solid level of functional connection, the donor’s level of trust allows it move to the next, vitally important tier of the relationship:

Personal Connection.

This is the more emotional part of the relationship. Personal connections are actions we take to make the donor feel an important part of the cause—things such as giving recognition, seeking the donor’s opinion, sending timely and relevant communications, and offering other forms of involvement.

In the vernacular of the social scientists, personal connection is the fidelity part of a relationship. The bond signifying there’s a two-way street of give and take, of mutual respect, with the donor believing the organization knows him or her and truly cares.

A Recipe for Trust.

When donors are both functionally satisfied and personally connected to your organization, they recommend you to others, stay with you, and are willing to forgive the occasional mistake (the two-month lapse in correcting the spelling of a name, for example). In short,  they trust you because your actions have demonstrated you care about their needs.

And “trust” is the linchpin for securing a solid, sustainable relationship. The kind of relationship that moves the donor to overlook shortcomings, give greater share of wallet, promote the organization, and go out of his/her way to engage with it.

Why Does the Nonprofit World So Often Ignore  the Importance of “Trust”?

One of the most plausible reasons I’ve heard is from veteran fundraiser Michael Rosen who answered the question this way: “Roger, The nonprofit community doesn’t often talk about “trust” because the assumption is that the sector is automatically entitled to it by virtue of the work it does. However, charity scandals and scientific research reveal that that is not the case. Just as with every sector of society, the nonprofit sector must EARN trust.”

Michael went on to note, in a response to a post I’d written, “While you focused on the development process as a means of building trust, you did not directly mention that ethics is another essential part of the equation. When organizations demonstrate sound ethical conduct, they are more likely to engender trust. The same goes for the sector as a whole.

“Sadly, even if a given organization does everything perfectly, it can still be harmed indirectly by the misdeeds of another charity that erodes public trust in the entire sector. So, not only do we need to be vigilant about the behavior of our own organization, we must also fiercely defend the integrity of the entire nonprofit sector.

“Research shows that the level of trust one has in the nonprofit sector determines whether or not someone will give. Furthermore, it determines how much someone will give. Small enhancements in trust can have a massive impact on giving.

For more on Michael’s points I’ve made (along with research sources), readers can checkout his article Doing well by doing right: A fundraiser’s guide go ethical decision making.

Next Steps

I realize this is a long post, but as Richard Pordes noted, it’s a complicated subject and deserves far more attention than it’s generally given.  In the P.S.  I’ve noted a couple more sources you might review.

Meanwhile…Remember, our missions only exist because people elect to support them. Building a relationship of trust with those supporters should be considered an obligation not a burden  – an obligation that happens to pay for itself many times over.

Roger

P.S.  Not everyone agrees with Edelman that trust in nonprofits is declining. Two years ago in Myth Busting: Trust in Charities in NOT Declining Kevin took issue with the Edelman methodology and outlined his problem with the Trust Barometer’s methodology.

Disinformation, misinformation, and hyperbole are increasingly filling digital mailboxes.  If ever there was a surefire Trust Eroder it’s this stuff.  So, I commend this gem from M+R  the digital fundraising firm.  The M+R Guide to Effective and Ethical Direct Response Creative.  Download it free of charge here.