The potential donors is justifiable: according to Essential

The non-profit sector today is worth an estimated $2 trillion worldwide, yet headlines
in recent times have seen the sector stumble between corruption scandals,
gross inefficiencies, false expenses and misuse of funds such as the $187 million
misappropriation to cancer charities by James T. Reynolds. Recent high-profile
scandals include donors of the Helpers Community Inc. raising concerns regarding
the misuse of donations and the Trump Foundation admitting to self-dealing. In
other cases, donors are mystified at the lack of results, like in the case of the Red
Cross’ failure to enable recovery in Haiti despite receiving $500 million in donations
following the 2010 earthquake.
The continuous decline in trust on the part of potential donors is justifiable: according
to Essential Research 35% of US citizens have little or no trust in charitable institutions.
Similarly, in the UK, figures are not promising, with trust in charities falling
from 6.7 out of 10 in 2014 to 5.7 in 2015, with 33% of those polled explaining that
the primary reason for their reduction in donations stemmed from the impact of
recent scandals on charities’ reputations. Naturally, the consequences of donations
decreasing is alarming; in the US, 52% of charities are not adequately funded and
cannot match the distressing increase in demand for their services.
Unsurprisingly, donor’s trust in charities has been declining1 steadily. In a 2015 poll,
more than a third of those interviewed did not trust charities and nonprofits2
Donors are demanding more accountability and charities, with forerunners such as
Kiva and GiveDirectly, are looking at how to be more transparent and accountable.
There are several methodologies organizations use to provide transparency to
their donors.
• Self-reporting: On websites and in annual reports, agencies report on their
progress and where donations are flowing. In many crowdfunded projects,
the crowdfunding recipient is also executing the project, and they report
from the field.
• Recipient reporting: Recipients of the aid report their own progress. This is
most prominent on websites where organizations allow donors to give to a
specific person, cause or project.
• Third-party reporting: Organizations such as GuideStar, Charity Navigator
and the Wise Giving Alliance provide oversight for charities, giving them a
ranking for their performance. However, the resources of these reports are
limited to public reporting from the charities.


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