No company, nonprofit or for-profit, likes to tell customers and investors when they’ve screwed up. The natural instinct is to hide failures. But research shows that when people and organizations admit mistakes people trust them more. Talking candidly about challenges increases the listener’s trust that positive statements are true.
One of the reasons that the nonprofit FORGE (this Wall Street Journal articles tells the story of the FORGE/transparency drama that played out on Tactical Philanthropy and around the web. Scroll down to the third heading) was able to raise the money they needed to save themselves from closing was because they aggressively shared the mistakes that they made and therefore built a large degree of trust that their plan to fix things would work.
This sort of openness is needed for a philanthropic capital market to thrive. Lots of research shows that economies grow fastest when there is a high degree of trust among market participants. I believe the same should be true of the nonprofit economy.
One fantastic example of this dynamic played out over the last few days at the nonprofit charity:water. charity:water is a nonprofit that raises money to drill wells in areas of the world where people do not have access to clean water. Led by charismatic photographer Scott Harrison, charity:water has been very successful at drawing attention to themselves via social media and the use of ultra high quality photos and video (see this compelling video they made with Hollywood star Jennifer Connelly).
As a donor to charity:water, you would want to know that the money you gave was used to build a well. Pretty simple. Except of course things don’t always go right.
A little while ago, charity:water sent me an email asking me to donate in support of drilling a well and telling the story of how fantastic they are at the work they do. Then yesterday I got the following email:
I want to sincerely thank all of you that donated $35 (and sometimes more!) for my 35th birthday.
We tried to drill a well live yesterday in a village called Moale, deep in the heart of the Central African Republic. Sadly, we came up short. Both holes collapsed, and the people of Moale who have waited 16 years for water, will have to wait a little longer. It was a pretty rough birthday, seeing the hopes of Moale crushed like that.
If you’d like to see what a failed attempt looks like and the challenges we sometimes face in the field, I posted this short video yesterday:
If you are reading this in an email, click here to view the video.
Note what happens when you watch that video. Your trust in charity:water goes up. As a donor, you become more certain that charity:water is a good steward of your money and making a donation to them feels like it is a better investment.
charity:water has produced uplifting videos of tons of successful well drills. But it is this video showing them failing that makes the most compelling case that they are good at what they do.