CEO says non-profits must adjust to public scrutiny

The nonprofit sector is becoming more transparent and efficient because it must accommodate the contemporary expectations of Internet-empowered donors, Robert G. Ottenhoff said.

Ostenhoff, the president and CEO of GuideStar, spoke on Tuesday evening at the Camp Concert Hall.

Ottenhoff began with a discussion of how the economic crisis and recent tax deductions affect the nonprofit sector. He then explained how the Internet has changed the world of philanthropy, creating a power shift toward consumers, whose demands have increased because of this global communication tool.

GuideStar is a nonprofit database that offers inclusive financial and programmatic reports on 1.8 million nonprofit organizations in the United States on its Web site, www.guidestar.org. It was established in 1994 and remains dedicated to providing information that helps users make knowledgeable decisions on how to donate.

The nonprofit sector is essential to American society, Ottenhoff said. This sector comprises charities, lobbying organizations and community organizations with varying budgets and responsibilities, he said.

"Collectively, it [the nonprofit sector] represents about 8 percent of all jobs in America and 10 percent of its GDP," Ottenhoff said.

The extreme nature of the economic downturn has proposed unprecedented challenges to this vital sector, Ottenhoff said. Although donations are steady and fundraisers continue to increase, the growths are modest, he said.

Lately, there have been incentives for charities to work together and some are even considering merging, Ottenhoff said. These interactions are unparalleled and may lead to a more consolidated nonprofit sector in the future, he said.

President Obama's new tax deduction serves as another endeavor, and has initiated a vast debate as to whether this new legislation will reduce donations from upper-class citizens, Ottenhoff said.

"Regardless, most Americans want to give to charity," Ottenhoff said.

But more and more people wonder whether the charities they support are honest and effective, he said.

This is where the Internet is transforming the relationship between donor and institutions. The opportunities the Internet provides are creating a highly informed and well-connected public, he said.

"The era of assumed virtue is over," Ottenhoff said.

Nonprofit organizations must adjust to meet the heightened public scrutiny and expectations, he said.

Donors demand greater personal engagement in philanthropy, increased transparency of the organizations and adequate data on which to base decisions, Ottenhoff said. Because of the Internet, nonprofit organizations are under the consumer microscope, he said.

"Nonprofit organizations must accommodate donor needs and expectations to reinforce the policies and values of the organization," Ottenhoff said.

Not only do donors request more transparency, but they also expect to see the impact of their giving, Ottenhoff said. Donors want to know how effective an organization is in providing the services promised, he said.

The Internet sets challenging, but ultimately beneficial, standards for the nonprofit sector, Ottenhoff said. As people become more involved with the organizations, they become stronger supporters and more connected with the companies' passions, he said.

"I'm positive about the future and I think GuideStar will emerge from the economic crisis stronger and ready to move forward," Ottenhoff said.

Contact reporter Fred Shaia at fred.shaia@richmond.edu