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4 stars? How online rating systems are impacting NGOs success

Once distinct, not-for-profits are now being rated in the digital space in much the same way as consumer products, movies and vacation spots.

By Bill Taibl, Director – Legal and NGO

The Federal Trade Commission recommends utilizing ratings websites before making any donation
The Federal Trade Commission recommends utilizing ratings websites before making any donation

In recent days, a hundred-million-dollar corruption scandal finally started to wind down and charges began to pile up after three long years of investigations. The culprit? Not a wayward politician or corporate CEO, but instead an NGO worker accused of bribery and other offenses related to the mismanagement of aid funds in Syria. Though illegal acts were limited to a small number of participants, the scandal threatens to sink the entire organization and its 3,000+ employees.

Such is the new reality for NGOs where any type of wrongdoing is amplified in the online space, making recovery a difficult feat. Once distinct, not-for-profits are now being rated in the digital space in much the same way as consumer products, movies and vacation spots. In recent years, a number of online ranking sites have sprung up to compare charitable organizations on the basis of transparency, staff compensation, expenses and more. These guides are becoming so prevalent that even the Federal Trade Commission now recommends utilizing one of the popular rating websites before making any donation.  

A number of these groups were formed following major industry scandals. It’s not surprising considering a 2016 poll found that trust in these institutes was at an all-time low. Today, a charity with positive reviews and high ratings is increasingly using this distinction as a selling point to increase their credibility.

A major theme in ratings is the issue of money management. U.S. non-profits collected $410 billion in donations last year alone. Increasingly, the public is demanding details on the use of these funds. While understandable, accounting practices in such organizations vary with international transactions making it more difficult to easily track and account for every dollar. After all, money sent across borders can pass through multiple financial institutions and take a significant amount of time to arrive. During this period, the sender will likely be left unaware of where their funds are in the process and what fees are required.

Teaming up with Western Union Business Solutions can provide a solution to many of these challenges. Though it may seem like an extra cost for a low-margin charity, a recent report found that non-profits that were open with their data received over 50% more in donations than their counterparts.

For other businesses, online reviews have long been critical to their success as 90% of buyers are influenced by digital feedback. As this type of behaviour spreads to other industries, NGOs would be prudent to ensure their practices are as transparent as possible – or risk the wrath of the online community.