Why are the most generous countries less trusting of not-for-profits?

 

Future World Giving

Building Trust in Charitable Giving – image by “. ..” (actual user name) via Flickr

The data suggests that many countries with low levels of engagement in charitable giving have the highest levels of trust in NGOs. How can this counterintuitive trend be explained and what lessons can policy makers and not-for-profit sector leaders learn?

 

In undertaking research for the last Future World Giving report, “Building Trust in Charitable Giving”, I came across a chart which has since been instrumental in advising my thinking about the development of charitable giving around the world. Looking through the slide share of Edelman’s excellent Trust Barometer for the stats that clearly show that trust in NGOs is higher than that of the media, business and government, I came across the chart displayed below.

 

Future World Giving

Edelman’s data on trust in NGOs is suprising – CLICK TO ENLARGE

The first thing that strikes me about this chart is that the peaks, the countries where trust in NGOs is highest, are not where one might expect to see them. That China (84%), Hong Kong (77%), Singapore (76%), United Arab Emirates (76%), Malaysia (75%), India (75%) and Mexico (74%) lead the world in terms of trust in NGOs seems, a first glance, to contradict what we know about both the environment in which not-for-profits operate, and the level of support and engagement of the public with civil society in the above countries.

 

Let me be clear. I am not dismissing the possibility that people in the nations I have just listed think more positively about NGOs than other nations. Clearly, the evidence suggests that they do. Nor am I suggesting that there are not positives to be highlighted about the development of a culture of giving in the countries highlighted.

 

According to the World Giving Index (annual global index of charitable activity) India has seen a 14% growth in the number of people giving to charity every month over the past 5 years, Singapore has seen the number of people giving money rise from 29% to 55% in the last year and Malaysia has seen significant government efforts in recent years to drive up volunteerism. However, the fact remains that none of the above countries ranks higher than 64th (Singapore) in the 2013 World Giving Index and China ranks joint last at 133rd in the world.

 

Indeed, in many of the countries with the highest apparent levels of trust in NGOs (according to Edelman), trust has been seen as a key barrier to the development of civil society. For example, in China scandals such as the apparent transfer of unused donor money following the Sichuan earthquake into other government budgets and alleged excesses of an employee of the Red Cross Society of China exposed a lack of transparency in the highly centralised Chinese not-for-profit sector. In India, regulators lack the resources to effectively validate the veracity of not-for-profits and CAF’s India Giving report shows that 52 per cent of Indians feel that a lack of transparency hinders donations.

 

If it is surprising to see the above countries topping the charts in terms of trust in NGOs then by the same token, it is interesting to note the indifferent position of the worlds most charitably engaged societies. In the UK, Ireland, Canada, Australia, USA and Sweden a higher percentage of people reported giving money to charity in the past month according the World Giving Index than indicated that they trust NGOs in Edelman’s data. That all of those countries rank in the top 20 in terms of giving money and all have highly developed regulatory systems in place to preserve public trust in not-for-profits makes that fact all the more confusing.

 

To recap, the trend seems to be that those countries with the highest levels of engagement in giving and the most sophisticated regulatory frameworks in place to hold not-for-profit organisation to account, see lower levels of trust than many emerging economies which enjoy neither widespread giving, nor comprehensive protection from abuse of the system. How can this be?

 

In attempting to explain this apparent counterintuitive trend we must first get the obvious caveats out of the way. The cultural, political, religious and economic circumstances in each country are of course radically different and may well play a significant part in explaining what we are seeing. Furthermore, the fact that only 27 countries are included in Edelman’s research meaning that claiming a relationship of any kind is, from a statistical point of view, a stretch. Nevertheless, I think that there is enough of a pattern to merit my conjecture.

 

My hypothesis is essentially a very simple one. I believe that the level of trust people profess to have in an institution or sector are relative to their expectations. In other words, if you have extremely high expectations of not-for-profits in terms of their governance, effectiveness and the underlying levels of abuse in the system then you are more likely to find reason to indicate mistrust. Furthermore, if you have experience of donating to and dealing with multiple charities then you have an ability to measure the standards of one organisation against another. In this way, it is inevitable that those with more experience of charities will have had interactions with not-for-profits in which they perceive standards to be sub-optimal. Once you have driven a Ferrari, your perception of the performance of your family car might fall.

 

Countries with high rates of charitable giving have achieved this through a continuing and progressive interplay between the rising expectations of donors (and the media coverage they consume) and the improvement of standards in the governance, regulation and impact measurement of not-for-profits. As more people give, they begin to hold not-for-profits to higher standards and demand improvements. When these improvements are in place, giving rises and the cycle of market complexity starts again. As I wrote in the Future World Giving report “Building Trust in Charitable Giving”;

 

“As participation in charitable activity grows in a nation, the regulatory system must evolve to meet new demands. These demands come both from not-for-profits, who require regulation that is appropriate for new organisational forms, and from donors, whose expectations of transparent reporting inevitably increase.”

 

Future World Giving

Giving market tends towards complexity

Perhaps this explains why countries with high levels of giving see more modest levels of trust. The ad-hoc meeting of expectations results in complex and uneven systems, particularly in terms of regulation. This makes advances increasingly difficult and with each stage of progress the returns in terms of trust, and giving, diminish.

 

 

 

So what lessons can emerging economies seeing rapid growth in charitable giving take from this idea?

 

Governments in emerging economies should recognise that as giving grows, the expectations of donors will rise. If governments do not act now to future-proof regulatory structures, incentives, and other civic infrastructure related to giving, the current levels of trust will fall when increasing expectations are not met. If governments want to see continuing and increasing rates of growth in charitable giving, they must be foreword thinking in their policy and avoid the complacency that so often comes with growth. Similarly, not-for-profit leaders should assume that donor expectations will continue to rise and act accordingly.

 

Adam Pickering

 

 

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