Why they kept quiet over Iceland

Mirella von Lindenfels says the best way for charities to protect their reputations is by owning up to lost funds

Mirella von Lindenfels
Mirella von Lindenfels

Let's congratulate those charities that were honest about the fact they had investments in Iceland and the scale of their potential losses. Sadly, they seem to be in the minority - but it will be to their credit that they owned up rather than wait to get found out.

I have to admit that my first reaction on hearing about the charities caught up in the collapse of Iceland's financial system was not one of unadulterated admiration. Even though I have spent most of my working life in the sector and understand the concept of responsible financial management, the scale of operational budgets and the need to protect services, my first reaction was: "How much?!"

This made me ponder the acceptability gap: the gap between what a charity thinks is the right thing to do and what its supporters and the wider public would consider acceptable. Is it acceptable to sit on what amounts to a significant percentage of your total operational budget as savings? How many children, cats, people aren't being helped because you have that money in reserve?

I know - reserves are important; you need that protection. But would donors see it that way? If they wouldn't, isn't that a threat to your future relationship with them?

Animal charity Cats Protection paid the price for being transparent last month when it was lampooned for almost 10 minutes on comedy quiz show Have I Got News For You. It's times like these when you need a communications person at the most senior level who can deal with the issue of perception. It's easy to sideline such concerns as fluff, or reject reputation management as 'just PR', but being aware of how a charity's actions and decisions might be perceived and the potential damage that perception could cause should be regarded as one of the most important functions within an organisation.

It may be that high levels of investment are considered fine, or that they would be if they were better understood. I merely offer that a charity should be as sure as it can that this is the case. Let's face it, there are a few charities out there that are not at all sure whether their investment strategies would be considered to be fine. At least, I assume that's why they have refused to go public about their involvement in Icelandic banks.

There isn't a 'one-size-fits-all' strategy for balancing what you believe is needed against what your public would consider acceptable. Nor is it always the case that the latter should prevail, but it is always the case that a charity should give the issue the consideration it deserves.

- Mirella von Lindenfels is founder of Communications Inc

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