Most nonprofits are hard at work, laboring under challenging conditions with funding getting tougher by the month and demand for services continuing to increase. Others are working on important issues to elevate the sector to new heights, such as promoting transparency and accountability and measuring effectiveness and impact.

And yet public skepticism about the nonprofit sector (and I would add most public institutions) continues to grow. Why, when our work is so important and so badly needed?

All it takes is an occasional bad story to reinforce the public perception that nonprofits are not always what we think, or would like them to be. Exhibit A is a front-page series last week in the Washington Post: “One in three of D.C.’s AIDS dollars earmarked for small groups went to organizations marked by financial problems and questionable expenditures.” The articles detail a litany of lack of services, dubious résumés, ghost employees, staff turnover, double billing, and missing records. And to quote one of the headlines: “Yet, the Funds Still Flowed.” The Post series reviews 90 groups that were awarded a total of more than $80 million. The newspaper “built a database using thousands of pages of tax returns, audits and lawsuits; real estate, D.C. Council and court records; and corporate and police reports.”

All of these allegations are amplified by the fact that in today’s tough economy donors are more sensitized to the issues of efficiency and effectiveness. They want to know, is my hard-earned money being used wisely and making a difference?

Although the above-quoted allegations still need to be proven, they put the nonprofit sector on the defensive once again. What can we do to fight back? Here are my three suggestions:

• Embrace transparency and accountability and make them a baseline for appropriate nonprofit behavior. Be sure your organization is on GuideStar and takes advantage of the GuideStar Exchange program to share even more important information. Be wary of organizations that aren’t willing to be transparent. If we don’t establish our own good governance principles, we risk more regulation.
• Demonstrate to your stakeholders that you’re committed to making progress and measuring success. How are you doing? What are your goals? How do you measure short-term and long-term success? Your stakeholders deserve to hear regular reports from your organization.
• As the largest single source of revenue to the nonprofit sector, government at all levels needs to improve its due diligence before it awards tax dollars to charitable organizations. It needs to do more to investigate the charitable status of nonprofit organizations and demand transparency, accountability, and capability.

It hurts the entire nonprofit sector when the public thinks nonprofits are being used for political or personal reasons and aren’t providing badly needed services effectively and efficiently. It is in everyone’s interest in the nonprofit sector to elevate our practice and embrace transparency in all our work.