Confidence in managing reputational risk among non-governmental organizations (NGOs) and charities has declined in 2025, as highlighted by WTW’s “NGOs and Charities Reputational Risk Report 2024/2025.” This drop is driven by a combination of external pressures and internal challenges, with organizations facing a volatile environment that threatens their public trust and operational stability. Below is a detailed overview based on the latest available data:
Key Findings on Declining Confidence:
- Reduced Confidence in Risk Management: According to WTW’s third Reputation Risk Readiness Survey (conducted September–October 2024), confidence in processes for managing reputational risks has fallen since 2023. Only 9% of the 100 surveyed senior leaders from NGOs and charities (with assets over $1 billion) reported having a formal process to assess and manage reputational risks linked to board-level KPIs, down significantly from prior years. Additionally, oversight of reputation-related risks at board meetings dropped to 34% from 53% in 2023.
- Stakeholder Engagement Decline: Only 30% of organizations engage with stakeholders at least quarterly, down from 51% in 2023, and C-suite social media engagement fell to 52% from 80%. This suggests resource constraints and a lack of bandwidth as leaders address broader operational challenges.
- Financial Preparedness Lacking: Just 2% of respondents reported strong modeling capabilities to quantify the costs and liabilities of reputational damage, and only 1% rated their resilience to a reputational crisis as “very good.” This indicates heightened vulnerability to financial fallout from reputational issues.
Key Reputational Risks Identified:
- Cyberattacks as a Growing Concern: 60% of respondents cited the fallout from cyberattacks as a top reputational risk in 2024/2025, up from 27% in 2023, driven by fears of sensitive data breaches. This reflects broader industry trends, with 65% of global organizations identifying cyberattacks as a primary reputational risk.
- Customer Abuse Concerns Easing: Only 33% named customer abuse as a top reputational risk, down from 49% in 2023 and 66% in 2022, suggesting improvements in vetting, safeguarding, and safety procedures.
- Social Media and Public Trust: Social media amplifies reputational risks, with poorly judged posts or donor complaints potentially causing immediate damage. Low public trust, critical for fundraising (73% of donors prioritize trust before donating), remains a challenge, especially as 32% of Americans trust charities less than five years ago.
- External Pressures: NGOs and charities face a “perfect storm” of declining aid budgets, reduced donations, rising service demands, and restrictive political environments in some countries. Recent scandals have further eroded trust, increasing scrutiny from stakeholders and regulators.
Reasons for Declining Confidence:
- Resource Constraints: Leaders are stretched thin, “firefighting” wider challenges like funding cuts and geopolitical pressures, reducing time for proactive reputation management.
- Perceived Opacity and Corruption: Posts on X highlight perceptions of NGOs as opaque or corrupt, contributing to a broader crisis of trust across developed and developing countries.
- Regulatory and Operational Challenges: Increased state scrutiny, restrictions on operations, and regulatory demands (e.g., California’s Supervision of Trustees Act) strain resources and heighten reputational risks.
- Lack of Strategic Risk Management: Only a small fraction of organizations have robust, board-level risk management processes, leaving them exposed to crises. The shift toward viewing reputation as a risk (rather than a branding issue) is underway but incomplete.
Strategies to Mitigate Reputational Risk:
- Enhance Transparency: Publishing detailed reports on impact, financials, and KPIs, and joining standards programs (e.g., GuideStar’s Platinum Seal) can boost trust. Nonprofits with high transparency receive 53% more contributions.
- Crisis Management Plans: Developing clear protocols for handling crises, including communication strategies and designated response teams, is critical.
- Stakeholder Engagement: Regular, proactive engagement with donors, volunteers, and the public, including on social media, helps maintain trust and address concerns early.
- Gift Acceptance Policies: Clear policies to vet donors and decline controversial funds can prevent reputational damage. Well-drafted gift agreements with “redirect or reallocate” clauses protect both parties.
- Monitor Public Perception: Tools like Google Alerts or active stakeholder feedback (e.g., surveys, suggestion boxes) help track and address reputational gaps.
Broader Context:
- Industry Trends: The decline in reputational risk confidence aligns with a broader erosion of trust in NGOs, with survey data indicating a deepening crisis globally. This is compounded by competition for funds, talent retention challenges, and burnout risks.
- Donor Expectations: Donors prioritize impact (98%) and mission alignment (49%), demanding transparency in how funds are used. Nonprofits failing to demonstrate effectiveness risk losing support, as only 44% of donors typically return the following year.
- Regulatory Oversight: Compliance with laws (e.g., California’s charitable fundraising regulations) and watchdog organizations like GuideStar is critical to avoid scrutiny and maintain credibility.
Conclusion:
NGOs and charities are grappling with a complex risk landscape in 2025, marked by declining confidence in reputational risk management. Cyber threats, reduced stakeholder engagement, and external pressures like funding cuts and scandals are key drivers. However, greater involvement of finance and corporate functions signals a shift toward treating reputation as a strategic risk, offering a path to resilience. By prioritizing transparency, robust crisis planning, and proactive engagement, organizations can rebuild trust and mitigate risks.
For a deeper dive into specific strategies or a chart comparing risk trends (e.g., cyberattacks vs. customer abuse over time), let me know!