7 Reasons Systems Fail and Trust Erodes

What is trust? It is an outcome. It’s the result of a process. It is built over time like a bank account. And in absence of trust you’re probably more vulnerable.

People – and donors – rely on the marketplace to operate in a way that rewards fair and honest practices. Those practices include: integrity, honesty, fairness, disclosure and accountability.

According to Claire Rosenzweig, CAE, president and chief executive officer of the Better Business Bureau of Metropolitan New York in New York City, trust goes out the window when systems fail. She made her comments during a presentation, “Building High Trust In A Low Trust World,” at the recent annual meeting and exposition of the American Society of Association Executives held this year in Columbus, Ohio.

Rosenzweig cited statistics from the 2019 Edelman Brand Trust survey where it was found 45 percent of consumers said a “brand” would never be able to regain their trust after a “brand” displays unethical behavior or suffers a controversy. And, 40 percent of respondents said they would completely stop buying from that “brand.”

There are seven reasons why systems fail:

  • Feelings of entitlement;
  • Irrational exuberance and uninhibited self-interest;
  • Arrogance;
  • Conflicts of interest;
  • Creative accounting;
  • Failure of independent auditors; and,
  • Failure of board oversight.

Nonprofit leaders can “be the personification of trustworthy,” she told the audience. Consumers look to nonprofits and businesses to act on social and environmental initiatives as a key element of trust. Boards are responsible to ensure that their organizations and employees can be trusted.

Nonprofit leaders must build a culture of trust so that it is sustainable and ongoing. Leaders need to figure out why mistrust happens and get to the root cause, Rosenzweig counseled.

Leaders need to collaborate every day with board members, staff members and the community. Reputation, financial stability and sustainability depend on it, she said.