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How Impact Washing Affects Nonprofits and Charitable Giving

Impact washing occurs when organisations falsely claim to create significant social or environmental benefits without providing evidence to support these assertions. This trend, like greenwashing in environmental efforts, is becoming increasingly common and is profoundly affecting nonprofits and charitable giving.

As donors become more selective in their contributions, they want to ensure that their support goes to organisations with authentic missions and measurable outcomes. Misleading or inflated claims about social impact create confusion, making it difficult for donors to differentiate between genuine efforts and superficial ones. This erosion of trust can lead to donor fatigue, causing potential contributors to become sceptical and hesitant to support any organisation that claims to make a social impact for fear of being misled.

 Nonprofits heavily rely on public trust and support, particularly for funding programs that offer real, long-term benefits. However, organisations engaging in impact washing can attract funding that would typically go to legitimate nonprofits. This diversion of funds results in less capital for programs focused on deep, structural change and more resources redirected to organisations that prioritise appearances over genuine impact.

 Authentic nonprofits often make significant efforts to report their outcomes and maintain transparency regarding their successes and areas for improvement. In contrast, impact-washed organisations may lack this level of transparency, concentrating instead on promoting feel-good stories or selective metrics that may look impressive but lack depth. This lack of accountability can ultimately lower industry standards, as genuine nonprofits face increased pressure to “compete” in a landscape filled with exaggerated claims.

 When donors and the public begin to view charitable claims with suspicion, the entire nonprofit sector suffers. Authentic organisations are burdened with the increased demand to prove their effectiveness, often requiring resources for reporting and validation that could otherwise be utilised for direct impact.

References

Chen, X., Chang, C.H. and Zhang, L., 2021. The effect of social impact claims on donation likelihood in nonprofit marketing: The role of impact transparency and empathic concern. Journal of Business Research, 130, pp.93-102.

Ebrahim, A. and Rangan, V.K., 2014. What impact? A framework for measuring the scale and scope of social performance. California Management Review, 56(3), pp.118-141.

Porter, M.E. and Kramer, M.R., 2006. Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), pp.78-92.

Nicholls, A., 2009. ‘We do good things, don’t we?’: ‘Blended value accounting’ in social entrepreneurship. Accounting, Organisations and Society, 34(6-7), pp.755-769.

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