Why not-for-profit organisations trigger more negative reactions from consumers than commercial businesses after a breach of trust

Published March 2020

Hornsey, M., Mangan, H., Chapman, C.M., La Macchia, S., & Gillespie, N. (accepted). The moral disillusionment model of organisational transgressions: Ethical transgressions trigger more negative reactions from consumers when committed by nonprofits. Journal of Business Ethics.


  • Nonprofit organisations play a unique role in sustaining the fabric of society: many have a core mission to increase inclusiveness, preserve equality, and protect the interests of society’s most vulnerable members. They deliver this mission in ways that cannot be substituted through commercial or government activity.
  • It is through the provision of these services that nonprofits are viewed as “purveyors of good”, enabling them to develop a reservoir of community trust that fuels donations and volunteering.
  • But what happens when nonprofits suffer an ethical breach? Scandals involving nonprofits (e.g. child sexual abuse by the Catholic Church, doping in sport) damage trust and reputation. These scandals can threaten the very survival of the organisation by impairing its ability to attract donations and volunteers to fulfil their mission.

What’s new

This research asks the question: does the same trust breach have different consequences depending on whether it is conducted within a commercial organisation or a nonprofit?

Answering this question will enable nonprofits to better predict consumer responses to trust breaches, and better equip them to know how to engage in trust repair efforts.

We conducted experiments to test two competing views:

  1. Moral disillusionment: people expect higher ethical standards from a nonprofit than a commercial organisation, and so having this expectation violated by an ethical violation generates a harsher response
  2. Moral insurance: the moral reputation of nonprofits protect them in the event of a transgression, acting as a “trust bank” that buffers them from negative effects of scandal

In three experiments, collectively involving 1372 people, participants read about an organisation that had engaged in fraud (Study 1), exploitation of women (Study 2) and unethical labor practices (Study 3).

What we found

Nonprofits generally benefit from having moral reputations. Consumers trust nonprofits more than commercial organisations and have stronger intentions to engage with their services and products, and spread positive word-of-mouth about them.

However, in the context of a trust violation, consumer trust dropped more when the organisation that violated trust was described as a nonprofit, compared to a commercial entity. 

This effect occurred because the transgression violated participants’ higher expectations that the nonprofit would act morally, leaving them disillusioned.

This drop in trust then flowed onto consumer intentions to purchase from or support the non-profit (Study 1) and consumer word-of-mouth intentions (Studies 2 and 3).

The drop in consumer trust was more pronounced when the ethical transgression directly breached the nonprofit’s mission (e.g. exploitation of women by a non-profit whose mission was to support vulnerable women).

No support was found for the view that the moral reputation of non-profits protects them in the event of a trust breach.

Our findings confirm that nonprofits are penalised more harshly than commercial organisations when they breach consumer trust.

Bottom line

  • Nonprofits have more to lose from an ethical breach than do commercial organisations: their fall from grace is steeper, resulting in an elimination of their reputational trust advantage (and in some cases a reversal of it).
  • Nonprofit boards and managers need to have in place a comprehensive range of governance, internal controls and cultural mechanisms to prevent breaches occurring – with a particular focus on identifying and managing vulnerabilities directly related to the core mission of the nonprofit. 
  • A strong ‘trust bank’ of good deeds is not sufficient to protect nonprofits from a loss of trust after a violation. Trust prevention and repair requires nonprofits to carefully manage the expectations of stakeholders to ensure they can deliver against these expectations.
  • Nonprofits need to respond swiftly and comprehensively to ethical breaches, to limit the damage to trust and consumer intentions, and restore trust as quickly and robustly as possible.

Learn more about Trust, Ethics and Governance Alliance.