“Character is what you are. Reputation is what others think you are. The reason that some fail to climb the ladder of success, or of leadership if you want to call it that, is that there is a difference between reputation and character. The two do not always coincide. A man may be considered to have sterling character. Opportunity might come to that man; but if he has the reputation for something he is not, he may fail that opportunity. I think character is the foundation of successful leadership.”

Jackson, Jim, Walking Together Forever: The Broad Street Bullies, Then and Now

Source: Dictionary of Burning Words of Brilliant Writers (1895), P. 46.

Anonymous author; this is attributed to Mann, in The Wordsworth Dictionary of Quotations (1998) edited by Connie Robertson, and similar statements are often attributed to Thomas Paine, but the earliest published variant of such a declaration seem to be in an anecdote about an anonymous Boston woman in 1889:
I have the reputation of being of good moral character. But you know reputation is what people think of us, while character is what God and the angels know of us, and that I don't want to tell.
Anonymous Boston woman, as quoted in Current Opinion (1889)
There is a very great difference — is there not? — between the temporal and the eternal judgments, a very great difference between a man's reputation and a man's character, for reputation is what men think and say of us, while character is what God and the angels know of us.
Price Collier, in Sermons (1892)
Reputation is what men and women think of us, character is what God and the angels know of us.
Attributed to Thomas Paine in A Dictionary of Terms, Phrases,and Quotations (1895) edited by Henry Percy Smith, and Helen Kendrick Johnson
Misattributed

As quoted in "Lincoln's Imagination" by Noah Brooks, in Scribner's Monthly (August 1879), p. 586 http://books.google.com/books?id=jOoGAQAAIAAJ&pg=PA586
Posthumous attributions
Variant: Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.

The Men Who Are Making America (1918) by Bertie Charles Forbes