Clarifying Nonprofit Transparency

magnifyglass (2)Transparency is the media buzz word du jour—for our government, the Wall Street bailout, and for nonprofits. But I think the meaning and precise implications are a bit murky. Perhaps we need some transparent clarity? How does the call for transparency really apply in a practical way to nonprofits? As fiduciaries of organizations held in the public trust, how do we effectively translate the value for donors, development officers, and nonprofit organizations?

Guidestar.org recently conducted a study on nonprofit transparency. A review of 1,800 nonprofit websites revealed good news and bad news about the state of nonprofit transparency. In this context, Guidestar was actually assessing disclosure practices. They found that 93 percent of the nonprofits surveyed disclose information about their programs and services online.

However, they questioned the relevance of the actual data provided. The bad news was that only 43 percent posted their annual reports; 13 percent posted their audited financial statements, and a minuscule three percent posted their IRS letters of determination. Here are Guidestar’s steps for increasing transparency:

• Nonprofits should regularly update their websites with current, detailed program and evaluation information.
• In addition to posting names and titles of board and key staff members, nonprofits should post brief biographic information for these important leaders.
• All nonprofits should post these documents on their websites: annual report (if produced), audited financial statement (if available), copies of current and recent 990s, and IRS letter of determination.

And one additional note— if you use a third-party, social media tool to help you generate engagement and donations that is powered by Network for Good.org, http://www.networkforgood.org, be sure to register for Donor Tracking reports.

Whether you use Facebook Causes, or YourCause.com, it’s essential to know exactly who is making the contributions through the social media portals—giving you the opportunity to do proper stewardship and cultivation. And speaking of transparency, this is particularly critical with an organization such as Network for Good, which is technically a nonprofit organization, as well as a conduit for nonprofit giving. We as professionals must require full contact data disclosure on donors through these sources—including donors who have requested that their gifts be listed as anonymous—since we maintain the same vigilance about honoring those wishes for donors who make donations directly to our organizations.

What do you think?