Paul Light keynote address to the Citibank Board Leadership Forum states that 60% of Americans believe that nonprofits waste a great deal or fair amount of money. This rise in skepticism is compounded when one considers the rampant tax abuse that the Washington Post revealed in the nonprofit sector.
Albert Crenshaw reports, “Charities and other nonprofits exempted from taxes because they serve a public purpose have become a hotbed of tax evasion and abuse.” In light of these facts it is important for nonprofits to build greater trust with all of their stakeholders.
It is very important that organizations consider having greater transparency in their operations and I have listed some of the reasons why this will benefit your organization in the long run.
* Transparency increases our bottom line. The continuous abuse of the present ways that nonprofits are governing their organizations and financial matters will cause a lack of trust with the public and assist in decreasing the amount of money that people are willing to contribute to nonprofits. We can counter this by being proactive by providing our stakeholders with key information that is easy to access.
* Transparency builds trust. Stakeholders (donors, staff, volunteers, and parents, etc.) will have greater confidence in your organization if they are aware of how we are doing things. You can use your website to offer information about your finances, operations, and governance. Independent Sectors recommends that nonprofits should provide the following information on their website:
Vision and mission statements
Statement of values and code of ethics
Conflict of interest policy
Form 990 with all parts and schedules
(except contributor’s list which is protected under the Privacy Act)
Most recent audit financial statements
Information on programs and impact of our work
List of board members and officers, and staff
Bylaws or charter documents
* Transparency is the wave of the future. The Sarbanes-Oxley Act that resulted from the abuse in Enron has caused the IRS to look closer at the private and nonprofit sector than it has ever done before. Organizations like the Charity Navigator, an independent charity evaluator, “works to advance a more efficient and responsive philanthropic marketplace by evaluating the financial health of America’s largest charities.” Simply put, the American society wants to be informed about who and what they are giving to.