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JCF Blog

The Critical Importance of Nonprofit Transparency

Posted by: Jewish Community Foundation of Greater Hartford on 6/2/2015

As a culture, we are obsessed with being “good consumers.” We read food labels, we go online to compare specifications and ratings on everything from cars to computers to baby carriages. We also make key buying decisions based on reviews of every service and product out there. We are spoiled by information, and we’ve come to expect that information to be available far beyond the retail realm. 

In terms of philanthropy, donors seek guidance, too – whether from sites like Guidestar and Charity Navigator, their local community foundation (like us), or other seasoned philanthropists.  In some ways, our charitable giving may be even more closely scrutinized than our retail purchases.  I suspect that this drive to evaluate nonprofits stems from my two-part “rule of the few”:

1) A few organizations did some really bad (or stupid) things – I read about them in the newspaper – and it makes me wonder if my donations are being used well;

2) I can only give to a few organizations, but how do I decide which ones are the best?

Donors want to feel good about giving, but they also want to feel that they are making a difference with their gifts. Just like every other decision in their lives, many of them want information to understand the organizations they are considering. 

It’s important to have great stories to inspire, but it’s also important to share baseline information that funders can use to understand the overall picture better.

This is where transparency comes in.  Organizational transparency can be defined in many ways, but one definition in particular is a direct antidote to donor’s fears. Transparency is the conditional opposite of secrecy. It is the deliberate attempt to move from opacity to an organization that encourages open access to information, participation, and decision making, and which ultimately creates a higher level of trust among stakeholders.

I believe that donors want to see that an organization is following its mission and providing services with as much benefit as possible.  They want to be able to look inside a nonprofit and understand its value to society. And why shouldn’t they have that?  It is their funds that allow us all to achieve the positive social results that we were founded to achieve. 

By being transparent, that is, by providing information about our organizations to both donors and the public, we will inspire confidence rather than suspicion.  A nonprofit might say, “but we are doing just fine without overwhelming people with all that information.” Perhaps; but the question I might ask is whether the absence of real transparency could be the difference between a gift and a major gift.

At the Foundation we believe in the value of transparency to create meaningful trust relationships with our donors and potential donors.  If you go to our website, under the “About” tab you will see a menu item called “Governance and Transparency”.  If you click on that link you will find a page with all of the Foundation’s key organizational documents in one place.  (It’s a best practice to put all such materials in one place for easy access by donors).  There you will find not only our IRS Form 990, but our audited financial statements, bylaws, investment returns, conflict of interest policy, a list of our Board of Trustees and something new – a “Donor Bill of Rights”.  Soon we will post Committee Charters for all our major committees as well.

We hope that other organizations in our community will follow our lead.  Perhaps just as importantly, we hope that our efforts will engender discussion about both the value of transparency and the critical role our community’s nonprofits play in creating positive social change in the community.

If you have any questions or comments about transparency, the new section of our website or any of the documents contained there, please do not hesitate to call and ask.

Michael Johnston is president and CEO of the Jewish Community Foundation of Greater Hartford. 

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