Generally, transparency is considered as something required of entities that are asking for something whether it be politicians seeking votes, companies seeking to build new plants, or non-profit organizations seeking money. Donor transparency can be a useful means of fundraising for these organizations. On the other hand, a lack of transparency can be extremely costly because donors can choose to give their money elsewhere to organizations that are being more transparent. The public is desirous to engage in and give to causes they care about, but this only happens if your organization’s perception is positive and there is honest transparency. This honest transparency works both ways by allowing the potential donor to be transparent and by responding back honestly and transparently as an organization. Beck and Company Certified Public Accountants and Business Advisors offer many non-profit financial and accounting services to assist you in being truly transparent when it comes to your finances.
Donor Transparency
The process of receiving financial support for your non-profit begins by allowing potential donors the freedom to be transparent themselves. Donor transparency means supporters talking candidly about their reasons for considering giving.
This includes:
- How important is it for a donor to get personal, public recognition for their generosity? It could be extremely important or something to avoid at all costs.
- Whose approval is necessary before a sizable contributions can be made?
- The deeply personal motivation behind a gift – which is different for everyone.
- The kind of connection the donor wants to have with the organization. Some people want to be consulted regularly; others want anything but that.
- The larger role played by the charity in the donor’s life. Many people become philanthropists because of a life-changing experience.
- The worries the donor might have about giving. Many donors have concerns about spending, competence, or realistic chances for success, but they are often reluctant to voice them.
Financial Transparency as an Organization
The final point above is extremely important for your non-profit to address with donors. Financial transparency starts with effective and accurate financial reporting. Visit here to find out more about important tips for maintaining financial accountability in your reporting. These include tracking that raised funds were only used for their intended purpose, communicating openly in both good and hard times, maintaining practices that won’t hinder future networking opportunities, and having an infrastructure in place to manage finances well. If potential donors worry that the organization’s spending or financial competence is not up to par, this can be costly in losing the potential donation or future donations from current donors. On the contrary, having updated and accurate financial statements while being honest and open about common practices your organization follows can create needed trust.
When it comes down to it, transparency means trust. Your organization must be financially in good standing with sound business and finance practices in place to be able to secure donations and continue receiving more. Tell the truth to donors and potential donors about your organization, your partnerships, and your goals. Disclose who benefits from your services, how much they receive, and how and when funds are both raised and then disbursed.
In conclusion, no partnership between donors and non-profits can truly get off the ground until both sides have put all of their cards on the table in an honest manner. Donors need to state clearly what they can provide to the campaign and express concerns openly. Organizations need to prove what will be done and gained through these donor provisions. Transparency and positive perceptions will surely strengthen partnerships and cultivate needed trust. Transparency leading to partnerships can only be possible with sound non-profit practices. Please contact Beck and Company CPAs for assistance in making this a reality for your organization.