Transparency can translate to evidence of grant dollars and donations being used properly, which then converts into donor trust and more donations.
When foundations grow in wealth and influence they shape the reality of the communities they serve. The what, why, and how foundations work affects many aspects of life.
If a foundation (meaning its leaders) have racist views they might end up investing in groups/companies that propagate racist messages, or only helping areas with a majority of white people. If a foundation has a misogynistic perspective it might end up only granting funds to start-ups and grassroots movements where only men are in charge. If a foundation has negative views of poor people they might end up supporting projects that further exacerbate income, housing, and/or education inequality.
Organizations such as Glass Pockets have created a basic transparency system where transparency levels depend on foundations sharing basic things like contact information, mission statement, list of board members, and staff bios (some donors might not want to donate to a foundation that has a board member or staff member that uses their social media to propagate xenophobic beliefs, for example). Foundations can also share successful grant-making strategies, priorities, and lessons learned that can help other foundations improve their operations and outcomes. They can also share grant data, forms, and audited financial statements. This organization also considers diversity data such as hiring policies, and executive compensation processes. They look into whistleblower procedures, conflicts of interest policies, codes of conduct, and bylaws.
Glass Pockets by Candid also encourages foundations to provide grantees with surveys to get feedback and optimize their programs. They believe that transparency is needed to collaborate amongst foundations and create a circle of continuous optimization that will inevitably improve the communities they serve.
Depending on all these factors foundations are given GuideStar Transparency Seals (bronze, silver, gold, and platinum) that according to research from Villanova University and the University of Wisconsin—Milwaukee, lead to a 53% increase in contributions from funders and donors. Another organization that rates nonprofits is Charity Navigator using information from websites and IRS Form 990.
The reasons for transparency are clear:
Openness improves performance.
Accountability improves donor trust in foundations.
Donor trust improves fundraising efforts and loyalty.
Fundraising improves our communities' lives and outcomes.
Many donors are expecting more and more transparency and access to information/data before they decide to give their money to foundations. They take social justice seriously and are avid users of the internet. RootCause’s report “Research-Informed Philanthropy: Donor Behavior in Seeking and Using Information” found that donors look for specific information on performance and impact before they donate. They want information about the long-term benefits.
- 75% seek information about impact
- 68% seek information on fundraising or overhead costs
- 63% seek information on the social issue addressed
- 56% want a list of specific projects supported
Plus, according to a survey done by the researcher Penelope Burk, almost 50% of participants would donate more but don’t because they need more information about how their past donations had been spent.
Sharing your annual report in a PDF or dedicating a landing page or section of your website to it, with the necessary financial data, accomplishments, impact stories, mission statements, and donor spotlights (e.g. major donors, recurring donors), will go a long way.
All this means that organizations will need to organize themselves, their data, and documents so that the efforts for transparency don’t end up eating up too much of their budgets. Because keeping everything in check takes staff members' time, and time means money. Workflow automation and document management are key to enjoying the benefits of being more transparent with donors. After all, sharing is caring.
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