Transparent Nonprofits

8 Ways Nonprofits Can Be Financially Transparent

Businessman Simon Mainwaring once said, “The keys to brand success are self-definition, transparency, authenticity and accountability.”  Transparency and accountability, in particular, are essential to a nonprofit achieving mission success.

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In fact, these two principles are foundational to the rating system used by Charity Navigator, the nation's largest and most-utilized evaluator of charities. Charity Navigator offers these two definitions:

Accountability is an obligation or willingness by a charity to explain its actions to its stakeholders.

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Transparency is an obligation or willingness by a charity to publish and make available critical data about the organization.​​

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How to show accountability and transparency
The willingness to be accountable and transparent about your nonprofit — especially finances — creates an environment of trust that encourages donations. Financial transparency and accountability are also essential for legal compliance.

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The National Council of Nonprofits lists several ways your nonprofit can - and in some cases, must - demonstrate financial transparency:​​

1. If requested, provide copies of the three most recently filed annual information returns (IRS Form 990) and your organization’s application for tax-exemption. These can be posted on your website.
2. Be honest in your solicitation materials and in communications with donors about how their gifts will be or have been used.
3. Adopt a conflict of interest policy with a disclosure statement that your Board and staff must create an executive compensation policy that ensures the Board is aware of, and approves, the salary and benefits of your Executive Director or CEO.
4. Have the Board of Directors review important financial reports as well as review the IRS Form 990 before filing.
5. Adhere to sound financial management policies, including internal controls. This ensures accountability.
6. Adopt an expense reimbursement policy that requires prior approval and limits expenditures to a reasonable limit.
7. Publish information about your nonprofit’s tax-exempt status, who’s on your Board of Directors, and appropriate financial information on the website.
8. ​Simplify financial transparency with cloud software.

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Nonprofits face significant challenges as a result of thin staffing, tight budgets, primitive financial management tools (e.g., spreadsheets), and far-flung management teams. Financial transparency may seem almost impossible.

Fortunately, there’s cloud-based fund accounting software from Sage Intacct. Now you can create greater levels of transparency across every dimension of your organization and get real-time visibility into your organization’s financial health. Key stakeholders like the Board of Directors have instant, actionable insight to make smart decisions about your nonprofit’s future.

Let Leaf Software Solutions guide you to greater financial transparency and accountability. By focusing on your business needs first, so we can design a solution that scales as your nonprofit grows. Call us at 317-814-8000, or email us to get started today.