Today’s Discerning Donors Expect Financial Transparency and Accountability

Today’s donors are very discerning when it comes to their relationships with nonprofit organizations.

Above all, they seek personal alignment with the mission, values, and goals of the organizations they support. They want evidence that their support results in outcomes and lasting impact. While they expect to see facts and metrics that substantiate impact, they especially appreciate well-crafted stories that illustrate how real people and communities are benefiting.

Alongside these expectations, donors assume the organizations they support will be transparent and accountable, especially regarding financial matters.

The responsibility for ensuring transparency and accountability originates with the board of directors and extends to the chief executive officer and other senior staff. Donors expect that these organizational leaders will proactively assume these responsibilities and provide information to donors and prospective donors before they are asked.

Generally, nonprofit organizations can address transparency and accountability by taking the initiatives and actions listed below. At the same time, organizations would be wise to consult with their specific donors and tailor their transparency and accountability practices to meet their donors’ expectations.

• Ensure honesty in all communications, i.e., solicitation materials, website copy, stewardship communications, and annual reports.
• Tell it like it really is—even when the message may be negative. Donors who are committed to your organization expect and appreciate honesty, even when the news is bad news.
• Be certain that all financial reports are accurate and complete and meet professional accounting standards.
• Require Board review and approval of all financial reports before these reports are shared publicly.
• Periodically, seek independent, external review of accounting and reporting practices in addition to regular audits.
• Adhere to best practices in gift accounting and operational accounting.
• Document in writing gifts that come with donor restrictions and make certain everyone who needs to know has a copy of and honors these restrictions.
• Have a records management policy and practice in place that protects donor privacy, that provides cybersecurity, and ensure permanent documents are appropriately retained and safely stored.
  
  

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