Nonprofit Transparency, What Info is Private or Public?

Nonprofit transparency is exceptionally important for an organization with closely monitored spending. However, it isn’t just about financial reporting. That information is required by law to be transparent. To develop a relationship with your community, you need open communication, too.

But it isn’t always easy to achieve complete transparency, especially when trying to get things done. Communication is work. Here’s what board members should know about nonprofit transparency.

nonprofit transparency

Nonprofit Organizations Are Founded Upon Trust

As a public tax-exempt organization, nonprofits have to disclose their financials. Nonprofit organizations should also  make their board meetings and decisions as transparent as possible to better serve the community. Because nonprofits are funded by others, transparency is used to build trust.

Often, a lack of transparency occurs not because the nonprofit is “hiding” anything, but instead because the nonprofit doesn’t have time to curate and publish relevant information. Without meaning to, a lack of transparency can harm the reputation of a nonprofit.

Here are a few ways to improve your nonprofit transparency:

  • Maintain your listing on third-party sites. The Better Business Bureau and Charity Navigator both provide reviews of nonprofit organizations. If there are any complaints about your organization, address them directly and professionally.
  • Post your documents on your website. Whether they’re financial statements or meeting minutes, decide which documents you want to release to the public and make sure they’re easily accessible on your website. This will allow any interested donors to go over your documents first, and decide whether they want to work with you.
  • Be responsive about any inquiries. Connect with the community and respond to their questions as they come up. Social media gives you an excellent opportunity to interact directly with your community, future volunteers, and potential donors.
  • Keep all board members on the same page. Regularly discuss both transparency and confidentiality with other board members, and make sure everyone knows what is and isn’t to be discussed outside of board meetings. For the purposes of negotiations and projects, it isn’t always advantageous to be completely transparent about future projects and initiatives.

Improving the transparency of your nonprofit will encourage trust, as well as encouraging additional donations. The more upfront and honest you are, the more willing others in the community will be to work with you.

The Difference Between Nonprofit Boards and Other Boards

Consider the difference between charities, foundations, and school boards. Public charities collect public funds, and consequently need to be open and transparent about their spending. Meanwhile, private foundations are funded mostly through private entities. Therefore, they are not nonprofits, and a private board has no requirement to be transparent to others.

Likewise, school boards can be either public or private. While transparency is important to school functions, private schools are not required to make their meeting minutes or financial decisions public. Public school boards can often keep their meeting minutes confidential, but transparency is generally considered to be a positive. Check if your state has “sunshine laws” for civic entities, designed to keep discussions transparent to the public.

Nonprofits Don’t Need to be Transparent About Everything

Transparency is considered to be a best practice, both for nonprofit and for-profit organizations. But beyond what is required legally, a nonprofit organization will need to use its own discretion regarding what is released to the general public.

Most importantly, all board members should be aware of what information is available for immediate release, and what information is being kept confidential. Personally identifiable information and medical information both need to be protected. Consult with your law team about any special considerations if your mission works primarily with minors or a population with other legal considerations.

For the purposes of compliance, nonprofit organizations are going to at very least need to release their financial statements. But other than financial statements, improving transparency within your operations can help build a strong, reliable organization that the community trusts. Keep up the great work!

Interested in how to make your board of directors more productive through the effective use of technology? Boardable is a software platform that centralizes all communication between you and your board. Find the best meeting times, securely store all of your documents, archive discussion threads and more—all in one board portal. Click below to schedule a demo with a member of our Boardable team.

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