The term transparency often gets thrown around and unfortunately, nonprofits end up believing they must share EVERYTHING about the organization, its work, its finances, etc. However, that is not quite true.
Transparency begins with open and honest communication within the board and between the board and the Executive Director. One of the most basic tenets of transparent communication is that all board members have access to the same information when making decisions. This means there are no side bar conversations that provide certain board members with additional information or excludes other board members. It also means that all board members and staff members have access to information about the business of the organization (board meeting minutes, annual budgets, etc.).
Once this transparency happens internally, it can continue with external stakeholders including government agencies, current and potential donors, and those who receive services from the organization. Transparent external communication includes sharing general organizational information and annual reports, as well as good and bad news.
What does transparency look like (in practical terms)?
Information is shared. The organization’s leadership shares major news, whether it is good or bad with the board. Big information is shared with key donors and other key stakeholders quickly. Note: The leadership must clearly define what is major.
Information is available and up to date. For external stakeholders, the organization’s website is key. It should include information like board members, staff, programs/services, volunteer opportunities, and how to donate. Some extend this to include the posting of the annual 990 filing.
While it may feel that such transparency takes too much time, the risk of not communicating information might make your stakeholders less likely to support your work because they don’t know enough about the organization, your challenges, and the good work you are doing.
Discussions about transparency inevitably lead to questions about whether any information can remain confidential. The answer is YES. The IRS requires the following information be made public or available upon request:
- Form 990 for the last 3 years
- Form 1023 (filing to become a nonprofit)
- Board meeting minutes and meeting notices in certain states.
Information that can remain confidential:
- Executive Session Minutes
- Donors who wish to remain anonymous
- Private addresses of board members
- Personnel files
- Client information
Transparency is the goal; however, it is not easy or quick to achieve. Younger, new organizations may find transparency easier to navigate than older, established organizations who have a defined culture. But, for all organizations, becoming transparent is well worth the effort.