September 23, 2017
 
Transparency Can Be a Delicate Balancing Act for Nonprofits

By Leigh Tucker

Leigh Tucker
In today’s nonprofit landscape, charitable organizations are under tremendous pressure to maintain a high level of transparency in their operations, and by sharing information, a nonprofit is perceived to be more trustworthy, more accountable to its constituents, and, hopefully, more deserving of donations.

As Kirsten U.S. Senator Gillibrand has noted, “I find that when you open the door toward openness and transparency, a lot of people will follow you through.”

To help nonprofits fulfill their obligation to be transparent, organizations like GuideStar and the Foundation Center collect detailed information about nonprofits and offer their findings to the public at no cost. Their goal is to collect and present detailed information about nonprofits in an organized way so that donors can make informed decisions and comparisons to guide their giving.

For nonprofits, there is a lot at stake when it comes to building a reputation of openness and transparency. Providing too little information can unintentionally lead people to believe you may have something to hide. On the other hand, providing too much information can jeopardize important relationships.

So how do you ensure that you are providing enough information to the public without going too far? How do you ensure your transparency doesn’t backfire? Where is the balance? Here are some basic guidelines that can help:

DO: Post a complete and accurate Form 990 on your website. Besides being a legal requirement, your Form 990 is the single most important tool for building trust and confidence among your constituents.

DON’T: Publicize the names of the donors that are listed on your Form 990—this information is confidential. Your donors have the right to remain anonymous until you have their express permission to share their identities.

DO: Share your Form 1023 that states your organization’s mission. It also lists the name, title, address and compensation of your officers, directors, trustees, employees, or contractors that receive greater than $50,000 per year.

DON’T: Provide the private street address for the individuals you list on your Form 1023. The IRS now allows the use of a mailing address in lieu of a street address in order to protect the privacy of employees.

DO: Disclose the minutes of board meetings as well as meeting notices if your organization operates in a state that has sunshine laws.

DON’T: Share the minutes of your executive meetings as these sessions often include discussions about confidential matters.

DO: Provide all audited financial statements per your state requirements.

DON’T: Disclose your organization’s financial budgets. A budget is merely a plan—a projection for the future that may or may not come to fruition. It is more important to share your year-end financial statements that reflect how your nonprofit ACTUALLY performed.

Leigh Tucker is managing director of the Nonprofit Practice at Accounting Management Solutions. Email him at ltucker@amsolutions.net or call 781-419-9220.
March 2016

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