Improving the Effectiveness of Charities Through Transparency
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The document discusses the importance of transparency in improving the effectiveness of charities by fostering public trust, essential for attracting donations. It highlights that a decline in public confidence has created a gap that charities must address by sharing financial details with stakeholders and using platforms like social media and candid listings for accountability. Furthermore, it emphasizes the significance of being evaluated by reputable charity assessment organizations to enhance credibility and donor confidence.
Improving the Effectiveness of Charities Through Transparency
- 1. Improving the Effectiveness of Charities Through Transparency Abiola Abdulkareem
- 2. Introduction The effectiveness of any non-profit organization depends on its ability to attract donations. Even a small amount of money can be beneficial. So, to effectively run a charity, the management must ensure the organization doesn’t have a negative public perception, mainly in terms of its finances, and the best way to do this is through transparency.
- 3. When the management of a charitable organization is transparent with its finances, it could begin to gain public trust. The more trust people have in an organization, the more comfortable they will be when donating. In a study conducted by Basware in the United Kingdom, 90 percent of people interviewed said they could donate to charity. However, only one in four people out of the 90 percent donate to charity, while seven percent said they never do.
- 4. In another research by the commission of England and Wales in 2018 on the public perception of the charity sector, results showed that 45 percent of people had less trust and confidence in charities within the last two years.
- 5. The decline in public trust means that charities have a significant gap in the market that must be filled. However, filling the gap is not an easy task. Charities need to put necessary measures into place, for instance, allow transparency so both the organizational board and the public can know how much money they’re receiving and what they’ve been able to achieve with donations.
- 6. The most important part of transparency is dealing with any risks that could trigger the widespread call for transparency. The management of the charity has to identify and fix issues that could lead to public concern. One factor that could cause issues for a charity is financial opacity among the organization's board and volunteers. It is essential to keep everyone in the loop by sharing financial details with them. Provide the team with relevant financial statements highlighting key points such as gross and net revenue from every event.
- 7. Additionally, being transparent about donations to the whole team would make each person more accountable to their own small budget. Practicing such openness helps to connect everyone to the state of the organization's finance which is crucial as there needs to be internal openness and cohesion before appearing in public.
- 8. Transparency can also be achieved through increased public presence. It is not unusual for charities to promote their public presence to attract more followers and donors; however, they can use the same platform to show the public what they have achieved and other things they hope to achieve through more donations. Common platforms for this kind of task include social media, fundraisers, mailings, and newsletters.
- 9. Also, charities can become more transparent by updating their Candid Listing. Candid is the largest source of information for non-profits and the most trusted source where donors or foundations find information about nonprofits. They were formerly known as GuideStar until February 2019 when they merged with Foundation Center and were renamed Candid. The platform publishes the 990 information (financial information about the finances of nonprofits) of many nonprofits. However, charities can include much more about their organizations like mission, accomplishments, programs, and needs. This information is also essential in marketing a charity.
- 10. Lastly, charities must ensure they get rated by reputable charity assessment organizations such as Charity Navigator. This watchdog platform rates tax-exempted charities based on their financial openness and how effective they are. They also provide information for donors about genuine nonprofits. Charity Navigator rates organizations between one to four stars on financial, transparency, and accountability grounds. Other well-known evaluators include Universal Giving, CharityWatch, and Philanthropedia