How to Promote Financial Transparency in Your Nonprofit

One of the most important aspects of running a nonprofit, at least when it comes to community relations, is transparency. Your community, stakeholders, and supporters trust you to use their time and money in a way that accomplishes your mission, and financial transparency is how you’ll show what their contributions are used for.

With transparency comes trust, and with trust comes long-time support and appreciation for what you and your nonprofit accomplish.

What is Financial Transparency? How Does it Impact Your Nonprofit?

Financial transparency refers to how much a company provides clear, accurate, and accessible financial information. This could include their financial performance, budgets, operations, and reports.

Nonprofits have strict requirements for reports that are available to the public, and while this helps with financial transparency, it shouldn’t be the only report contributing to the effort. You should include financial information on your donor packets, newsletters, and annual reports.

5 Ways to Promote Financial Transparency in Your Nonprofit

Presenting financial information can feel extremely overwhelming, especially if you’re not confident in your accounting department, but it can (and will) pay off in the long run. Also, reports and financial documents are not the only way to promote financial transparency.

In fact, relying on financial documents can make your community confused and overwhelmed by information they don’t understand that’s presented in a way that’s hard to navigate. Luckily, there are a few ways to help:

#1. Establish Clear Financial Policies and Procedures

To ensure that all the information you’re sharing is accurate and up-to-date, you should have policies and procedures regarding every financial process in your nonprofit. We recommend starting with these main SOPs (systems of processes).

#2. Regular Financial Reporting

Be proactive, not reactive, when it comes to sharing your financial information. Produce regular monthly, quarterly, and yearly reports based on your fiscal year-end. As a bonus, you’ll also have access to information needed to make educated plans and preparations for upcoming months and events.

#3. Educating Stakeholders and Community Members

Again, be proactive. Put an active effort into educating your community members and stakeholders about your finances. Remember to share donation information, the results of your latest fundraising event, and your impact data.

#4. Leveraging Technology

Utilize technology to be more transparent in sharing your financial data and reports. Opt to create an interactive report vs. a traditional one to explain more complex ideas or present data in a more user-friendly and accessible way.

#5. Transparency in Fundraising and Donations

We mentioned this before, but it’s worth a second statement: be transparent in your fundraising efforts and donations received. Donors love to be recognized for their support and appreciate knowing where and how their funds are helping.

Creating a Culture of Transparency in Your Nonprofit

There’s no harm in creating a culture of financial transparency in your nonprofit. In fact, there are only benefits! You should always strive to create a space that is appreciative and inclusive of their community, something donors and supporters love.

If you want to be more transparent with your community, clean up your accounting, and make more informed decisions with your donor funds and grants, contact the ModVentures team today.