If your work involves nonprofit fundraising, odds are good that in the not-too-distant past you’ve had a conversation about transparency. It would be hard not to. This particular “T” word is a good contender for the topic of the moment. And we happen to believe that’s a very good thing. Our reason is simple. Transparency matters because it is absolutely essential to the other “T “every mission-driven organization depends on, and that’s trust.
Often when the topic of transparency comes up, it’s for a very specific reason. People are thinking about GuideStar or Charity Navigator, the data that these services share, and the impact that has on potential funders. In this context the word “transparency” boils down to the need to report certain metrics to certain influential third parties.
That need is real, but transparency means much more than focusing on the numbers that drive donor rating services. It’s about creating a culture of information sharing and a set of practices that set the stage for a more open and stronger relationship with donors.
This aim is so important that at Schultz & Williams, we think of it as one of the requisites of successful fundraising—right up there with a compelling case for investment, donor capacity and inclination, strong organizational leadership and solid infrastructure.
If your organization is not yet as transparent as it should be, how can you help move it in the right direction? Here are four steps to consider:
- Get Your Metrics in the Right Range—Agreed: transparency is much more than ranking well when it comes to these most basic numbers, but if you don’t pay attention to these first, donors and the public may not get far enough to notice other positives. To be considered a well-run nonprofit and a good steward of donors’ investment, most discerning philanthropists and donor advisors will look to see your spending on administration and fundraising somewhere between 10-15 percent of budget. Yes, this standard is too reductive. Yes, it can fail to recognize legitimate differences among types of organizations. But yet, for many funders, institutional and individual, it’s a litmus test.
- Think About and Talk About Your Fundraising the Right Way—Unfortunately, all the attention that’s been focused on fundraising costs fuels a perception that raising money is, at best, a necessary evil. The reality, however, is that for most nonprofits, it’s mission-critical. It’s vital that in all your communications to underscore this point. Speak of donors as partners in your work. Make clear that “overhead” actually represents your capacity to deliver on your mission. When you announce plans and projects, in the same breadth talk about securing the resources that will carry them forward. Impact doesn’t happen without investment. After all, nonprofits are nonprofits precisely because they exist for stakeholders, not shareholders, and thanks to donors, not customers. Let’s not let anyone forget that.
- Go Deeper—If we agree that figures on administrative overhead don’t tell donors all they need to know about your organization, the question becomes, What metrics will? How can you reveal your organization’s impact in the most valid and powerful way? If your mission is to feed the hungry, the answer may be as simple as counting meals served. If it’s something more multifaceted or less concrete—transforming a neighborhood, preserving a community’s history, advocating for a cause—you may need to think harder. You may also need to make an investment in data that is not already available, commissioning survey research or data gathering over time in order to generate the information you need. This may seem onerous and expensive, and it takes long-term planning, but if the research truly reveals your mission in action, it will be worth it. It may even help you think about your mission more clearly. When you dream of community transformation, does that really mean more people employed, more students graduating or maybe more families who say they love where they live? Or is it all three? You need to decide.
- Go Even Deeper—At the most basic level, building trust with donors is very much like building trust with a friend. How do you do that? Through honesty and openness. That might mean sharing more than you once thought wise about your organization’s policies on thorny issues, acknowledging setbacks as well as successes. But if you are wrangling these issues with integrity, if you are working hard to address challenges, letting your donors know will be persuasive. It’s a step toward making them into real partners. Of course, this doesn’t mean opening your direct solicitation messages with bad news. It does mean that in more substantive conversations with more committed supporters, you tell a more complete story and answer tough questions with candor.
As I hope all this makes clear, transparency is more than a tactic. It’s a matter of organizational culture, and for some organizations, it will require a cultural shift. I believe, however, that this shift can be a positive one. In fact, it’s a significant part of what it takes to build a true culture of philanthropy—a goal other S&W team members have explored in other posts and presentations.
To open your colleague’s thinking to the value of this shift, it’s good to point out that transparency is not just another reporting requirement or regulatory hurdle. It’s a chance to strengthen your relationship with donors and the public by sharing your story in its most honest form and asking them to support you for all the right reasons. It’s a way to build trust with your stakeholders by putting your trust in them.