Smile for Nonprofit Transparency Measures

How are you running your nonprofit? Your donors want to know, your competitors want to know, and the IRS needs to know. It all boils down to nonprofit transparency measures.

Four Out of Five Dentists Recommend: Transparency

There are two components to what makes for good nonprofit transparency measures. Firstly, there are some acts of transparency your organization is required to do. These are the non-negotiables of transparency, the “brushing your teeth everyday” of transparency hygiene. If your dentist finds out, they may report your nonprofit to the IRS.

Secondly, there are some nonprofit transparency measures that aren’t required but encouraged. These are the actions that are needed to reap the benefits of proper transparency. Nobody’s going to compliment you on your flossing, but you might get a hi-five from your dentist, or in this case, your thoughtful donor. We’ll discuss what that hi-five looks like here shortly.

A Measured Approach to Nonprofit Transparency Measures

Let’s first discuss the minimum viable transparency measures for your not-for-profit. Although there are plenty of small issues to look out for unique to State and circumstance, we’re going to focus on two to get squared away first:

1. IRS Form 990
2. Application for Tax-Exemption

You are required by law to keep the three most recent copies of your IRS Form 990. Similarly, you must also keep your nonprofit’s application for tax-exemption on hand. Moreover, what if instead of just having it on hand, your not-for-profit broadcasts it on its website? This is an act of good faith and signals to your donors that you value accountability and transparency. This is just the tip of the iceberg when it comes to nonprofit transparency measures.

Time to Floss

Although nonprofit transparency measures may feel like a legal imposition, they can become a legitimate tool for success! These measures may include developing a conflict of interest policy. Not only is this functional in times of uncertainty, it signals to donors your organization has an eye for ethics and detail. You might also decide to develop out an executive compensation policy for that same reason. Eliminate all doubts of a misuse of donation!

In addition to donor confidence, transparency can boost morale company wide. Operating transparently can increase your employees’ trust in the organization. The fact of the matter is: good external communication starts with internal communication, so start flossing!

1st Rule of Floss Club: Talk About It

One hidden benefit recently researched by Stanford was the collaboration effect of nonprofit transparency measures. They found that an open approach to nonprofit business practice helped combat that nasty feeling of competition that comes with doing business publicly. The honesty and good will that comes with proper transparency hygiene may help transform your competitors into partners!

Before Your Next Checkup

Yes, there are some impositions that come with nonprofit transparency measures, but the inconvenience will pay dividends if you simply lean into it a little. As sure as flossing yields healthy gums, transparency yields trust. It might be a tad cumbersome when you try it for the first time, but flossing isn’t a short game strategy.

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