People have to trust you when you accept donations online for a charity. People want to know that their money will be spent on the cause they support. In fact, according to Fidelity Investments, 81% of the people they surveyed said that they were concerned about a lack transparency in non-profits and 65% said they would give more if they had a better insight into what their donation was actually doing. There are some steps that your organization can take to reassure potential donors about your transparency, some of which are relatively easy to achieve, and some of which are more complicated.
The Council of Nonprofits has a few suggestions for increasing your transparency, and many of them can be done within a short time frame. One practice that you can implement at a surface level is to publish your charity’s financial information on your website. Encoding a link on your homepage to a copy of the IRS Form 990 your financial officers filled out will put many potential donor’s minds at ease. It is a good idea to post on your website your organization’s annual report, IRS letter of determination, and any audited financial information too. These documents should be on hand and ready to be uploaded to the website whenever your IT person has some time. Fortunately, donor management software such as Process Donation can make creating or filling out some of these forms easier by making your accounts easy to reconcile. Be sure to update this information when you get new disclosure documents.
On a slightly more fun note, you might want to post a page on your website that details who your staff and board members are and what they do for your organization. Donors like to put their trust in people they can name, and they appreciate being able to trace who is involved in their preferred charity, especially when the group they are giving to accept donations online.
Some tasks that will help you seem more transparent to your donors are a little complicated and require multiple steps. Your very first step should probably be to have someone read up on your state’s public disclosure requirements. Each state has its own department for overseeing nonprofits and those departments will have publications detailing what they consider good practices for a charity. The federal requirements are different, and you can look these up on the IRS website. They even have an online tutorial about it.
Once someone in the organization has figured out the basics, your board and staff members can put together written policies that can then be posted on your website or simply have on hand if anyone asks for it. The Council of Nonprofits suggests formulating a policy for compensating board members and a system for members of your organization to report problems.
It is also important to start tracking and breaking down how much good you are doing with each dollar you receive. At the top of every donor’s mind is how much of their donation is going to the cause and how much is going to administrative concerns. If you have some statistics to back up the idea that you are doing good efficiently, then collect those statistics and post them somewhere where potential donors will see them. Do you track how many people received hot meals from you? How much did each meal cost? How many people were able to pay rent because you covered some of their groceries? Donors want to know how effective their giving is.
Many of these tasks take a while and require a lot of cooperation, but they will encourage generosity across the board. If you are curious about how to make donor management easier (which will free up more time to work on being transparent,) contact us and see how our software can help.