Balancing Transparency and Confidentiality in Nonprofit Organizations

by Danielle Bloom

2 min read

Transparency is increasingly important for nonprofits to be successful in fundraising, but the need for transparency also has to be balanced with the need for confidentiality regarding both donors and clients. Your nonprofit can strike a favorable balance by having clear policies and procedures in place regarding both transparency and confidentiality issues.Consider the following factors when you’re developing procedural guidelines about your nonprofit’s publication of personal, financial, and operational information.

Transparency

Potential donors and government agencies require higher levels of transparency from nonprofit organizations than before. For your nonprofit to comply with applicable laws and successfully attract donors, it has to make information readily accessible about the organization and how it operates, how money is spent, and the effectiveness of programs and services the organization provides.Transparency is a key factor in gaining your donors’ trust. Regularly publish information about your nonprofit’s activities on your website, and through a variety of other outlets, such as social media, newsletters, press releases, and annual reports.Basic transparency information includes a clear statement of your nonprofit’s mission and activities, as well as information on board members, executives, and key employees. It’s good to have separate information pages on your website describing each program your nonprofit operates. Your organization’s financial accounting should include information on both fundraising and expenditures. It’s increasingly important for you to disclose what percentage of funds are spent on operating the nonprofit versus what percentage is actually spent on the organization’s programs and serving clients.Provide your donors with prompt acknowledgement of donations, including a receipt for tax purposes. Answer any questions they may have promptly and honestly, including information showing that their donation is being spent in accordance with their wishes, such as being solely dedicated to a specific program. Your organization’s latest financial accounting report and proof of its tax-exempt status should be readily accessible to donors.

Confidentiality

Confidentiality issues apply for both donors and clients. Personal information about individual clients your nonprofit serves, including photographs, should never be published without their permission. In respect to donors, your organization should assure donors of your respect for their privacy. For example, donors should have the right to make their donations anonymous, and they should also have the right to opt out of future fundraising efforts, including having their names, addresses, and phone numbers removed from your organization’s contact lists.Your organization should publish a policy statement to indicate that it doesn’t share any personal donor information with any other organization or with any individual outside of the organization.Many donations to nonprofit organizations are made online. Make sure you have a secure payment/donation processing system in place to assure potential donors that their information – such as their names, addresses, and credit card information – is protected by your payment processing security. It’s also a good idea to include a simple statement on your website donation page explaining why your organization requests certain information: that it serves the purpose of being able to keep the donor informed with information, such as periodic newsletters, about your organization – again adding the reassurance that their personal information is not shared or sold to any business or other nonprofit organization.Practicing openness about your organization while still respecting the privacy of donors and clients engenders the kind of public trust that will help your nonprofit attract and maintain financial support.

References & Resources

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