Creating Social Value Blog / Social Innovation

Embracing Transparency in the Non-Profit Sector

By Richard Scioli, Babson Board Fellows member and Founder of Elemental Innovation

Through my involvement with The Lewis Institute’s Board Fellows program I’ve had the opportunity to spend the past year on the Board of The Special Olympics of Massachusetts. Spending time with their staff and the people they serve has given me incredible access into the good they do, and assured me that donating to that organization is worth every penny.  Surely, one of the best ways to get to know a non-profit is to volunteer, but not every person can be involved with the business of the organizations they support in this capacity.

There are well over a million registered tax-exempt non-profits and foundations in the United States and thousands of campaigns and causes competing for time and money. What are they doing to earn the trust of current and potential donors?

Primarily, they are becoming more transparent. The non-profit sector in the United States is going through a tremendous period of growth in this direction. Many organizations make substantial efforts to tell donors the exact impact of their donations. Charities like Best Buddies (an organization that supports individuals with intellectual disabilities) have gone as far as to post their IRS filings online.

One non-profit in particular is making tremendous headway in helping individuals decide where to donate their money.  Charity Navigator is a site devoted to the evaluation of non-profits.  It ranks non-profits on accountability, financial responsibility, and compares a non-profit to a cohort of similar institutions. The site is taking further steps to analyze this data and produce reports on the non-profit sector in aggregate.

Major consulting firms like McKinsey are devoting serious manpower to the non-profit sector and are regularly publishing white papers on industry trends.  The result of this work has provided donors with valuable information and tools that will help multitudes direct their dollars to highly functioning non-profits. With donors quickly becoming more educated and aware, non-profits not only need to consider the efficacy of their organizations but also embrace the power of transparency to nurture donor relationships.