Unfortunately, many people do not trust some nonprofit
s to use their donations wisely. By being completely transparent about your finances, you can make sure potential donors
don't have any reason to distrust your organization. Use this checklist to make your nonprofit more transparent.
The IRS maintains a list of registered nonprofits that are eligible to receive tax-deductible charitable contributions. If you are a registered nonprofit in good standing, make sure that your name appears on this list.
GuideStar publishes your 990 information
from the IRS. But, you can also include much more information about your organization by updating your listing with your mission
, programs, leaders, goals, accomplishments, and needs. GuideStar is one of the first stops when a donor or a foundation is looking for information on a nonprofit.
This watchdog organization rates 501(c)(3) charities based on their financial efficiency, among other factors. Not all nonprofits are on its list, but it does provide a guide for donors looking for solid nonprofits. CharityNavigator assesses the ratio of overhead expenses (particularly fundraising expenses) to a nonprofit's overall budget. Donors want most of a nonprofit's revenue to go toward its programs. CharityNavigator cannot evaluate every nonprofit, but by following its criteria for highly-rated organizations, you can bolster your reputation among donors.
The Wise Giving Alliance at the Better Business Bureau provides a way for citizens to check up on nonprofit behavior just like they can do with businesses. Anyone can check its site to make sure a nonprofit has met the BBB's standards for accountability.
Have you read the Better Business Bureau's Wise Giving Alliance Standards for Charity Accountability? Charities that meet those standards can become accredited and display the accredited charity seal. The Alliance's Standards for Charity Accountability provide an excellent road map to any prospective nonprofit for setting up its organization in the most ethical way.
Your IRS form 990 tax return is a public document. It is available to the public through the IRS, and on websites such as GuideStar. You must have a copy available in your office for people who inquire. Why not make it easy to find by posting it on your website as well?
In addition to your 990, put contact information on your site, a list of your board of directors and senior staff, and consider posting your most recent audit and a summary of the most recent board activity and decisions made.
The Sarbanes-Oxley Act was passed in 2002 by congress to remedy some of the accounting shortcomings of publicly-traded companies. However, it provides a number of "best practices" that many nonprofits have adopted in order to provide transparency
to their organizations. Get to know Sarbanes-Oxley, and how other nonprofits are applying it to their financial management.