Transparency as a Fundraising Tool

August 9, 2018

At GuideStar, we believe that transparency is vital to the health of the nonprofit sector. What do we mean by transparency? Borrowing from Webster’s, we mean the state of being “free from pretense or deceit.” For charities, that means being open about programs and finances and readily sharing that information with donors, funders, regulators, and the general public.

How does transparency relate to fundraising? First, it helps donors identify the nonprofits they want to support. Donors get greater satisfaction from contributing to nonprofits whose values mirror their own. When a charity provides specific information about its mission and programs (including goals, activities, and accomplishments), it helps donors make an emotional connection to the organization.

Transparency also helps donors distinguish between nonprofits that have similar missions. Nearly one million charities are registered with the IRS, and thousands of additional faith-based organizations receive donor support. Being transparent makes it easier to stand out in the crowd.

Finally, transparency helps donors ensure that the nonprofits they support are trustworthy. Donors want their charitable dollars to go to legitimate organizations that will use their gifts wisely. When a nonprofit volunteers information about its mission, programs, and finances, it helps donors back up their emotional connection to the organization with cold, hard facts.

In short, transparency builds trust with donors. It enables them to answer three important questions:

  • Why should I give to you?
  • What will you do with my money?
  • How will you measure success?

Using GuideStar to Increase Transparency

GuideStar connects people with nonprofit information. We have a database of the more than 1.5 million tax-exempt organizations registered with the IRS as well as thousands of faith-based nonprofits. We make this information available to the public on our Web site, www.guidestar.org, on partner sites, and through license agreements.

If your organization is a tax-exempt entity registered with the IRS, it’s on GuideStar. If your organization files a Form 990, that return is either on GuideStar or soon will be.

I know what you’re thinking: “If we’re already on GuideStar and they’re posting our 990, we don’t need to do any more.” Yes and no. It’s true that donors can confirm your organization’s legitimacy by going to GuideStar, because only nonprofits the IRS recognizes as tax exempt are on our site. It’s also true that if your organization files a 990, donors will find information about your mission and programs in your GuideStar Report and that they will be able to view the three most recent returns we have received for you from the IRS.

These days, however, donors expect more. They want a better description of your mission than whatever text you can squeeze into Part III of your return. They want donor-friendly descriptions of your programs. They want specific, measurable information about your accomplishments. They want to know about your goals and special needs. They want to know how your organization measures success.

Frankly, they need this additional information to make informed choices about their charitable giving. You can provide it to them by registering with us and completing the GuideStar Information Form. Thanks to the generosity of foundations, there is no charge to you for participating. Grant support also allows us to make the vast majority of the information you provide available to all registered users at no charge.

Any nonprofit recognized by the IRS as tax exempt can complete the GuideStar Information Form. If your organization is registered with the IRS but does not appear on GuideStar, fax a copy of your advance ruling or letter of determination to us at (757) 229-8912. If your organization is faith based, fax us a copy of your listing in an official denominational directory. For more information, contact us at customerservice@guidestar.org or 1-800-784-9378.

We have found that donors are interested in four key pieces of information beyond the Form 990:

1. Mission

—Your organization’s history, philosophy, and/or purpose.

2. Programs

—Your organization’s major operating programs including, if appropriate, size and beneficiaries.

3. Accomplishments

—Major accomplishments from the past fiscal year.

4. Objectives

—Operating objectives for the current fiscal year.

Benefits of Supplying Additional Information

By voluntarily supplying additional information, you provide context for the numbers in your organization’s Form 990. If you don’t file a 990, you put yourself on an equal footing with organizations that do. In either case, you expand your outreach to the more than 20,000 people who use GuideStar each day. They include donors, professionals who advise donors, government officials, the media, academic researchers—and grantmakers and other funders. In fact, grantmakers and corporate funders make up the greatest proportion of our repeat users.

There are some additional benefits to making your information available on GuideStar:

  • You receive a free subscription to GuideStar Select. GuideStar Select gives you enhanced search fields, search results,
    and GuideStar Reports.
  • You receive free access to your organization’s printable Full Report. Normally, a Full Report is available only to
    GuideStar Premium users.
  • You receive a $300 discount on annual subscriptions to GuideStar Premium, our highest level of service.
  • You can link directly from your GuideStar Report to your Web site.
  • You can link directly from your Web site to your organization’s donation page on JustGive(www.justgive.org) or Network for Good (www.networkforgood.org). These donation portals make it possible for you to receive on-line contributions without devoting your organization’s resources to accepting and processing credit card donations.
  • Your information automatically appears on GuideStar’s other partner sites. GuideStar’s 25 partner sites include NYCharities.org, the Touch DC Coalition, the American Express and MasterCard cardmember donation sites, and the Fidelity,Schwab, and T. Rowe Price donor-advised funds.

Most of all, you demonstrate your organization’s commitment to a transparent, accountable nonprofit sector. This commitment has paid off tangibly for several organizations. Recently, Help Matrichaya told us, “We are grateful to GuideStar as ‘Dining for Women’ found us through your website and donated $1,025 to help us help those that need help the most.”

Other Ways to Increase Transparency

Make transparency part of all of your organization’s outreach. Do more in your literature and on your Web site than tell donors that you’re good people who deserve their support. Give them specifics about your mission, programs, goals, achievements, and how you measure success.

If your organization files a Form 990, take full advantage of Part III. Describe your exempt purpose—i.e., your mission—and programs in donor-friendly terms. Use concrete examples, and get your communications and/or development department’s input on the language.

If your organization has a Web site, post your application for exemption, advance ruling or letter of determination, audited financial statement, and annual report on it. Consider using GuideStar’s eDocs service to upload these important documents to your GuideStar Report; we are receiving increasing requests for them.

By themselves, these seem like small steps; together, they make up a transparency revolution. Please join GuideStar in the vanguard.

Helpful Links

Bob Ottenhoff is president and CEO of GuideStar, a nonprofit that offers information about the programs and finances of more than 1.5 million IRS-recognized nonprofits. GuideStar promotes public disclosure for and about tax-exempt organizations in order to help people connect with information about America’s nonprofit community. With this information, donors of all kinds can make more informed giving decisions. To find out more, go to www.guidestar.org.

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