what is a response to the below information?
Nonprofits rely on society for the support they need to provide services and achieve their goals; therefore, their ability to gain and maintain trust is essential in the long-term success of the organization. This trust can be earned, maintained, and sometimes mended through accountability. There are many ways nonprofits can be held or hold themselves accountable. Components of nonprofit accountability include 1) transparency 2) answerability or justification 3) compliance and 4) enforcement or sanctions (Ebrahim, 2016).
Potential Impact of Transparency on Nonprofit Organizations
Transparency allows interested stakeholders, such as donors, clients, employees, and community members to have some knowledge of the nonprofit’s operations. Specifically, transparency involves nonprofits collecting and making publicly available information on the nonprofit’s governance and management that meets the expectation of stakeholders (Sanzo-Pérez et al., 2017). Part of what makes transparency effective as a form of accountability is that the information accessible can be scrutinized by the public, meaning they are able to draw their own conclusions from the information presented (Ebrahim, 2016).
Upward accountability involves nonprofits being accountable to their funders or patrons (Ebrahim, 2016). Having good upward accountability fosters a strong working relationship and encourages ongoing support. Nonprofits rely on their donors to provide resources and donors rely on nonprofits to provide programing that achieves their missions; this dependence may lead to increased financial transparency between nonprofits and donors (Lu et al., 2020). Without ongoing transparency, if questions arise in the utilization of funds or the provision of services it could lead to loss of donations or contracts. If transparency supports the work being done these donations and contracts could increase/continue.
Transparency can look at several different factors within a nonprofit organization. Transparency has traditionally focused on management and governance, but in the last decade has focused on how the nonprofit achieves their mission (Sanzo-Pérez et al., 2017).
When a problem arises within a nonprofit organization, particularly when it is well publicized, transparency may come into play to look for a reason why this happened. For example, traditionally after response to failure, there is a call for greater transparency in the use of funds by executives and trustees; this type of accountability is considered coercive or punitive (Ebrahim, 2016).
Using the same example of transparency in funds, one way transparency can be utilized is through review of disclosure statements. Disclosure statements are often required by law and can include tax reports and other registration/reporting documents as required (Ebrahim, 2016). These can be reviewed by donors, clients, and members who may wish to access them which provides some level of accountability (Ebrahim, 2016). Due to these statements being relatively accessible by the public and the person accessing them having the ability to draw their own conclusions based on the contents, this supports some level of nonprofit transparency.
Transparency does not have to be reactive. Distrust in the nonprofit sector or ruined reputations have led to an increase in voluntary disclosure of information to regain trust (Lu et al., 2020). Even outside of times of crisis, transparency can support the work and agency is doing well. One way an organization can do this is by taking advantage of online media to provide stakeholders with information that is descriptive, value-orientated, and positively related to their mission (Sanzo-Pérez et al., 2017).
References
Ebrahim, A. (2016). The Many Faces of Nonprofit Accountability. The Jossey-Bass Handbook of Nonprofit Leadership and Management (D. O. Renz & R. D. Herman, Ed). Jossey-Bass, A Wiley Brand.
Lu, S., Huang, C., Deng, G., & Lu, K. (2020). Transparency and Resource Allocation of Grassroot Nonprofits in China. Voluntas: International Journal of Voluntary and Nonprofit Organizations (31), 1188-1200.
Sanzo-Pérez, M. J., Rey-Garcia, M., & Álvarez-González, L. I. (2017). The Drivers of Voluntary Transparency in Nonprofits: Professionalization and Partnerships with Firms as Determinants. Voluntas: International Journal of Voluntary and Nonprofit Organizations (28), 1595-1621.
Striebing, C. (2017). Professionalization and Voluntary Transparency Practices in Nonprofit Organizations.Nonprofit Management and Leadership 28(1), 65-83.
