Making sure you know how to be transparent with donors is essential to building trust. While every organization is different, many nonprofits rely heavily — sometimes exclusively — on donor support. In 2021, overall charitable giving in the United States increased 8.5% compared to the previous year. While you may be used to considering factors such as donor churn and donor retention, there’s another area to consider: donors and trust.
As a nonprofit organization, you thrive when your donors trust that their gifts are being spent wisely and effectively. But how do you communicate the impact that donations have in order to meet that gap between donors and trust? The answer is simple — transparency.
Donors and Trust, by the Numbers
The Independent Sector’s Trust in Civil Society report explores factors that drive trust in American nonprofits and philanthropy. As part of their key findings, they share that there appears to be a two-way street between trust and civic action.
Donors and volunteers both indicate they have higher trust for nonprofit organizations, while also identifying trust as a necessary factor for them to support the organization.
From the survey:
- 63% agreed that “many factors, including how much I trust a nonprofit to do what is right, determine whether or not I support it financially, or through volunteering.”
- 83% agreed that “nonprofits must earn my trust before I support them.”
According to the report, there are four primary dimensions that comprise trust capital: ability, dependability, integrity and purpose. For nonprofits, statistical modeling indicates that the latter two dimensions, integrity and purpose, contribute the most to building or reducing trust.
Transparency demonstrates both of these facets, even when it means admitting failure. In the article, “Why Failing Transparently Is a Good Thing,” author Wayne Elsey, founder and CEO of Funds2Orgs, explains that discussing failure, and the learnings from it, can be a pathway to earning trust.
Here are Elsey’s quick tips for being more transparent with your donors and supporters.
Publish your nonprofit financials.
Even if you have a small organization, place your audited financials on your website. This action alone can significantly help bridge the gap between donors and trust.
Consider getting a Guidestar Seal of Transparency.
With a Seal of Transparency from Guidestar, you may be able to increase your donations by 53%. Guidestar is an independent organization, and having their approval can showcase the dependability and credibility of your nonprofit.
Publish your outcomes and impact.
Donors want to know what your organization does and your metrics for success. Be clear and transparent. For all of your programs, give regular updates via a newsletter or email blast. Always publish an annual report of achievements from the past year.
Make sure to have whistleblower and conflict-of-interest policies.
Have policies in place to discourage illegal or corrupt activities and promote speaking up. Not only is this tenet vital to maintaining your organization’s integrity, but it also demonstrates to donors that you understand best practices in these arenas and take corruption seriously.
Experiment and create pilot programs or initiatives.
Finally, nonprofit leaders must develop their organizations. Thinking outside the box with vision and transparency shows you want to be a better nonprofit leader and expand your outcomes and impact.
Want to learn more? Donate is one of the nine elements in the Points of Light Civic CircleⓇ, your system for changing systems. Our Civic Life Today issue on Donate explores the act of donating, thoughtfully encourages individuals to understand the power of their donations and shows people how to approach donating through a thoughtful lens in order to have the greatest impact.