News & Events


“Transparency = increased funding from the public”

A brief overview of our top 10 best practices and trends for not-for-profits (NFPs) includes the following:

  1. Board governance – three duties include monitoring/strengthening financial resources, ensuring adequate financial resources and protecting assets/providing proper financial oversight.
  2. Watchdogs and transparency – some of the major players include Better Business Bureau, Charity Navigator, Charity Watch and GuideStar. They provide NFPs with transparency guidelines and financial metrics on top performing NFP entities.
  3. Enterprise risk management (ERM) – this area includes social media policies, succession planning and contract/3rd party risk.
  4. Cyber risk – this area includes performing a risk assessment, collection/storing of sensitive data, and educating users on phishing, passwords and dual authentications.
  5. Social media and channels of giving – this area includes trends and proven methods of increasing contributions and private grants, including recent technology and how to build lasting donor relationships.
  6. Connect the dots of data sources – ensuring that your website and your financial, tax and annual reports present the best financial picture that is easy for donors and users to understand and support.
  7. Benchmarking – tracking that your entity compares to others by types of activities, by regions, by compensation and other metrics.
  8. Key performance indicators (KPI) – have management share with the board details on how the revenue and expenses, including metrics on number of donors/grants/employees/volunteers/vendors/outside or 3rd party fundraisers.
  9. Federal grants – understanding that grant funds are available from local/state/federal agencies to meet program needs and the extra costs of compliance with the associated regulations.
  10. Tax issues – understanding the new tax act and emphasis on transparency. New issues include qualified transportation fringe benefits, impact of higher standard deductions/limit of state taxes on individuals. Other planning opportunities are available for individuals to contribute IRA funds and establish donor advised funds.

As noted in item 1 above, NFPs need to implement best practices that secure adequate resources and funding from the general public. So, the remainder of this article shares resources on financial development.

GuideStar is a major player and one of the top charity watchdogs in the United States. Through their website at www.GuideStar.org, they provide all tax exempt entities in the US with the ability to tell their story, share their mission and solicit program funding. GuideStar’s Jan. 16, 2019 blog included a list of the 10 most read articles on fundraising/revenue generation that included the following:

  1. Thoughtful Solutions for Reluctant Fundraising Board Members
  2. 5 Fundraising Tips-Straight from Donors and Grantmakers
  3. Partners in Philanthropy: How to Work with Donor-Advised Funds
  4. The Crucial Role of Silence When Asking for a Gift
  5. Top 6 Ways a Board Can Help Its CEO
  6. Understanding Your Donors is Crucial to Keeping Them
  7. How Nonprofits can Build Partnerships with Businesses
  8. Want to Rock Your Year-End Fundraising?
  9. The Fundraising Cheat Sheet for Board Members
  10. Kick Off the Year-End Giving Season with Your Giving Tuesday Campaign

GuideStar’s blog from Jan. 8, 2019 included an article by Jacob Harold, “New Research Shows Nonprofit Transparency Matters”. New research supports that (1) donors give more to transparent nonprofits and (2) transparent entities tend to be stronger. Research from this article found that nonprofits that earned a gold seal of transparency averaged 53 percent more in contributions the following year compared to those that don’t have seals. The article suggests that nonprofits that can put a “finger on the scale” of raising money to meet their missions by simply telling the world about their work in a structured way on their GuideStar profiles.

This study points out that the number one factor in establishing donor trust is a clear and solid message on the entity’s accomplishments. They reference a new www.give.org report on “Donor Trust”.

Note that many corporations, lawyers and accountants use GuideStar to verify data on charities and use this information to offer advice to clients on the questions they have about transparency and financial accountability. Similar to other charity watchdogs like the Better Business Bureau and Charity Navigator, they assign seals of transparency, based on the data provided (e.g., Platinum, Gold, Silver & Bronze).

It is imperative that your charity periodically update and monitor its data with GuideStar and other charity watchdogs. Transparency and accountability are critical to positioning your entity for consideration for funding from major donors.

The table below presents information on the seals of transparency along with data on nonprofits that provide grants/funds to charities.

In 2017, 78 percent of the nonprofits that received donations through GuideStar’s website had seals. GuideStar has over 10 million visitors a year.

Given that there are over 2.3 million tax exempt entities, charities have a great opportunity to improve their transparency and messaging of their programs. This will allow them to improve their odds of applying for and obtaining more or increased gifts/grants from over 161,317 gifting and grant making organizations.

The table below presents information on nonprofits that provide grants/funds to other charities.

A few other sources that focus on leading edge fundraising technology include:

MobileCause https://www.mobilecause.com/amazon-smile/ is a platform for smaller to mid-sized charities that allows them access to technology and advanced tools to be on a level playing field with more established/larger entities. Some of the tools include:

  • Webinars – monthly for fundraisers
  • Infographics – fundraising ideas
  • EBooks – engagement strategies
  • Blog – latest tips and trends
  • Case Studies – fundraising success stories
  • Stats – ensure Return on Investments (ROI) with fundraising and communication benchmarks

Other websites that should be considered for legal and grant related information include the following:
National Council of Nonprofits
https://www.councilofnonprofits.org has some great resources on state laws and grant research and how to apply to grant making organizations.
www.FoundationCenter.org
www.grantstation.org

Summary: The stakes are high for all exempt organizations to be transparent, accountable and leverage technology. Those entities that are proactive with their mission, their resources and their message will continue to thrive and be leaders in their fields. The research shows that nonprofit transparency matters. UHY looks forward to continuing our role of sharing knowledge with those involved in the tax exempt area.