A common thread among high-performing nonprofit organizations is having a culture that embraces transparency. You can feel it from the moment you walk in the room. It will be fully on display through comportment at board meetings, how the organization generally conducts business, how staff and management carry themselves and, most important, how it is evident in everyday decision making.

When organizations embrace transparency, they project to both insiders and outsiders a heightened sense of trust and confidence. These two values, trust and confidence, are what people will feel and remember about an organization as the details of individual interactions fade over time.

There are many fiscal and financial benefits to be realized when your organization has a culture of embracing transparency. These fiscal and financial benefits will heighten the sense of trust and confidence an organization so directly needs to maintain and project to staff, leadership, members, donors, and the general public.

When organizations embrace transparency, they project to both insiders and outsiders a heightened sense of trust and confidence.

The over-arching fiscal benefits are derived from projecting a sense that your organization is well managed, that it is appreciative of member and donor financial support, and that it honors its commitments to safeguard and use these funds wisely. Also, the organization has a diverse board of directors and governance structure that will ensure resources are put to the best use to advance mission and sustainability.

The over-arching financial benefits come from having accounting systems, policies and procedures, and governance structures that honor and adhere to transparency best practices and safeguarding assets, including:

• timely and regular financial reporting that is open to all,
• a governance structure that supports oversight and use of financial assets,
• open communication channels between staff and management and management and leadership (e.g., board of directors and committees) that ensure efficient, regular sharing of key financial information.

Enhancing Fiscal and Financial Transparency

The following list gives you a better sense of the fiscal versus financial aspects of transparency and how they both complement and support a vibrant culture of embracing transparency:

Fiscal.

• project a commitment to fiduciary financial oversight and safeguarding of assets
• financial statements and IRS Form 990s made available to board and leadership
  • including board and finance-committee discussions
• finance-related committees
  • audit committee
  • finance committee
  • investment committee
    • investment policy
    • spending policy
  • budget committee
• board review of sensitive transactions
• annual disclosure statements in support of the conflict-of-interest policy
  • board level
  • committee level
  • c-suite and senior management
• disclosure and posting of key governance policies and documents
  • code of ethics
  • conflict of interest policy
  • compensation review policy
  • joint venture policy
  • operating reserve policy
• new board orientation practices

Financial.

• project a healthy attitude on internal accounting controls at all times
• financial statements and Form 990s made available to management and staff
  • including staff and management discussions
• annual risk assessment practice
• management reports
  • monthly budget reports
  • monthly projection reports
  • cash-flow projection reports
• annual review of HR practices
  • performance reviews
  • compensation reviews
  • benefits review and oversight
  • payroll tax and reporting
  • employee manual
• finance calendar of key deliverables and due dates
• timely month-end closing and reconciliation for the finance department
• staff annual review of internal accounting controls
• staff annual review of all grants, contracts, and sponsorship agreements
• comprehensive annual budget preparation process including board leadership oversight
• preparation for year-end audit and Form 990

These individual elements, polices, best practices, and systems represent some of the more visible components that will enhance your culture of transparency and project a sense of trust and confidence of a well-managed and on-mission organization.