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5 Ways to Increase Nonprofit Transparency

The annual Form 990 fulfills compliance requirements to the IRS for most charities and private foundations. And because the Form 990 is a public document, it communicates information about the organization to interested parties such as donors, state officials, and federal regulators. But by its nature, the form is limited in its ability to demonstrate the passion of an organization for its purposeful mission. The organization’s website and annual report are two other ways to demonstrate transparency and communicate the mission.

It’s easy to have a website and yet leave out transparency-critical items. Remember that transparency is essential for earning the public’s trust. Consider the following information as helpful for donors who want to learn more about your organization:

  • Vision/mission description
  • Policies such as statement of values, code of ethics, conflicts of interest, whistleblower protection, and board or employee travel
  • Board and staff member descriptions and/or bios
  • Program activities – how success is measured and how often programs are reviewed
  • Financial information – include total income, expenses, and assets (It’s also possible to provide a link to the Form 990 for financial details. Make sure that the version posted online is ok for public viewing, so that personal or private information is not disclosed.)

An annual report is not a requirement, but may be useful, even if the report is less frequent than annually. If an organization produces a hard copy report, the information must be kept current via extra pages or attachments.

Nonprofit staff must be ready to produce certain information about the organization to anyone who asks. Required information includes: the last three years of Forms 990 and 990-T, and Form 1023 (application for tax exemption). If the organization is a covered entity under HIPAA, the guidelines for handling confidential documents must be followed. Having the information readily accessible makes it easy to comply with disclosure requirements.

Talk with  Salmon Sims Thomas nonprofit specialist if you have questions about nonprofit organization compliance.