Why is transparency important for fundraising?

For a donor, it is important to know where and how the donation made by them is being utilised. This will not only make them feel satisfied but will ensure that they repeat donations. For them, to donate- options are many. One of these is to donate directly to an NGO. But their numbers are large, for example, in India, there are over 2 million charity organisations; in the US, there are over 1.5 million charity organisations and so on. This makes the competition tough! Transparency is one such feature which can help you come up in this competitive endeavour.

Thus, for every not-for-profit, it’s important to be transparent with the donor. This transparency can be in various forms:

Amount spent as overheads: For a not-for-profit, a part of the funds raised is to cover the salaries and other admin costs like office rent, phone bills, etc; which is called the overhead costs and rest for the direct program. A donor too understands this and thus, would like to know, what per cent is this overhead cost? Though there is no direct rule/ regulation on any acceptable overhead costs. But there are organisations having about 40 per cent as overhead costs. Anything between 15-25 per cent is a more acceptable overhead cost for donors.

Change in the program/ activities: A donor donates for a particular activity/ to see a particular impact. But sometimes, due to circumstances, the particular activity for which the donor donated cannot be conducted or may become redundant. The funds raised are then utilised for some other activity. In such cases, it is advisable for the organisation to inform and update the donor too, regarding the same. This further helps build trust among the donor and the organisation and can soon expect the next donation. Such donors can also be your brand ambassadors or spokesperson in the community.

Communication-related commitments: Sometimes, while accepting a donation, you or your fundraiser may make certain commitments to the donor. These could be like- you will be publishing a monthly newsletter and this will have donor photos along with their quotes; publishing the donor details on your organisation website or status of projects will be updated on the social media pages, etc. All such communication commitments should be met so that the donor understands that her/ his contribution is in the right hands and will be utilised appropriately.

Legal and another mandatory status: There may be some legal/another mandatory status, change, etc and if so, you must communicate it to the relevant donors. For example- if you are still awaiting your tax exemption certificate or your legal status or receiving foreign donation (FCRA in India) is on hold, etc. The donor should be appropriately informed about all these changes. In most of the cases, the donor will still continue to donate if is convinced with the cause you are working or sometimes may make a further donation, looking at your honesty characteristics.

Thus, it’s important to be transparent with your donor. This will help build trust and present your genuine attitude for the cause and will enhance overall fundraising.