Whether you want more donations (and who doesn't?) or looking for people to get your idea off the ground and make it into a reality, sooner or later you're going to come up against the sticky issue of how much information to make public.
Transparency in philanthropy is a deceptively easy idea that can be incredibly complex and intimidating.. The rise of Big Data can obscure just as much as it reveals, so do you just put it all out there or streamline it? Do you let everything hang out? Keep information in your hip pocket? What's a charity to do?
Brooke Binkowski (BB): More and more, accessibility and transparency has been gaining ascendancy as an important part of the donor-charity relationship. Can you talk a little bit about why it's something to work on now, as opposed to five or ten years ago?
Michael Nilsen (MN): It's become increasingly more important, because donors have access to more and more data now, whether it's through GuideStar or just things being posted online. But donors can be more aggressive about getting information about a charity, and then donors and supporters can share their experiences with a charity far faster and easier now than they could ten, twenty, thirty years ago.
Ethically you should be transparent, regardless. I think some charities have lost that point, that sense of doing the bare basics, but I think really talking to donors about the impact of their gifts, and that sort of thing, and communicating with and cultivating them [is important]. But I think, also, these technological trends have heightened the impact of transparency, and how charities need to be paying attention to it, if they're not.
(BB): What's the point of going really far out of your way, really falling over yourself to make information about your nonprofit easy to find and accessible to everyone? Are there advantages to the organization that might not be immediately obvious? How about to the donor?
(MN): When situations come up, the issue of transparency is certainly one that often tends to come up if there is a controversy: how charities are using money and what it's going to be used for. A lot of these things come together – there's this big trend now of donors really wanting to see their impact. You get a lot of donors who are worried about, I don't want to have all my money spent on fundraising or administrative costs.
Charities need to be clear and transparent about the kinds of programs they're supporting, and where their donor money is going, and there's some pressure from charities to sometimes make those cost ratios and things better than they should be, you know, to encourage more support and undervalue the cost that it takes to put programs on, the administrative costs, logistical cost, that sort of thing.
(BB): But don't do that, no matter how much you're tempted. How about technological advances? Are those more helpful to donors or to nonprofits?
(MN): With technology, more sophisticated donors, more coverage of nonprofits, all those things I think are really increasing the pressure on charities to really focus more on transparency, and be very clear on what they're doing, how they're doing it, that sort of thing.
This also goes back to other issues too. Not enough people understand your story. What we see is data.
(BB): Right, and you need more than just data. You need to tell those stories.
(MN): Less than half of donors who give to one organization stay with that organization the next year. People aren't being informed well, and feeling that connection with charities. So how often should you contact people? Well obviously you don't want to overwhelm them, but I think there's a lot of donors who feel really disconnected after they make a gift because the charity isn't being necessarily transparent. It's not talking about what it's doing, it's not talking about issues that need to be discussed, like how much it does take to keep a charity operating, and what is our impact in the community? And that's a challenge that charities need to address.
(BB): So in the end, it's just taking that relationship that you have with donors to the next level by trusting their judgment, and building trust in you at the same time?
(MN): Transparency isn't just an ethical imperative – it's also an incredibly important way we can reach out to donors and cultivate them, and build relationships with them, by showing what we're doing – not only are we ethical, but here's what we're doing, we're trying to create this goal, and we want you to get connected in on that.
Michael Nilsen can be found on Twitter at @michaelanilsen.