Boost fundraising through transparency
Howard Lake | 18 September 2011 | Blogs
The recession presented charities with the greatest challenge they’ve faced in recent years as competition for funding increased and donor support fell to the wayside. Many charities still bear the scars of the credit crunch and there is further uncertainty ahead
Increasing competition for funding and tightening legislation means that charities are becoming more accountable for their financial expenditure and how they communicate it to stakeholders and the wider world.
Creating a leaner, more efficient administrative and financial infrastructure will help improve transparency and stakeholder communications.
This can easily be done by reassessing day-to-day procedures and looking at where activity can be improved. For instance:
1. Access to real-time information
Accessing real-time, accurate information will give you an instant overview of your charity’s finances, enabling you to prepare reports for external scrutiny by stakeholders with confidence. Implementing the right software should reduce the length of time spent on reporting and enable you to present financial data easily for management to interpret. By presenting information this way, you can share detailed, financial data with non-financial managers and trustees in a format they can easily understand and act on.
Having the right information from reports will also provide you with better measurement tools to show results and profitability from fundraising activities, which can help ensure that money on future projects is spent appropriately.
2. Protect your payments
It’s vital that charities are 100% transparent with their accounts. There are a number of important factors that need to be considered to ensure total trust from the public, the board and beneficiaries.
Unfortunately, all too often charities are the victims of fraud and even worse, sometimes from within their own ranks. Separation of duties will help you to maintain financial control by preventing fraud occurring from within. It means that no withdrawal can take place without two separate parties providing electronic approval. It lets charities closely monitor their finances in terms of where funds are going and who they are going to. It also prevents rogue charities from being set up for an individual to transfer money to and funds being illegally transferred to an individuals’ personal bank account. It’s a sad truth but an inevitable one that every charity must be prepared for.
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3. Be transparent
It’s crucial that you are fully transparent with your beneficiaries and service users. Whether it’s through informal discussions or formal reporting, be prepared to be totally clear on and able to justify your spend. Clear reporting is vital to show trustees, donors and managers how and where money is being spent, to show expenses are being correctly processed and that the charity’s money is being spent wisely.
Using an independent auditor will enhance your organisation’s credibility by providing transparent financial reporting for both internal and external audiences.
4. Shout about your successes
Don’t forget to work with your marketing and communications teams to share any timely and relevant information. It’s all well and good putting in place relevant procedures but you must decide how you are going to best communicate these measures to both internal and external audiences.
About Howard Lake
Diminishing charity donations are often the fallout from a recession with consumers tightening purse strings meaning they are less likely to put their hands in their pockets and donate. However, using the right software to streamline your accounts will provide you with easy access to your funding so you can see what money is leaving and what money is coming into your accounts. In turn, this will enable you to pull together a targeted strategy to drive donations, show transparency and set clear goals for measuring the organisation’s performance.
By putting transparency at the heart of your financial operations, your organisation can demonstrate all of these values, encourage donors to resonate with you and safeguard donations both now and in the future.
Paul Sparkes is Product Director for IRIS Accounting & Business Solutions
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.