Improving Transparency using Nonprofit Accounting Software

nonprofit-accounting-software-improves-transparency-and-givingDonors want to know where their money is going. Even though there has been positive growth in people’s desire to engage in and give to nonprofit organizations, they still want to know where that money is going and how it is being used. Being transparent with donors can be a useful means of fundraising while the opposite can lead to the loss of potential donors who choose to give their money elsewhere to a more transparent organization. This honest transparency works both ways by allowing the potential donor to be transparent and by responding back honestly and transparently as an organization. RBP Methods can help you be truly transparent when it comes to your nonprofit finances by helping you effectively implement and use both nonprofit accounting software and fundraising software. These types of accounting software can help make the financial management process streamlined, simplified, and clearer for both the organization and its donors. Allow the donor to be transparent, but also be prepared to be truly transparent as an organization by having solid financial records and updated financial information available.

Here’s how to foster donor and organizational transparency:

Donor Transparency

The process of receiving financial support for your nonprofit begins by allowing potential donors the freedom to be transparent themselves. Donor transparency means supporters talking candidly about their reasons for considering giving.

This includes:

  • How important it is for a donor to get personal, public recognition for their generosity? It could be extremely important or something to avoid at all costs.
  • Whose approval is necessary before a sizable contributions can be made?
  • The deeply personal motivation behind a gift – which is different for everyone.
  • The kind of connection the donor wants to have with the organization. Some people want to be consulted regularly; others want anything but that.
  • The larger role played by the charity in the donor’s life. Many people become philanthropists because of a life-changing experience.
  • The worries the donor might have about giving. Many donors have concerns about spending, competence, or realistic chances for success, but they are often reluctant to voice them.

Financial Transparency as an Organization

The final point above is extremely important for your nonprofit to address with donors. Financial transparency starts with effective and accurate financial reporting and management. If potential donors worry that the organization’s spending or financial competence is not up to par, this can be costly in losing the potential donation or future donations from current donors. On the contrary, having updated and accurate financial statements while being honest and open about common practices your organization follows can create needed trust. This starts with good nonprofit accounting software such as Abila MIP Fund Accounting and fundraising software such as Abila Fundraising 50.

When it comes down to it, transparency means trust. Your organization must be financially in good standing with sound business and finance practices in place to be able to secure donations and continue receiving more. Tell the truth to donors and potential donors about your organization, your partnerships, and your goals. Disclose who benefits from your services, how much they receive, and how and when funds are both raised and then disbursed.

No partnership between donors and nonprofits can truly get off the ground until both sides have put all of their cards on the table in an honest manner. Donors need to state clearly what they can provide to the campaign and express concerns openly. Organizations need to prove what will be done and gained through these donor provisions. Transparency and positive perceptions will surely strengthen partnerships and cultivate needed trust. Transparency leading to partnerships can only be possible if sound financial practices are in place. Please contact us here at RBP Methods to learn more about accounting software options for nonprofits that are essential to creating and maintaining these partnerships.