Transparency’s Effect on Nonprofit Financial Management

nonprofit financial management transparencyBeing transparent in nonprofit financial management is not always easy or comfortable, but it is so important. The good news is that it is possible, and nonprofit accounting software systems can help. Although often overlooked, transparency is one indicator of success that must be a priority. Albeit subtle, transparency is key to earning and keeping trust from constituents and staff alike.

Over the past couple weeks, we have looked at two other performance indicators that are also important to nonprofits—transformation and technology. These are all part of our series on four performance indicators or “Four Ts” that produce results and victory for nonprofits. Transparency is the third of the four indicators that has the potential to increase and produce greater success while positively impacting nonprofits. To learn more about the other indicators, visit here to learn about technology and to see how it impacts transformation as well.

Is your organization accountable to its stakeholders and providing them with insight into how money is being spent, how decisions are being made, etc.? Does your organization allow its stakeholders and constituents to make informed decisions while providing them with the accurate data they need in order to do so? Many organizations fail to even view transparency as something that will better decision making. The reality is that this can be achieved if care is taken to present information in relevant and engaging ways. Nonprofit accounting software can make a drastic improvement in presenting information and organizing data in a way that increases transparency and the rate at which necessary information can be shared. Learn more about two fund accounting software options that help nonprofits do just that—AccuFund Accounting Suite and Abila MIP Fund Accounting.

Having the relevant data and accurate, real-time information needed to be transparent can be tricky and difficult, especially in small organizations who may not have expertise in implementing and using accounting and financial software systems that make this more readily available and possible. Not only does RBP Methods offer the software you’ll need, but we also offer the support you need to implement and use the software for ongoing success. Let’s take a closer look at what transparency is all about and how it is beneficial.

Defining transparency and its importance to nonprofit success:

Transparency is so much more than sharing the latest budget or minutes from meetings. It involves identifying the right sets of data, identifying the appropriate financial and non-financial key performance indicators (KPIs), and acting upon that information to demonstrate how effective a nonprofit organization is at meeting the needs of those it serves. Metrics and measurements must also be clearly communicated to achieve transparency, and this information must be consistent and timely.

The beauty of transparency is the opportunity it creates for true openness. It has many benefits including helping in fostering a culture of collaboration and sharing within an organization and to its stakeholders. At the same time, transparency can increase trust and engagement through true accountability.

Here are four essential benefits of being transparent:

  1. Engagement is increased- conversations, decision making improvements, dialogue, etc.
  2. Nonprofit staff internal collaboration and true openness are both enhanced
  3. Trust in the organization grows and continually improves on the part of its stakeholders
  4. Operational efficiency is heightened within the organization

Accounting for nonprofits is made simpler while increasing transparency through nonprofit accounting software systems that can do some of the work for you through enhanced automation and accuracy. Contact us here at RBP Methods to let us know what your needs are and to find out how we can assist you in meeting those needs using nonprofit financial management software offerings. The conclusion of our series on indicators that can determine organizational success will conclude next week as we look at how talent management can be a strong indicators of nonprofit success as well.