What Does Transparency Mean to Philanthropy and Why Should You Care?

User .Minh Luu
Posted Date : February 27, 2013

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If you haven’t already, you should start thinking about how transparent you want your organization to be. The Philanthropy Roundtable began looking at this topic and is about to publish a short book, by John Tyler of the Kauffman Foundation, about all of the intricacies involved. So why are we talking about it and what does it mean for your organization? Does it mean releasing all of your organization’s financial information? Does it mean releasing detailed information about your board members and how they are selected? Does it mean releasing detailed information about all of your grantees and the criteria by which they were selected? Does it mean releasing racial or socioeconomic information about the beneficiaries of your grants?

There are a many questions to ask about transparency. But at the same time, there are also some myths about transparency. So let’s have a look at some of those myths, some of the useful means of transparency, and what you can do to get ahead.

Myth #1: Because foundations have tax-favored treatment, the public has a right to know. If private money is given to charity, what right does the public have to extensive information? The public does have the right to know we’re following the law. That is why we require foundations to fill out a Form 990, which is publicly available. But there is a distinct difference between private money going to charity and public money going to charity. What does the public have the right to know and where is the line? Watchdogs, Congress, and others who want information about your organization have different motives and objectives. But it’s your information and you need to think about its purpose. So what about voluntarily providing information to the general public? Foundations may be very well served by voluntarily publishing information. This gives your organization an opportunity to tell YOUR story, highlight YOUR work, and establish integrity.

Myth #2: Blanket transparency will mean all are behaving appropriately. If we inundate the airwaves with heaps of information, we will literally flood people. The flood of information only creates a false security blanket that everybody in the sector is behaving appropriately. This could actually obscure good information, drown positive messages, and negate the goals of transparency. Overwhelming amounts of information also denies your organization the ability to tell its own story. You lose control of your message when you indiscriminately release lots of information in a one size fits all approach. How many of us read all the privacy disclosures we get from our credit cards, insurance companies, or something we sign up for on the Internet?

Myth #3: Complete transparency equals organizational effectiveness. First off, who says you have to be effective, to whom, and for what? The release of information about an organization’s activities does not automatically mean it is effective or achieving its mission. For example, small foundations do not have the same resources to comply with broad transparency as large foundations. The need to release lots of data costs time and money, perhaps resulting in less effectiveness. Conversations about effectiveness are important, but let’s not forget about the variety of foundations that exist! The foundation world is diverse-large and small, new and old, corporate and community, independent and family-and we all have our own visions of effectiveness.

Myth #4: Blanket transparency would not result in the forced change of foundation activities. If organizations are forced to release all grant information, it could chill support for things that may not be publicly popular. Gay rights, civil rights, school choice, global warming, and religious causes are all political hot potatoes. And they’ve all been funded by philanthropy. For business or personal reasons, donors may not want to release everything about funding decisions. But, this does not mean these organizations are misbehaving. Should organizations be forced or pressured to release information on grant decisions? What impact might this have on the grantmaking process? Could it embarrass applicants that submit poor proposals? Consider these questions and make a plan.

These are just some of the issues involved in discussions on transparency. I hope I have piqued your interest about this and look forward to future conversations when Tyler’s book is published.

Sue Santa is senior vice president for public policy at The Philanthropy Roundtable.

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