Transparency & Accountability: Essentials for High Ethical Standards
Wounded Warrior Project has garnered news headlines lately, but unfortunately the attention is not positive. According to a New York Times story, a whopping 40% of the 2014 donations Wounded Warrior received were spent on overhead-that totals about $124 million. The PR Newswire reported that The Patriots Initiative, a top military watchdog group, has refused to grant accreditation to the nonprofit due to its “unsatisfactory performances in efficiency, effectiveness/impact, leadership transparency and donor centricity.” The issues faced by Wounded Warrior Project bring to light the indispensable nature of high ethical standards in the nonprofit arena. In our experience, nonprofits lacking transparency, accountability and high ethical standards are overlooked by grant funding organizations; meaning if your nonprofit plans to develop a successful grant writing strategy, these issues need to be addressed head-on before you start approaching funding organizations.
What does transparency and accountability mean to you and how does it relate to maintaining high ethical standards? Most nonprofit experts will tell you that accountability means being honest with your stakeholders and with the public about your organization’s finances, governance, and management — in short, being upright in all of your professional conduct. Transparency allows those outside the organization to see your level of accountability and to realize the level of ethical standards you have set for the ministry. Together, these three key factors build trust and assure the public that your organization is what it claims to be and is worthy of financial support.
But transparency and accountability mean more than that to you as a grant-seeking nonprofit ministry. Your organization’s ability to attract grant funds and donors rests on being transparent and accountable. Foundations and other funding sources will not tolerate a lack of accountability and transparency. They need solid and legitimate assurance that if they were to contribute to your organization that those funds will be used appropriately—meaning towards the mission. Ensuring that your financial reports and information regarding the effectiveness of the programs is available to anyone who is interested in contributing to your mission is absolutely essential. Most of us have seen a those glossy annual reports most high-profile nonprofits send out. Your nonprofit may not be able to print a 30 page glossy magazine-style annual report, but, thanks to the internet, making this information available in electronic form is almost free.
As a nonprofit, you are given tax-exempt 501(c)(3) status because you exist to serve the public and better your community. The public is your stakeholder. Your ministry depends on public goodwill even more than for profit-making organizations, and when the public loses faith in a nonprofit, donations fall and the nonprofit’s ability to do its job is compromised. Unfortunately, this seems to be the current direction of the Wounded Warrior Project.
Are there issues with your nonprofit structure that make your organization unattractive to funding sources? Our Analysis of Funding Preparedness is designed to discern what issues are blocking the effectiveness of your fundraising efforts. The Analysis of Funding Preparedness is included at some level in all of our and also as an à la carte service.