How Trust and Transparency Fuel Funding

Trust is rarely given freely - it’s earned. This is a lesson for-profit organizations often learn the hard way when a PR disaster strikes. Nonprofits, on the other hand, can face an uphill battle from the get-go. Whether we like it or not, the philanthropic industry is judged on measures that don’t always fit their models or reflect their impact. And, when your organization’s entire existence depends on fundraising, trust is even more critical. As new research from GuideStar reaffirms, transparency plays a major role in building trust with donors and constituents: “Donors give more to transparent nonprofits and transparent organizations tend to be stronger organizations.” So exhibiting transparency is a critical way to demonstrate trustworthiness from the start, encourage the donations you need, and keep your mission moving forward.

The same principles apply in the crowdfunding space. A recent study by the Kelley School of Business at Indiana University found that two methods encourage campaign donations: regular updates and demonstrating a certification (as in showing that a campaign benefits a 501(c)(3) organization). That being said, the study noted that, between the two, updates were far more effective. The Philanthropy News Digest reported that “each additional work-related word in an update increased donations on average by $65.27 a month, [whereas] being tagged as a "certified charity" raised funds by $22.02 a month.”

So, nonprofits, whether you’re planning a new crowdfunding campaign or just trying to increase communication with your donors, it’s time to let your impact updates shine! As you well know, so much can happen in a year. So don’t save all your updates for your annual or periodic grant reports. Share them freely and invite people to join in on your journey with you. (hint: You may want to try Fluxx Grantseeker, a free-to-use grants management tool specially designed for nonprofits to manage grants, payments, and impact from a single easy to use platform).

Foundations, transparency can benefit your grant giving as well. Try asking your grantees open ended questions about their progress and results. Rather than deciding how impact should be measured, ask your grantees about what they’re noticing in the field. The answers and the stories may surprise you.