We were recently asked what information we think makes an organization transparent, and why we think improving transparency is an important use of staff time. This blog post addresses these two questions.
A transparent organization should publish their budget/financial information (including some break down of donor sources)
Many charities will make their financial information available to someone who emails them. We believe it is better for organizational transparency to have this information available publicly on the website as most people will not email and this sets up a de facto barrier.
The budget shows you where the organization is spending its resources and donations. The donor breakdown gives a sense of how the organization is currently funded, and what demographics support it. It would be impossible to get a sense of an organization's effectiveness without being able to see its budget. For example Givewell and the Against Malaria Foundation have their budgets publicly available in detail. Something that could be added to these websites is specific information on where additional donations would go.
A transparent organization should publish goals and plans for the future
This is something almost all organizations do, but they are often far too vague, providing very little in terms of specific numbers or dates. We think that almost every organization has room to grow here. Very few organization publish SMART goals which they can be held to, although some charities are quite strong at laying out more general plans. Having these plans published not only helps keep an organization more accountable, but also mitigates hindsight bias, and makes it much harder to change or ignore goals if they are not met.
A transparent organization should provide detailed information on processes and methodology
This is a must for any organization, particularly the ones that are 1) hard to quantify and 2) reviewing other charities. With GiveWell, for instance, we want to know how they picked their top charities. We cannot just trust that they made the right call. We need to look at their criteria and their process to be able to give weight to their recommendations.
A transparent organization should provide information on values
It is extremely important to know an organization's values. Once again, most organizations have a public set of values, but it needs to be far more detailed for one to really trust an organization. To use GiveWell as a strong example, knowing that they “place value on reducing animal suffering, though substantially less than on human suffering” helps inform our perspective and put their recommendations in the appropriate context.
A transparent organization should provide time breakdowns
One thing that is almost never posted on charities' websites is how they spend their time. This is less of an issue for organizations such as the Against Malaria Foundation, where their staff time is fairly small compared to their budget. But for an organization where staff time is the main cost it is highly important to know where this time is going, as it is the main output of our organization. Estimates of time spent on projects can also allow you to quantify how effective each of your organization's projects are, to later help you evaluate your impact.
A transparent organization should provide external and internal reviews
Some charities have no reviews of the work they are doing and many charities have only internal reviews (meaning one done by staff of the charity). Well these are a great step have an external expert make sure your charity is the doing the most good it can is very important and often forgotten. We are much more likely to give a grant to a charity that has had external experts review it and explain why they think its effective publicly. Doing reviews of a nonprofit can also help the nonprofit learn, grow and improve. If a review is done it should be shared with both the staff and the public this will not only grow trust with your donors but also ensure your charities makes big efforts to deal with any problems that came up in it.
Our organization is striving to be as transparent as possible while still respecting the privacy of the donors, foundations and organizations we work with. If you can think of information that would be good to have public or topics that should be elaborated on in a blog post, contact us or comment below.