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The Growing Importance of Reporting Transparency in NGOs

In recent years, a number of online ranking sites have sprung up to compare charitable organizations on the basis of transparency, staff compensation, expenses and more.

The Federal Trade Commission recommends utilizing one of the popular rating websites before making any donation.
The Federal Trade Commission recommends utilizing one of the popular rating websites before making any donation.

There are endless websites that grade movies, vacation destinations, restaurants and…NGOs? In recent years, a number of online ranking sites have sprung up to compare charitable organizations on the basis of transparency, staff compensation, expenses and more. These guides are becoming so prevalent that even the Federal Trade Commission now recommends utilizing one of the popular rating websites before making any donation.  

Today, a charity with positive reviews and high ratings is increasingly using this distinction as a selling point to increase their credibility. A major theme in ratings is the issue of money management. U.S. non-profits collected $410 billion in donations last year alone. Increasingly, the public is seeking details on the distribution of these funds. While understandable, accounting practices in such organizations vary with international transactions making it more difficult to easily track and account for every dollar. After all, money sent across borders can pass through multiple financial institutions and take a significant amount of time to reconcile. During this period, the sender will likely be left unaware of where their funds are in the process and what fees are being deducted.

NGOs may be hesitant to focus more efforts on this financial process as many have limited resources. Though it may seem excessive for a low-margin charity, a recent report found that non-profits that were open with their data received over 50% more in donations than their counterparts. According to research, there was a direct link between actively shared information and greater fundraising results. Forbes 20th annual list of America’s top 100 charities showed that these celebrated organizations earned 12% of the U.S.’s total philanthropy revenue for the year, out of over 1 million groups. The rankings detailed financial activity like revenue, expenses and net assets, among other factors.

Clearly a positive online ranking and reputation for transparency can become a helpful tool for an NGO. Such an edge can be welcome to some who struggle to maintain a steady level of donations in an ever-growing industry. In the United States, the number of registered non-profits increased over 10% in a ten-year period. The sheer volume of organizations can make it challenging to attract volunteers, staff, media attention and funding.

An effective way to increase transparency is through the use of a digital platform for payments and reporting. Centralizing through this type of system makes it easier to run reports and locate the status of each vendor or payment. This also removes some of the manual work from employees, whose time could be better spent. Western Union Business Solutions works with hundreds of NGOs to manage their global payments on an easy-to-use online platform.

For other businesses, online reviews have long been critical to their success as 90% of buyers are influenced by digital feedback. As this type of behaviour spreads to other industries, NGOs would be prudent to ensure their practices are as transparent as possible. Contact an NGO specialist today to see how this tool could enhance your not-for-profit.