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A PROGRAM OF THE U.S. CHAMBER OF COMMERCE FOUNDATION
 

IOM Blog

April 13, 2016

Discover the Many Fiscal and Financial Benefits of Embracing Transparency

A common thread among high-performing nonprofit organizations is having a culture of embracing transparency.  You can feel it from the moment you walk in the room.  It will be fully on display through comportment at board meetings, how the organization generally conducts business, how staff and management carry themselves and, most importantly, how it is evident in everyday decision making.

When organizations embrace transparency they project to both insiders and outsiders a heightened sense of trust and confidence.  These two values, trust and confidence, are what people will feel and remember about an organization as the details of individual interactions fade over time.

There are many fiscal and financial benefits to be realized when your organization has a culture of embracing transparency.  These fiscal and financial benefits will heighten the sense of trust and confidence an organization so directly needs to maintain and project to staff, leadership, members, and donors and to the general public.

The over-arching fiscal benefits are derived from projecting a sense that your organization is well managed, is appreciative of member and donor financial support, and honors its commitments to safeguard and use these funds wisely.  Also, the organization has a diverse board of directors and governance structure that will ensure resources are put to the best use to advance mission and sustainability.

The over-arching financial benefits come from having accounting systems, policies and procedures, and governance structures that honor and adhere to transparency best practices and safe-guarding assets including:

  • Timely and regular financial reporting that is open to all.
  • A governance structure that supports oversight and use of financial assets.
  • Open communication channels between staff and management and management and leadership (board of directors and committees) that ensure efficient, regular sharing of key financial information.

The following chart is provided to give you a better sense of the fiscal vs. financial aspects of transparency and how they both complement and support a vibrant culture of embracing transparency:

ENHANCING FISCAL AND FINANCIAL TRANSPARENCY
FISCAL FINANCIAL
  • Project a Commitment to Fiduciary Financial Oversight and Safe-Guarding of Assets
  • Financial Statements and 990’s Made Available to Board and Leadership
    • Including Board and Finance Committee Discussions
  • Finance Related Committees
    • Audit Committee
    • Finance Committee
    • Investment Committee
      • Investment Policy
      • Spending Policy
    • Budget Committee
  • Board Review of Sensitive Transactions
  • Annual Disclosure Statements in Support of the Conflict of Interest Policy
    • Board Level
    • Committee Level
    • C-Suite and Senior Management
  • Disclosure/Posting of Key Governance Policies and Documents
    • Code of Ethics
    • Conflict of Interest Policy
    • Compensation Review Policy
    • Joint Venture Policy
    • Operating Reserve Policy
  • New Board Orientation Practices
  • Project a Healthy Attitude on Internal Accounting Controls at All Times
  • Financial Statements and 990’s Made Available to Management and Staff
    • Including Staff and Management Discussions
  • Annual Risk Assessment Practice
  • Management Reports
    • Monthly Budget Reports
    • Monthly Projection Reports
    • Cash Flow Projection Reports
  • Annual Review of HR Practices
    • Performance Reviews
    • Compensation Reviews
    • Benefits Review and Oversight
    • Payroll Tax and Reporting
    • Employee Manual
  • Finance Calendar of Key Deliverables and Due Dates
  • Timely Month-End Closing and Reconciliation for the Finance Department
  • Staff Annual Review of Internal Accounting Controls
  • Staff Annual Review of All Grants, Contracts and Sponsorship Agreements
  • Comprehensive Annual Budget Preparation Process including Board Leadership Oversight
  • Preparation for Year-End Audit and 990

These individual elements, polices, best practices, and systems represent some of the more visible components that will enhance your culture of transparency and project a sense of trust and confidence of a well-managed and on-mission organization.

      
Avatar photo
A. Michael Gellman, CPA, CGMA
Founding Principal Partner
Fiscal Strategies 4 Nonprofits, LLC (FS4N)

Mike is an independent fiscal and financial strategist for nonprofit organizations and a co-founding principal partner of Fiscal Strategies 4 Nonprofits, LLC (FS4N) and co-founder of Sustainability Education 4 Nonprofits (SE4N). Before starting FS4N, Mike had 30 years Public Accounting Firm experience managing not-for-profit business, fiscal and financial services consulting specialty group. He has been designing strategies and teaching budget and projection-based systems and fiscal and financial management enhancement strategies for over 30 years. He has conducted numerous seminars and has written articles on budgeting, operating reserve and investment policies, financial management, fiscal sustainability, leading economic indicators for nonprofits, and the impact on governance and transparency and accountability.

Mr. Gellman teaches courses and has made presentations for Georgetown University, the U.S. Chamber of Commerce Foundation's Institute for Organization Management, American Institute of Certified Public Accountants (AICPA), many State CPA Societies, the Center for Nonprofit Advancement, and for national nonprofit organizations such as the National Urban League, Volunteers of America, and many other nonprofit organizations.

He can be reached at mgellman@fiscalstrategies4nonprofits.com .

Comments

  1. Kylie Dotts says

    August 24, 2017 at 11:25 am

    I like how you mentioned that transparency will help to heighten trust and confidence. That could be combined with fiscal management services to help you not only be trustworthy in how you work but also in ensuring that your finances are well understood and looked after. Then people could trust you for who you are and how you are as well.

    Reply
  2. Bethany Birchridge says

    April 16, 2018 at 10:36 am

    I agree with Kylie; transparent really helps build trust between clients and a business. I also think the advice could work for charitable organizations, as people want to make sure their donations are being used responsibly. For those who need assistance with fiscal management, what tips do you have for finding a professional?

    Reply

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