Through The Looking Glass: The Tactics and Importance of Transparency

(Epaminondas Farmakis is the President and CEO of elpis Philanthropy Advisors and serves as Program Director of the EEA Grants NGO Programme for Greece. A version of this post originally appeared in The Huffington Post.)

Many in the developed world take for granted that NGOs and non-profit foundations follow the highest standards of transparency when they dispense funding. Access to data is a pre-requisite for all organizations that apply for, and receive, either public or private funding. Grantees must share their funding sources and publicize their activities and results through their websites, newsletters and social media profiles. Indeed, this reporting and sharing of results compose a large part of how those organizations solicit and secure additional funds for future work.

When considering grant requests, foundation program officers look for certain information, and the applicant’s web presence is essential to that search. Program officers must assess how active the organization is and whether donors have access to results and metrics. The level of local community engagement can also play a role depending on the nature of the applicant’s work.

Funding applicants expect scrutiny and understand the need and power of telling their stories in ways that both ensure transparency and support development goals. But what about funders? Shouldn’t they hold the same high standards of openness that they request from prospective grantees?

It’s a bit of a double-edged sword—how much should funders reveal, and is it possible to reveal too much? However, it’s only fair to ask foundations to address the same issues that grantees have to navigate. Applicants that resist transparency risk losing funding or clients. Historically in traditional philanthropy, closed off funders had nothing to lose. But the current environment of open source platforms, social media and easily accessible data and analytics urges a new model of public collaboration. Resources such as GrantCraft, an online tool provided by The Foundation Center, offer many examples of how foundations and donors may adopt full transparency in their work.

And the benefits are plentiful, too. Publicizing clear guidelines and selection processes translates to better grant requests, and sharing of internal data and reports with other funders results in a more efficient philanthropic practice. Foundations and donors need to make a choice: Will they continue to do their business behind closed doors or share their practices with the community?

While transparency is the goal, there are also myriad associated benefits along the path to achieving it. Here are a few:

Building Trust

Foundations and non-profits exist in a symbiotic relationship imbued with an inherent level of trust. If one party wants to improve its work, it needs to ask for feedback from its partners as well as the community it serves. Foundations and non-profits alike seek the public’s support in their charitable endeavors. The alignment of goals and organizational objectives is a critical factor in building trust through transparency. With a full understanding of a foundation’s mission and purpose, grantees can articulate and refine their own program objectives in order to fulfill that mission. This also prevents “mission creep,” in which the grantee initiates projects just because funding is available. The philanthropic community benefits overall from this trust. Parties on both sides have a clear understanding of the issues addressed and neglected in the community.

Creating Effectiveness

Smaller foundations and family trusts often keep their priorities a secret. They avoid revealing information such as strategic goals, issues and geographic areas of interest in order to maintain flexibility in the projects they fund. However, that mystery also discourages applicants. A foundation website with clear guidelines and descriptions of the selection process should be the absolute minimum standard for transparency. Regular communications through workshops or online tutorials—with advice on what donors look for in an application—will help create a better understanding from applicants on how to navigate the often complex funding request process. Tips on what constitutes a “red flag” are also helpful in ensuring that applicants don’t waste their efforts on non-priority issues or requests. A transparent explanation of a foundation’s process and strategic goals can help both sides work toward more effective and meaningful projects and programs together.

Ensuring Collaboration

Last but certainly not least, sharing information, data, reports, practices and failures leads to better grant-making. The era when every foundation was working in isolation is long gone. In today’s interconnected world, if your goal is making an impact, then the only way forward is through collaboration. Representatives from the philanthropic community need to meet regularly, exchange views and data and create networks with other stakeholders. In a perfect world of transparent grant-making, donors would commit to give only to those organizations that are forthright with their funding sources, projects and results. Minimum standards of transparency should appear on donors’ websites and throughout the donation process. The drafting of the International NGO Accountability Charter was a great first step in setting global standards for NGO accountability. Donors around the world should embrace such initiatives and commit themselves publicly to fund organizations that comply with such standards. In addition, foundations must commit to ongoing collaboration. As the sector evolves and matures, so must our ability to work toward common best practices for all.

-- Epaminondas Farmakis