Opening Up Demystifying Funder Transparency

A common complaint among nonprofit organizations is that foundations pursuing similar objectives require dramatically different metrics and reporting requirements. To address this issue, healthcare foundations in Kansas and Missouri created the Advocacy Evaluation Learning Initiative in 2010, which brought together six funders, 13 high performing advocacy organizations, four local evaluators and two national technical assistance firms. 

Foundations do not, in fact, have to share everything to be transparent. Several foundation leaders have spoken about “appropriate” transparency, which helps better meet both the mission and obligation of a foundation. These leaders reminded us that certain aspects of foundation work don’t need to be open and accessible, because privacy will enable better work and efficiency.

In 2003, the Meyer Memorial Trust in Portland, Oregon adopted a set of organizational values that included being “open, accessible, and transparent.” At the same time, the trust was undertaking a complete redesign of its website.

1. Transparency and Technology
One project where funders are coming together to connect and learn from each other is Markets for Good.

The King Baudouin Foundation in Brussels, Belgium, embraced the idea of internal learning by launching a “best failure” award within the foundation. The idea behind the award was that learning is much more constructive and richer when people can learn from failures or projects that did not go as expected. Staff from each of the foundation’s 10 activity fields were invited to submit at least one project for the best failure award.

• Grantee Perception Report - Center for Effective Philanthropy
• Tools and Resources for Assessing Social Impact Database - Foundation Center

1. Behind Closed Doors: Sharing Grantee Data & Processes

For many foundations, a first step to becoming more transparent is to share information about their goals, theories of change, and processes for grantee applications. Making grantee selection processes more clear addresses a top complaint from nonprofits: they are frustrated in their efforts to obtain information about a funder’s grant strategies and selection processes, which is integral to developing productive relationships and writing meaningful proposals.

Transparency is not simply a nice idea. Transparency can help foundations build and strengthen relationships that can ultimately help them make a bigger and stronger impact. Funders across the world also face increasing demand by the nonprofit sector, the public, and others to be more open about how they do their work, their decision-making processes, and what they are learning.

Transparency is, in a word, openness. A foundation that operates transparently is one that shares what it does, how it does it, and the difference that it makes in a frank, easily accessible, and timely way. True transparency comes down to a mindset, one in which funders believe they are most effective when they approach all aspects of their work by saying “let’s publicly share this.” But transparency is not just about sharing information and processes. It is also a means to greater accountability, and to building relationships between a foundation and other key groups such as grantees, applicants, partners, and other funders.