Why Should Foundations Be More Transparent?

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.

In addition, foundations are under pressure from governments to be more transparent about their work. In the United States, foundations are under the watchful eye of lawmakers and others who rightly assert that if foundations are benefitting from tax-exempt status, they are obligated to make their work and operations open and available to anyone who asks. In Europe, many countries have amended their legal framework for foundations, affecting accountability and transparency regulations. Meanwhile, with the advent of new and inexpensive technology platforms, the public often questions why a funder of any size can’t at least have a website that describes its goals, areas of funding, and application processes.

This pressure is not coming from just the outside. In a 2013 GrantCraft survey to subscribers on transparency, 79 percent of respondents said that it is very important that funders move toward greater transparency and openness, with another 20 percent saying it is somewhat important. A growing sense exists among funders and grantseekers about the increasing prevalence and importance of transparency. Benefits highlighted in the survey include:

• Less time spent explaining goals and strategies to potential grantees
• Better, more on-target grant proposals
• More effective and informed grantmaking based on feedback from grantees and other stakeholders
• Stronger and more open relationships with grantees and other nonprofit organizations
• Closer relationships with other foundations, leading to more collaborative grantmaking
• Increased public trust