This article features several reports, including study findings that suggest transparency results in more contributions, and looks at a pilot program aimed at bringing donors and investors together to fund not-for-profits. Also covered are surprising study findings on board diversity among nonprofits and Facebook’s fundraising effectiveness.
Transparency drives higher contributions
Transparency can pay off for nonprofits — literally. A new study published by the Journal of Accounting, Auditing & Finance suggests that the public sharing of information results in increased contributions. The researchers examined more than 6,300 nonprofits, comparing those that have achieved recognition for their transparency (specifically, recipients of a “GuideStar Seal of Transparency”) with those that haven’t.
Nonprofits with stronger governance, better performance and more professional staff typically had greater transparency than their counterparts. Interestingly, the researchers found that funders respond to higher transparency by upping their funding. Organizations that went from not transparent to transparent saw an increase of 53% in total contributions in one year.
Pilot program tests “Impact Security”
The finance firm NPX Advisors has launched its first Impact Security, a financial product that brings together donors and investors to fund nonprofits. The pilot program involves The Last Mile, a nonprofit starting a Web development shop inside San Quentin State Prison. The organization raised $800,000 from investors and $900,000 from donors. The investment money immediately went to fund the shop.
As The Last Mile progresses toward its impact goals (based on “inmate hours worked”), the donor fund will pay up to $900,000 to the investors. This means that the potential return on the initial investment is $100,000. If the project falls short of its goals, investors could lose some or all of their investments. Donors would redirect their remaining funds to other nonprofits.
Boards struggle to achieve diversity
Nonprofit board members overwhelmingly think that board diversity is critical. However, they lack the knowledge, skills, resources and commitment required to turn their awareness into reality. That’s the conclusion in a survey report titled The Governance Gap: Examining Diversity and Equity in Nonprofit Boards of Directors.
Koya Leadership Partners, an executive search firm for nonprofits, surveyed 102 boards of directors. It found that 96% of organizations believe diversifying is a key objective, while only 24% have taken “action steps” to increase diversity. The report explores common obstacles and provides advice on how boards can move toward greater inclusion.
Facebook fundraising tops $1 billion
Many people complain about Facebook, but there’s no denying the social media giant’s effectiveness when it comes to fundraising. The company recently announced that users have raised over $1 billion on its platform for nonprofit and personal causes, helping to raise awareness and make an impact in their communities around the world. Save the Children, for example, has reaped more than $7.5 million, and the ASPCA raised more than $4.4 million from nearly 170,000 donors.
Please feel free to contact us with any questions you might have.