To succeed in crowdfunding, a nonprofit organization must be transparent in how funds are used and be accountable to their donors and the tax rules and regulations of their region.
Nonprofit organizations depend on donor funding to keep their mission going. Rather than pay their earnings back to investors, nonprofits funnel money back into the operation of the organization to reach their goals.
The Importance of Becoming a More Transparent Nonprofit
There are countless ethical reasons why a nonprofit should be transparent in how funds are used. Here is a quick breakdown of how transparency can improve the reputation of your nonprofit.
Avoid Fund Abuse
When there is no transparency in an organization, funds can be used for purposes other than those presented to the donors. Misuse of funds results in lost trust from current and future donors.
When a nonprofit becomes transparent and makes access to funding records readily available, trust is restored with donors.
Avoid Negative Press
Nothing kills a nonprofit’s reputation faster than when the media catches wind of donation misuse. Rather than hiding from the press and the public, be open about how funds are used and what your plan is to avoid any misuse in the future.
Avoid what would otherwise become a public relations nightmare by being transparent from the start.
Reverse Past Damage
If there were any discrepancies in the past regarding funds, transparency and accountability could help repair that damage. The most effective way nonprofits can do this is by making board members personally responsible for the mishaps and paying out of pocket to have specialists review the books and put a plan in place for future transparency.
How to Be Transparent and Accountable in Your Next Crowdfunding Campaign
Before you start your next cause campaign, transparency should already be at the forefront of your planning process. To ensure a successful crowdfunding campaign, take the following steps.
- State the amount you want to raise and how it will be used. Be specific. Include what you will do for funds if it exceeds your goal. How will you use the excess?
- Keep the public up to date during your campaign. You’ll want to consistently share the percentage raised, how many backers have signed on, and any other updates to the public. You’ll also want to be transparent about any problems that might arise as they arise. For example, if there are delivery delays, you’ll want to make sure to present that problem not only to your donors but to your potential future donors.
- Share your success post-campaign! Be transparent with how much money you raised and show the public how you use it.
Planning a Successful Crowdfunding Campaign
Transparency is key to successful fundraising. It builds trust with your donors as well as with the general public.
Teaming up with Causability is a great way to raise money for your cause, all while supporting artists you love through our Creator Grants.
Our nonprofit gives you more money for your cause, more choices, and more control. It also gives your supporters more transparency, so they know exactly how their money is being used to better the community.
