Charities Urged to Disclose More Data on Operations

Most nonprofit groups’ Web sites do not offer enough detailed information about the organizations’ finances, programs, and leadership, according to a new report that documents how much information charities disclose online.

The findings suggest that charities need to better respond to donors’ growing demands for additional information, says Dan Moore, vice president for public affairs at GuideStar, the Williamsburg, Va., group that issued the report.

“There’s a whole new level of engaged donors searching online for causes or for information about causes that meet their desired impact, and charities need to have that information available for them,” he says.

GuideStar’s report is based on a survey of nearly 1,800 charities and an examination of their Web sites.

It says that more than nine out of 10 organizations included basic information about their organizations online, including descriptions of their programs and services, and about seven out of 10 posted a list of board members and employees.

But more-detailed information was much less likely to be available online, the survey found.

Forty-three percent of the organizations made their annual reports available online, while 13 percent posted their financial audits. (GuideStar did not break down the data according to how many of the groups in the survey publish annual reports in the first place or have audited financial statements.)

Only 3 percent of the charities posted online the official Internal Revenue Service letter that proves the organization is tax-exempt.

Size of Charity

Disclosure practices varied somewhat according to an organization’s size, the survey found. Groups with higher income, for example, were slightly more likely than less wealthy groups to post annual reports, financial audits, and privacy policies.

The report says that while the type of organization didn’t appear to have too much influence on the availability of information, international and foreign-affairs organizations were the most forthcoming overall, while arts and education groups were the least so.

The GuideStar report calls on charities to regularly update their Web sites with details about programs, including strategy and “evidence-based evaluation metrics.” That kind of information, the report says, “is critical to engaging new Web-savvy ‘investors.’”

It also suggests that groups post brief biographical sketches of their leaders, highlighting their skills and contributions.

In conjunction with the report, GuideStar introduced “GuideStar Exchange,” a free, voluntary program for charities to better share information through the GuideStar Web site and to be recognized for their disclosure practices.

Organizations that meet a set of criteria, such as posting online their annual reports and whistle-blower policies, can earn a special GuideStar seal to display on their GuideStar report.

The report, “The State of Nonprofit Transparency, 2008: Voluntary Disclosure Practices,” is available free on the GuideStar Web site.