Transparency in philanthropy is important, and this blog presents a useful tool for those of us working in funding organisations to answer two questions:

• How transparent are we?
• Is this level of transparency appropriate for an organisation of our type and size?

But first, a bit about what transparency in philanthropy means in practice and why it is important.  (Or you can skip straight to the guts of things and take the transparency self-assessment quiz now.)

As discussed in my previous blog on funder transparency, being transparent simply involves showing that we are serving the public good by being open about who we are, how much we give away, where our funding comes from and where it goes, how funding is decided and other information that can reasonably be expected to be disclosed.

Why is this important?   One reason is that if our organisation is tax-exempt, we should be able to show that our funding is doing at least as much public good as the government would provide with the foregone tax revenue.  Additionally, for the sake of our personal reputations and the reputation of philanthropy in general, we should avoid any suspicion that foundations are involved in money-laundering, tax-evasion (and yes,  it is possible that this occurs right here in Aotearoa NZ) or any other unethical or inappropriate activity.   That said, for family philanthropy, the need for transparency often needs to be balanced by a desire to protect the privacy of the donors.  However for funders responsible for public money like statutory trusts, local or central government grant schemes and commercial companies administering trusts and foundations, it is reasonable to expect high levels of transparency.

But how transparent should a foundation be? And what does good transparency look like?

Fortunately Philanthropy NZ has produced transparency guidelines with two levels – one for small private foundations and one for large foundations and/or funders handling public money.  The guidelines are based on the excellent US resource Glass Pockets, and are adapted for use here.    Better still, there is now a simple self-assessment tool so you can assess the level of transparency for your organisation.

Take the transparency self-assessment quiz here.  There are instructions at the bottom of the page and definitions on page 2, and, if you want to increase your transparency, there’s a column for re-assessing your foundation after you have made improvements.

It isn’t hard to increase your transparency score, particularly for Level One Transparency.  We did this quiz for our own small charitable trust, Te Muka Rau, which is about as small and simple as a philanthropic foundation gets.  Here’s how we scored:

In our case, improving our transparency simply involved adding more detail to the About Us page on our website, being a little more specific on our funding processes and adding direct links to the relevant pages on the Charities Services website; it was all done in a morning.  And the final scores feel appropriate for a small funder like us.  Other larger funders, for example Vodafone Foundation, are working on the somewhat more substantial exercise of meeting all criteria for both levels.

As US philanthropist Russell Leffingwell stated way back in 1950s, “The foundation should have glass pockets, so that anyone could easily look inside foundations and understand their value to society, thereby inspiring confidence rather than suspicion”.  What this means in practice will differ from one funder to another, and it is up to each of us to decide what level of transparency is appropriate.   And we now have tools for the Aotearoa NZ context to help this happen.

PS Feedback, questions and suggested improvements on the transparency standards and the transparency quiz are most welcome!