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NGO: How to improve donors’ trust thanks to transparency and technology?
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NGO: How to improve donors’ trust thanks to transparency and technology?

On Thursday 4 April 2019, Jerome CHINCARINI, director of Synergix, shared his experience on "How to improve donors’ trust through transparency and technology?” at CAGI (Centre d’Accueil de la Genève Internationale). Here is a summary of the key elements of the event.

What is trust? And how to improve it?

- Value exchange: Trust means making an exchange with someone when you do not have full knowledge about them, their intent and the things they are offering you.

For example, when an NGO searches for donors because it needs funds for a project.

- Delayed reciprocity: Trust means giving something now with an expectation that it will be repaid, possibly in some unspecified way at some unspecified time in the future.

For example, an NGO will tell its story, provide KPIs, reports, hoping to receive funds

 

To achieve this trust, an NGO must bring transparency and provide relevant and reliable information on its performance, financial situation and governance.

These definitions correspond to the main objectives of an organization, which must work on the following 5 essential components to increase trust:

  • Engage people
  • Responsibility
  • Accountability
  • Responsiveness
  • Transparency

An NGO engages different stakeholders through its mission, history and impact. One of his main responsibilities is to be able to explain how its projects are set up. Indeed, organizations are dependent on grants and donors who may not continue to provide funds to an NGO if they do not understand how their money is being used. This is why transparency is a fundamental element.

Reporting on impact and results is a constant challenge. While not-for-profit organizations report the absence of a "coherent framework" and "human resources for data collection" as major obstacles, new technologies and digitization are now able to overcome these obstacles and rely on clear dashboards to monitor its financial management in real time.

NGOs work on a mission and it appears that donors invest in it. It therefore seems logical that they need to understand how the funds are used and to know that their investment has contributed to its implementation. An NGO is able to say: "This budget corresponds to this line, your donations have been used for that" when it has access to clear reports as well. Through technology, visual dashboards can be generated automatically to meet this need for transparency and enhance stakeholder confidence.

 

The problem: having systems and governance that work together

It seems easy but reality is different, due to the fact that there are 3 disconnected worlds:

  • Program/Field officers : running programs, follow up on expenses/budget, funding follow-up/allocation, monthly reporting HQ
  • Accounting/Finance : running operations, global follow-up, financial reporting, keep up with bookkeeping
  • Fundraising/Donors management : getting new funds, follow up with donors, donors reporting

 

When we talk to NGOs, it often comes out that these three worlds do not work together at all. Each has its own language, different priorities, and the data that matters for one or the other is not always obvious or identical. It usually results in various Excel spreadsheets that are not usable and from which it is difficult to extract clear trends.

This lack of efficiency can make it difficult to access the data and use it to create relevant dynamic reports. This is why setting up clear and personalized analytical trends is the basis to generate relevant dashboards. It is essential to prioritize and structure the information, for example, by: donors, grants, regions, programs, themes, activities... To obtain meaningful donor reporting and to be able to show exactly how the funds are used, the first crucial point is to create consistency in processes, monitoring and operations in order to have reliable data.

By analyzing the needs to better understand how each department works and their potential issues, it is possible to optimize the processes and design an effective data system for each NGO. When every department works efficiently with the same information, there are fewer problems and misunderstandings. If the whole organization works together in a relevant and clear way, the use of funds can be precisely justified and the NGO increases its efficiency and easily improves its transparency to donors, through the implementation of its own dashboards to show the achievement of its objectives.

 

Automatically generated visual graphics

Jérôme CHINCARINI presented a concrete example of graphs connected directly to financial data with clear analytical trends. As you can see above in the overview, it’s easy to get an idea of how exactly the organization's funds are spent and how funds are used per project, geographical location, theme, activity or type, as well as donations or grants. The graphs are interactive and allow to get more details in a click and to have a specific view on projects, donors or fund tracking.

Having such automatically generated visual information allows you to spend more time analyzing them than preparing them, explain each expense and answer many questions such as "What's wrong? ", " Where is the money? How were these funds used? Which fund has been used for Project X? What was the purpose of this grant?” Or “Which campaign was effective? ».

By structuring data and using new technologies, an NGO can access reports that show important information in real time. This is definitely an asset that gives the opportunity to effectively manage projects and be transparent with stakeholders, in order to build trust.

 


Transparency builds trust

A recent study by professors Erica Harris and Dan Neely from the University of Wisconsin-Milwaukee, analyzing more than 6,300 non-profit organizations, shows that donors contribute more when organizations are transparent. The research findings are summarized in one sentence "Transparency in the nonprofit sector is an added value for key stakeholders. ". This research shows that transparent NGOs also perform better across a range of dimensions from governance to finance to operations.

If stakeholders know what's going on from the inside, they feel more engaged, close to the organization and its mission, and donations naturally grow. Transparency is a tool that builds trust and adds real value. When an organization becomes transparent, the public and donor trust increases.

Once trust is firmly grounded, it is much easier for the NGO to achieve its goals and fulfill its mission.

 

The other benefits of transparency for an NGO


- Involve all stakeholders

By using the same financial information and adapting the presentation, an organization can involve not only donors, but also the board, employees, volunteers and the public. For example, for employees, the organization may be able to highlight strengths such as a new grant or the results of a fundraising event, while for donors it will focus on the way donations are invested in a project.

When the stakeholders understand what is happening, they feel involved and want to engage with the NGO.

 
- Reflect on the steps that will help improve

Dashboards with visual graphics are even more useful when they help make concrete decisions. With regular monitoring, analysis and comparison of results, the NGO team will have significant and predictive elements that will help them make significant improvements to carry out their missions and measure their impact.

Instead of spending lots of time preparing reports, the organization will be able to evaluate the effectiveness of its work, adapt to findings and turn results into action.

 

By leveraging the use of technology and the expertise of an accounting firm that understands the issues of an NGO, it can implement efficient processes that will provide real added value, increase transparency with donors and build trust.

 

Do you want to know more about how Synergix uses new technologies to address key NGO challenges? Download our case study!