Financial Transparency
Importance of Financial Transparency
Financial transparency is essential for building trust between non-profits, donors, partners, and the community. It provides accountability, ensures ethical management of funds, and helps maintain the reputation and sustainability of any organization. Non-profits that practice financial transparency are more likely to attract and retain donors, secure grants, and foster long-term partnerships.
The foundation of financial transparency is proper record-keeping. Non-profits should consistently track all incoming and outgoing funds. This includes donations, grants, sponsorships, operational expenses, and program costs. Maintaining accurate records not only helps with reporting but also protects the organization in the event of audits or donor inquiries.
In Saskatchewan,
Financial transparency for non-profits is primarily maintained through the requirements of the Non-profit Corporations Act, 2022, which mandates financial reporting and the involvement of independent auditors, along with the responsibilities of the board of directors and the Canada Revenue Agency (CRA).
Communication is key
Sharing Financial Statements
A key part of transparency is making financial information accessible. This may include sharing audited financial statements, tax filings, or annual budgets on the organization’s website. Providing these documents publicly demonstrates a commitment to openness and accountability.
Explaining Distribution of Funds
Donors want to know exactly how their contributions are being used. Non-profits should clearly communicate what percentage of funds go directly to programs, operations, and fundraising efforts. Providing simple breakdowns or visual charts helps donors easily understand the impact of their support.
Detailing Financial Updates
Transparency also means communicating regularly with supporters. Sending donors financial updates, providing receipts, and sharing stories that show the real-world impact of donations helps build lasting trust. Being proactive in communication reinforces accountability.