A charitable organization should make information about its operations, including its governance, finances, programs, and activities, widely available to the public. Charitable organizations also should consider making information available on the methods they use to evaluate the outcomes of their work and sharing the results of those evaluations.
Providing clear, timely information about an organization’s mission, how it operates and manages its finances, and the results of its work can have a powerful influence on the level of public trust and support that organization enjoys. Charitable organizations (other than churches) recognized by the IRS are required to file an annual information return (Form 990 series) with the IRS, a version of which they must also make available for public inspection. The IRS may assess fines on organizations that file late or incomplete returns. The IRS must revoke the tax-exempt status of any organization that fails to file a required return for three consecutive years. Beyond these legal requirements, each organization must weigh the value of greater transparency in garnering more support for its work versus the costs of gathering and producing information and the potential risks to staff, volunteers, and clients in sharing specific types of information.
For many private foundations and many public charities, the annual IRS information return serves as a primary source of information about their finances, governance, operations, and programs for federal regulators, the public, and many state charity officials. Copies of the returns (not including information on donors to public charities and selected other proprietary information) are available online through such providers as GuideStar, the Foundation Center, the National Center for Charitable Statistics, and the websites of many state charity offices.
Many charitable organizations are legally required to make their three most recently filed Form 990s and their applications for tax-exempt status, if after 1987, available to the public for inspection and copying at their offices or on a readily-accessible website. Organizations should ensure that their returns are posted on their own or another readily-accessible website soon after the returns have been filed with the IRS to provide prospective donors and the public with the most current information available.
Annual information returns, while helpful, provide a limited, and often dated view of an organization. Therefore charitable organizations should strongly consider offering additional information about what they do and how they operate through a website or other online vehicle, or through an electronic or printed annual report. Regardless of the format, this resource should provide information about the organization’s mission and vision, its board and senior staff members, program activities, and current financial information including, at a minimum, its total income, expenditures, and ending net assets.
Such reports or online resources need not be elaborate and can direct the reader to other readily available documents (such as the Form 990 return or audited financial statements) for further information. Online resources can generally be updated as new information is available. Organizations that choose to produce printed reports may decide to produce a new narrative every two or three years, while ensuring that readers have access to information on any intervening changes in its board and staff or programs and its current financial statements through an attachment, an online resource, or other notice.
An organization’s website or other online presence can be a key vehicle for transparency and accountability and communicating the organization’s work and progress. In addition to the information cited above, websites should provide links directly to or instructions on how to request the organization’s most recent IRS Form 990 return and other financial statements, key organizational policies such as its code of ethics and policies on conflicts of interest, whistleblower protection, and travel policy. If the website provides a mechanism that enables visitors to make online contributions, the organization should ensure that it includes appropriate information about how and where their donation will be processed and how the contributors’ information will be protected. For more information, see Principle #33.
Information on an organization’s results and how they are measured can be an especially valuable means of explaining its work and offering an accounting to donors and the public. Nonetheless, such information, and the ability to provide it, will vary considerably from one organization to another. To the extent evaluation or information on outcomes is available, some version of it should be included in annual reports, websites, and other forms of communication. More information about program evaluation is provided in Principle #19.