Transparency in Fundraising

Although, or perhaps because, I have worked in the community sector for much of my life, with the end of the financial year approaching I still find myself unsure how to respond to the stream of requests for donations the season brings to my inbox. Am I too easily persuaded by a compelling story or an urgent tone, without enough information or understanding of the facts behind it?

It’s often said, especially by thoughtful donors, that giving money away well is harder than earning it. After years of managing a philanthropicfoundation and teaching grant-making, I’ve come to see just how true that is. The challenge lies in balancing heart and head, the timeless tension that underpins the philosophy of effective altruism championed by Peter Singer and others.

This is why the term social investment is often more useful than philanthropy. It invites us to bring the same kind of careful thinking to charitable giving that we would apply to financial investments: questions about priorities, sustainability, and outcomes.

To be clear, the return on a donation isn’t financial. The work of the community sector is directed at complex, challenging, and often intangible and long-term, outcomes - recovery from substance dependence, integration into the community, housing stability, a cure for a disease - that actually makes it harder to assess the impact of a social investment than a financial investment, where impact is largely measured in dollars. But it is no less important that the impact be assessed meaningfully.

In 2020, Australians gave an estimated $12 billion to charity. These decisions matter, not only to generous donors and the causes they support butalso to how we shape our communities and direct our shared resources.

Too often, the requests we receive simply ask us to give without providing the tools to decide wisely. We’re told the work is vital (and it often is), but we’re rarely offered information about the organisation’s actual financial position, how it sets priorities, or whether its efforts are making a difference.

Some charities struggle to survive, while others are well-resourced with substantial reserves and high salaries for senior staff. Most are somewherein the middle. What they have in common is a responsibility to reflect honestly on what they’re achieving, where they’re falling short, and what, and how urgent, their financial needs are.

None of this is to suggest that charities should operate exactly like businesses. But many of the same questions apply: What are the organisation’score commitments and future plans? Is it solvent? Does it have clear strategies? Can it demonstrate impact? How sustainable would it be without donations, and how will a donation be used? Is it to keep the charity alive, top up reserves, or pay for a new building or a growth in services?

That honesty matters. Measuring success in the community sector is never straightforward, but a commitment to transparency and evaluation, evenwhen the results are mixed, is a mark of integrity and effectiveness.

What I’m suggesting is not radical: simply that donors should be offered a little more than the standard ‘help us do our vital work’. As social investors they are entitled to a clearer snapshot of where an organisation stands and what it’s achieving than is current fundraising practice. This doesn’t mean a full annual report, but a brief, transparent financial and narrative summary would go a long way.

I don’t write this to criticise those doing good work, or to create division in a sector I care about deeply. Quite the opposite. I believe greateropenness can build trust, strengthen the community sector, and increase support for those doing the most good. We owe that clarity not only to donors, but to the communities we all hope to serve.