There are seven principles for the financial management of charities which provide advanced guidance for boards of trustees and senior managers to help them ensure that their organizations use their funds effectively and that their staff and volunteers work well. These principles also provide a useful checklist for funding other charities. These seven principles of Transparency in charity fund transfers are:

1- Supervision

The organization must take good care of the resources entrusted to it and ensure that they are used for the intended purpose. The overall responsibility for this is the responsibility of the Board of Trustees/General Assembly. In practice, managers achieve Transparency in charity fund transfers by planning carefully and strategically, having proper supervision, considering risks, and setting up appropriate systems.

2- Accountability

The charity organization must explain to all stakeholders, including target groups, how it used its resources and what results it achieved. All stakeholders have the right to know how their funds and powers have been used. Charities have an ethical duty to explain their decisions and actions and submit their financial reports for scrutiny to foster Transparency in charity fund transfers.

3- Transparency

The charity organization must be transparent about its work and provide information about its activities and programs to the relevant stakeholders. This includes preparing accurate, complete and timely financial reports and making them available to all stakeholders, including target groups. If an organization lacks transparency in its work, it may create the impression that it is hiding something.

4- Integrity

At the individual level, the people of the charity organization must act with honesty and integrity to foster Transparency in charity fund transfers. For example, directors and boards of trustees must conduct their activities in accordance with procedures and by declaring personal interests that may conflict with their official duties. The integrity of financial reports depends on the accuracy and completeness of financial records.

5- Financial resilience (Viability)

Expenditures, both at the operational level and at the strategic level, must be balanced with incoming funds. Financial resilience is a measure for the continuity of activity and financial security of charitable organizations. The board of trustees and directors must prepare a financing strategy to show how the charity fulfills all its financial obligations and presents its strategic plan.

6- Accounting standards: Transparency in charity fund transfers

The record keeping and financial documentation system must be internationally accepted in terms of accounting principles and standards. Any accountant from anywhere in the world should be able to understand the organization’s financial record keeping system to bolster Transparency in charity fund transfers.

7- Procedure stability: Transparency in charity fund transfers

A charity’s financial policies and systems should be stable over time. This increases efficiency and transparency, especially in financial reporting. Although systems may need to adapt to changing needs, unnecessary changes should be avoided. Unstable approaches in financial management can be a sign of manipulation in the financial situation.

As mentioned, transparency is one of the key principles of financial management in non-governmental organizations. Today, volunteers and donors demand transparency from charitable organizations. It is clear that donors often encounter managers who do not manage the funds of these organizations properly, and for this reason, they become skeptical of other charitable organizations. As a result, transparency becomes a very important factor that allows any charity to build trust. The working transparency of the charity organization not only ensures the compliance of the organization’s performance with the outlined policies, but also builds trust in the organization’s partners and encourages them to continue their support. Tracking the route of any incoming or outgoing amount of the organization should be done with open accounting methods.

How to increase Transparency in charity fund transfers?

Here are three ways to increase the transparency of charity and charity organizations and organizations:

1- Standardization of financial processes

Does your organization use integrated financial procedures? Does each group have its own operating method? When you have to work with multiple applications and multiple different databases, you add a significant amount to your administrative costs. Standard processes put all the people of the organization in perfect harmony in terms of accounting. In this case, you will have the necessary information to create the necessary transparency for people who want or need to access the organization’s financial information.

2- Reporting to donors

When managing a charitable organization, you will definitely need this. If someone asks about your fees in certain areas, how can you process their request in a reasonable time frame?

Manually sifting through information wastes resources that could be spent on better advancing the organization’s mission. Donors need to be reassured that they are contributing to a worthwhile cause, but if your organization spends weeks preparing a report, that alone can breed pessimism. If it takes a significant amount of time to prepare a simple report for donors, it raises concerns about whether the organization is being managed properly. So, a charity organization should be able to prepare case reports or stage reports for them and provide them in a timely manner according to the various stakeholders it has. Donors are one of the most important beneficiaries of phased and transparent reports, both financial and operational.

3- Timely updating of information: Transparency in charity fund transfers

This means that you need a team that regularly and continuously updates the organization’s financial information. Large sponsorships and large expenses can change this trend significantly, and providing inaccurate figures can have far-reaching effects on the entire organization. Update means reflecting the latest data.

read more: Attracting people’s contributions to charity