Transparency is a mega-trend and central to the culture of the internet. In future, organisations in the social sector will become increasingly transparent, publishing their figures and bring open about their structures and their operations to promote trust and professionalisation. There’s also growing pressure from the side of donors and other funding bodies, who are no longer content merely to have good intentions, but now want to know in concrete terms what their money actually achieves.
People can now access information more easily than ever – be it about the accounts of politicians, the social engagement of a company, or what the service is like at a particular hotel. Not only this, they also actively contribute by providing and spreading information (see trend Pitch In). Transparency brings information into the public domain, which others can then use and add to. And with the internet transparency is cheap, because a vast and growing army of internet users spreads information worldwide quickly and with minimal effort required. Due to the confluence of technology, society and politics, a new debate has now arisen: Which data should be publicly accessible? What does transparency really mean? Facebook gives us transparency in the private sphere, albeit a kind of transparency that isn’t unambiguously desirable. What we’re interested here in is transparency in the public sphere, in institutions and organisations financed in part with public money, which concern our democracy and welfare. For digital natives (those born after 1980) such transparency, in the sense of open communication and accountability, is expected as a matter of course. They instinctively find non-transparent companies and organisations suspect. And the number of people who have never known a world without the web is growing.
- Transparency and trust
The social sector must embrace the new expectations around transparency, and organisations must adapt accordingly. In a survey of 500 donors carried out by consultancy Pricewaterhouse Cooper, 67% said that the most important factor in trusting an organisation was that it accurately reports on its activities. Three quarters saw publication of accounts as an important prerequisite for trustworthiness. This demand for transparency is sharpened by the occasional high-profile scandal, like the one which surrounded Greg Mortenson, famous philanthropist, writer and CEO of the Central Asia Institute (CAI). In 2011 an investigation by CBS News alleged that the CAI had spent millions of dollars promoting Mr Mortenson’s book, and that many of the charity’s claims about successful projects were fabrications or exaggerations. In another example in 2008, the CEO of Unicef in Germany was forced over exorbitant fees paid out to consultants, and attempts to cover up these payments. Now even established giants in the sector have begun to publish their data, among others the World Bank and the UN Food and Agriculture Organisation. The Pricewaterhouse Cooper Transparency Awards, which began in the Netherlands in 2004 and have since been replicated in Germany and Australia, are a sign of the growing demand for transparency in the social sector. They also illustrate how, just as in the commercial sector, transparency can be a competitive advantage, as organisations increasingly compete with one another in the market for donations.
- Crystal clear: state-sponsored aid leading the way
In recent years digital media have contributed to more information about charitable organisations being publicly available. In some trailblazer countries like the USA and the UK this development is well established, but even in some European countries, in Germany for example, it’s still in its infancy. In the USA and UK there’s a wealth of databases, platforms and blogs providing information about NGOs. Even state aid agencies are increasingly harnessing the potential of transparency through the International Aid Transparency Initiative (IATI). The United Nations Development Programme (UNDP), the World Bank and the EU-Commission have all signed up to the new IATI standard. Information about which funds are used for what purpose helps beneficiary countries to better coordinate their own activities. Up until now the parliaments in many of these beneficiary countries didn’t know exactly which organisations were providing aid in their country or where or how. Transparency not only leads to greater trust among donors, it also boosts effectiveness. Projects which integrate stakeholders in a clear and participative way are more successful. When data sets are inspected by many pairs of eyes rather than just a few experts, it leads to a more objective interpretation, explains “philanthropy wonk” Lucy Bernholz. Transparency enables evaluation, which in turn can lead to optimisation. And when funders and donors favour transparent projects and organisations, they come a step closer to ensuring their money is used effectively.
Transparency creates trust. Not only do internet users expect a high degree of transparency, it’s also relatively cheap for an organisation to present themselves transparently online. Anybody who wants to avoid the cost of processing lots of data can even just upload it in raw form. Simply the availability of data will make a funder or donor feel better, and donors with big budgets will invest time in their decisions, thoroughly examining accounts and available data. But others participants should also open up, so that public confidence grows not just in NGOs but also in foundations, state institutions and the whole social sector. And because less transparent and less worthy projects will receive fewer donations, transparency leads to a more professional social sector. Transparency encourages those on the outside to suggest improvements, driving further professionalisation. Finally, organisations should be internally as well as externally transparent. That way they are not only more effective but also better positioned in the competition for donations.