Charitable marketplace needs better information

By Todd Cohen

Better charitable intelligence through tougher policing and self-regulation will be critical to restore trust in charities.

While charity boards play a pivotal role, for example, their makeup and connections often are veiled in vague or limited information.

Charities also do a poor job measuring and reporting their impact and effectiveness.

Government rules require public corporations to disclose comprehensive information about their operations, finances, management and boards.

But charities must disclose few details, a regulatory weakness the new report to Congress by the Panel on the Nonprofit Sector does little to strengthen.

While it takes the overdue step of proposing that charities be required to disclose which board members are independent, for example, the panel fails to call for charities to identify board members’ professional or family connections.

And the panel simply rejects the usefulness of IRS forms to disclose complex performance data, which it says charities themselves should share.

That shortchanges the critical need to require that charities disclose a lot more about who they are and what they do, and to make that information easily available through a centralized public source.

With competition growing and trust eroding, doing business in the charitable marketplace requires replacing denial with intelligence.

Todd Cohen is the Editor and Publisher of the Philanthropy Journal.

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