Recently, people donating their money and efforts in the wake of disasters has spawned the need to share an extremely crucial piece of information: where the money is going and what their money is going to exactly. Financial transparency is a very important practice that all legitimate charities and organizations should abide by if they are to stake their claim as reputable companies. With the access to information that has technology has given us today, it is essential now more than ever.

Online information centers like Charity Watch allow people to delve into the processes of a charity of their choosing to decide whether or not their donations will be impactful. Not being given this information can make it much more difficult for a donor to choose the right organization, or even donate at all.

There have been a great deal of cases in which so called “charities” lended a hand following a disaster or public issue, only to keep most of the funds themselves and dupe donors out of thousands of dollars. For example, a number of charity scams surfaced following the Virginia Tech shooting in 2007 claiming to donate funds to the victims and their families, only to have donors become victims of identity theft themselves. It can be truly disturbing to see people take advantage of such tragedies, thus stressing the importance of transparency by organizations claiming to help.

This openness with how funds are being spent also builds a stronger sense of community with those who regularly donate to a certain charity. Explaining where the money is going and how efficient one’s efforts are provides insight for donors and helps them better understand their individual impact. Goals and obstacles should be clearly outlined as well to alleviate any unexpected bumps in the road.

Being financially transparent reinforces the confidence in an organization’s investors as well. They know exactly what their money is being put towards, and whether or not they feel it has the potential to make a decent profit. Charities that withhold this information altogether are very unlikely to receive any investment partners.

It should go without saying that transparency within an organization should start from within. Every employee should be made aware of their respective employer’s processes and levels of success, which can then be made public. A donor that understands where their money goes and how it is being spent is much more likely to continue donating to that organization, so long as they are assured that the cause is worthy.