March 6, 2013;Virtual-Strategy

Last June, GuideStar announced what it called an “overhaul” of the GuideStar Exchange, its “nonprofit transparency program,” introducing three levels of participation nonprofits can opt to use to share information about their finances and performance. Last week, in collaboration with BoardSource, GuideStar announced a new initiative that allows nonprofits to expand the information they choose to share publicly by including “essential board leadership practices” in their online profiles.

The two organizations believe this collaboration will prove useful in “shedding a light on a critical indicator of organizational strength and stability that is often hidden from public understanding or view.” Among the areas included in the new governance section of the GuideStar Exchange profile are questions about board orientation and education, CEO oversight, ethics and transparency, board composition and board performance. Nonprofits were invited to begin filling in the new “People and Governance” section of their organizational profiles in early March; this information will become visible to the public in a few months.

Many prospective funders, donors, volunteers and members of the news media use GuideStar as an important resource for getting a quick snapshot of a nonprofit’s financial health before writing a check or otherwise lending support or drawing conclusions. GuideStar has been steadily moving the goalposts, expanding the types of information nonprofits can include in their profiles, for example, including questions about compliance with whistleblower and document-retention policies.

The three-tiered program introduced in 2013 allows nonprofits to advance along a transparency continuum, each stage of which generates some tangible organizational benefits, as well as the less tangible—but perhaps more valuable—permission to identify the nonprofit as a bronze, silver or gold participant, including use of a GuideStar logo on websites and other materials. The bronze level requires little more than entry and verification of an organization’s basic contact information and mission; silver entails additional verifications regarding the organization’s financial information; while gold has much more rigorous requirements relating to impact and effectiveness, including organizational goals, strategies, capabilities, indicators and progress.

Many nonprofit leaders recognize it’s in their best interest to share as much as they can through GuideStar and other charity-tracking websites, because institutions and individuals will actively seek out the kind of information captured on these sites. Of course, it’s easier to complete more sections of a profile like the GuideStar Exchange if your house is already in order, and if it is, your GuideStar profile becomes an essential component in your fundraising, marketing and public relations efforts. When it comes to governance practices, it will be interesting to see how the sector responds and how ready organizations are to own (or own up to) their solid governance practices (or shortfalls).

There’s no doubt GuideStar and BoardSource intend to keep raising the bar in terms of accountability by inviting nonprofits to publicly share information about how their boards work. There’s no mention of a fourth level (platinum? priceless?) for completing the “People and Governance” section, so presumably this expands the “Impact and Effectiveness” requirements for a gold participation rating.

Keep reading NPQ for further developments.—Eileen Cunniffe