3rd Global Conference on Transparency Research HEC PARIS, October 24th 26th, 2013

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1 3rd Global Conference on Transparency Research HEC PARIS, October 24th 26th, 2013 Carolyn Ball, PhD, Associate Professor of Public Policy and Management, University of Southern Maine, Portland Maine, United States INDICATORS OF TRANSPARENCY AND TRUSTWORTHINESS IN NONPROFITS SHOULD WE TRUST NONPROFITS? Abstract One of the rationales for why we have nonprofits in the United States, better known as NGOs in the rest of the world, is that we trust them to provide a service. We as a society show our trust of nonprofits by giving them tax-exemptions. Nonprofits "need to be trustworthy and need to be trusted to succeed [in their missions] (Ortmann and Schlesinger, 2003). One way to create trust is to be transparent in the administration of the organization by use of a website. In this article, we examine transparency, a term just beginning to be used by nonprofits in the United State as a signaling device of the trustworthiness. We first define both transparency and trust and establish indicators for these definitions in both symbolic terms, using the words trust and transparency and tangible terms, such as having an annual report available to the public. I use data from the Indiana Nonprofit project. Results show that few nonprofits have adopted the idea of transparency. As such it cannot be used to identify whether a donor or citizen should trust the nonprofit. BallTransparency-trustpaper.docx 10/7/2013

2 How do the values of transparency and trust relate? One of the rationales for why we have nonprofits in the United States, better known as NGOs in the rest of the world, is that we trust them to provide a service. We as a society show our trust of nonprofits by giving them tax-exemptions. Nonprofits "need to be trustworthy and need to be trusted to succeed [in their missions] (Ortmann and Schlesinger, 2003)." Understanding trust in nonprofits is even more important as government reduces the direct provision of services in favor of contracting with nonprofits to provide those services. Further, given a number of highly visible scandals and corruption, some see a "crisis of confidence" occurring for nonprofits, although, for example, O'Neill (2009) disputes this. The need for transparency is just coming on the radar of nonprofits, in part, brought on by the passage of the federal Sarbannes-Oxley bill (2002) and new IRS reporting requirements in Among other aspects, the passage of the Sarbanes-Oxley bill required nonprofits to develop whistleblower policies, correct financial statements, provide the IRS 990 when requested, and create an audit committee if audits are conducted (audits are not required of nonprofits). Almost all nonprofits 1 file the IRS 990 (it discloses the pay of executives over $100,000, the mission, board directors, and finances). What transparency is and means for nonprofits (Ball 2010) is new, even though scholars have described serious problems with the accountability of nonprofits: incidents of theft and convictions (mismanagement of resources, misconduct, excessive compensation, personal life style enhancement and sexual misconduct (Gibelman and Gelman 2001, 2004), the costs of fund-raising (Jeremy 2006) and the pricing of healthcare (Altman, Shactman, and Eilat 2006). BallTransparency-trustpaper.docx 10/7/2013 2

3 This article reviews the meaning of trust and transparency in the nonprofit literature and examines websites for indicators of transparency and trust. It uses data collected from the Indiana Nonprofit Project and matches it with data from the Indiana Transparency Portal ( and Guidestar ( a website that collects nonprofit IRS 990 forms. Transparency Defined in Nonprofits The evolution of the use and the meaning of transparency comes from nongovernmental organizations, the supranational organizations, in particular Transparency International (Ball 2009). In the 1990s Peter Eigen, a manager at the World Bank, distressed by the World s Bank failure to address corruption in its loan-giving to nations, along with others decided to address this concern. He felt the politically neutral position of the World Bank led to little progress and high costs for the citizens of developing countries. Eigen meeting with a small group decided to form a new organization, Transparency International (TI) with Eigen at its head. (Other possible names included Honesty or Integrity International.) The organization would examine the effects and consequences of corruption for citizens, report on it across nations, and advocate policy changes in major global institutions to address corrupt practices. Transparency International had enough influence to spread the idea of transparency as a means to reduce corruption to influence other NGOs: the World Bank s own operations, the Organization for Economic and cooperative Development (OECD) conventions, and to congressional directives to the International Monetary Fund. These organizations changed their own internal policies to become more transparent and to influence state policies on BallTransparency-trustpaper.docx 10/7/2013 3

4 transparency. Today, the word is widely used in Europe and now by officials in the US government. As the idea of transparency was adopted internationally, it also began to be clear that it meant that organizations were open to public scrutiny whether though formal structures such as freedom of information acts or document availability and open meetings (Piotrowski and Van Ryzin (2007) and Roberts (2006). Transparency began to be used side by side with good governance and accountability to the public and openness to public scrutiny. With the help of the web, it has been possible to make more and more aspects of an organization's management available to the public. An early article in an international journal, "Between Public and Private: Accountability in Voluntary Organizations (Taylor) " published in 1996, mentioned the need for transparency in voluntary organisations, but is unlikely to have had wide circulation in the United States. Nonprofits in the US have been more reluctant to adopt the idea of transparency in their practices, as a means to combat fraud, corruption, unethical actions by administrators. The impetus for transparency vis a vis openness and accountability is occurring because of the threat of regulation and actual IRS regulation. The IRS has dropped the tax-exemption of nonprofits that have failed to file their 990s (a statement of finances). In the early articles on nonprofit transparency--and these relate to healthcare--, transparency has a fairly negative connotation, occurring because of the threat of regulation or actual regulation. It emphasizes transparency as a means of accountability and to create credibility (Ferman 2007; McPherson 2006; Galvin 2007; Mueller 2007; National Council of Nonprofits). The very limited recent scholarly writing about nonprofits has largely adopted the BallTransparency-trustpaper.docx 10/7/2013 4

5 definition of transparency as accountability, with emphasis on financial accountability (McCarthy 2007; Melendéz 2001; Nezhina and Brudney 2010; Saxton, Kuo, and Ho 2012). It is accountability, in particular, to donors (Stone and Wilbanks 2012). For example, Szper and Prakash (2011) analyzed whether sunlight, openness, that is disclosure of information to Charity Navigator changed behavior of donors. This view of transparency as important to donors, is reinforced by professional organizations such as the Independent Sector (2005) and the Robert Wood Johnson Foundation (Colby, Fishman, and Pickell 2011). Guidestar (2008) identifies 3 aspects of transparency: 2 posting annual reports, audits, and IRS letter that specifies that the organization is a nonprofit. In addition, it recommends posting evaluation information, board members' and key staff's names and titles, and biographic information on executives. In a more comprehensive manor, Gandia (2011) investigated Spanish non-governmental organizations use of the web for improving accountability and transparency. Gandia developed a comprehensive list of 78 measures: ornamental (e.g., its activities, mission, vision), informational (board information, financial data, annual reports), and relational (recruitment of volunteers, on-line donations, partnerships, memberships, updates available). Many of the eleven relational indicators are not closely tied to transparency (e.g., online donations, online store, electronic updates, exclusive access to the website by partners). Thus transparency occurs by the availability of information to the public. He found that websites were largely "ornamental" versus informational or relational. Though Candler and Dumont (2010) and Dumont (2013) do not use the word transparency, only accountability, their work has relevance to this study because they created an index of accountability (39 measures) focusing on characteristics of the website such as ease of use, BallTransparency-trustpaper.docx 10/7/2013 5

6 updates, links to social media, news, and some overlapping measures with Gandia such annual reports, minutes, mission statements, and volunteer information. They identified the areas of accountability as accessibility, engagement, performance (performance results, 990, annual report), governance (bi-laws, board member information), and mission. In the case of Guidestar, its recommendations may be beyond the pale of most nonprofits. Gandia and Dumont expand transparency beyond what its definition as a means to reduce corruption, increase openness, and increase accountability to include web accessibility features and the ease of use of the web. More consensus occurs that nonprofits achieve transparency by being accountable, fiscally prudent, and demonstrate this to its donors. Trust is now tied to transparency as appears in the Report to Congress (2005). The level of transparency is, itself, an indicator that an organization is trustworthy (Melendéz 2001). As Gandia's work suggests, even in Spain this requires more openness, disclosure than is occurring. If the idea of transparency is new to US nonprofits, except as mandated by the IRS and Sarbannes-Oxley bill, can we expect nonprofits to provide a wealth of information? The web is the mechanism to provide this, but not all nonprofits have websites. Trust Defined in Nonprofits Trust in nonprofits is often identified as a derivative of doing or taking a particular action. It is something that happens over time through transactions with donors, consumers, citizens, and government agencies that have experience with the nonprofit. It is transactional. Bryce (2007) has identified 5 transactions through which trust occurs by 1) contracting, 2) BallTransparency-trustpaper.docx 10/7/2013 6

7 obtaining the tax-exemption status itself and donations to the organization, 3) commitment to a mission, 4) employing social capital, that is how it projects itself, often by its values, its affiliations, shared interests, more so than simply its mission such as the use of volunteers, 5) maintaining its assets, that is custodial trust. Trust occurs through interactions that create a perception of trustworthiness. Trust occurs by being accountable in its actions and transparent in its finances through disclosure of finances and a board assuming its fiduciary responsibilities (Keating 2006; Independent Sector 2005; Brody 2002). Visible aspects of this are the availability of audits (not required of nonprofits), and codes of ethics (National Council of Nonprofits; Blodgett and Melconian 2012). Using the web to disclose information creates accountability and hence trust (Saxton and Chao 2011) What appears to be an overarching idea is that nonprofits need to develop and maintain trust. To not do so is to threaten their very status as tax-exempt nonprofits separate from the private sector and their missions. Involving many meetings of nonprofits and citizens throughout the country, the Independent Sector, concluded that to maintain the trust of the public nonprofits must set standards and policies of governance (e.g., conflict of interest policies), accountability, and transparency (Report to Congress and the Nonprofit Sector on Governance, Transparency, and Accountability 2005). Nonprofits to be trustworthy must be accountable to donors, volunteers, government agencies and the greater public, and taxpayers who partially fund many nonprofits. In the next section, I explain the choice of measures creating a more simple model of trust and transparency using nonprofits that have contracts with the state. Gandia's work as BallTransparency-trustpaper.docx 10/7/2013 7

8 previously described shows that even in Europe where the idea of transparency is much more understood, NGOs have limited their adoption of transparency and have used the web as a more of a relational tool, an expansion of the idea of transparency. Methodology This paper uses the comprehensive list of Indiana nonprofits available through the Indiana University Nonprofit Project ( edu nonprof ). Indiana nonprofits were chosen for analysis because of the comprehensiveness of the database which is updated every year and includes data from the IRS, the Indiana Secretary of State's office, churches, synagogues and mosques, and community listings. I also collected data on all nonprofit contractors, identified as payees, with the major departments of the state of Indiana: Corrections, Health, Workforce Development, and Child Services, and Education. 3 This required eliminating all those that were not nonprofits listed as payees on Indiana's Transparency portal ( Since the website contained no identifier of the payee status as a government agency, private entity or nonprofit entity, I matched the names back with the Project's lists and Guidestar ( to determine if the contractor was actually a nonprofit. In addition, some agency names were truncated and I contacted the State Auditor's office, responsible for the Transparency portal, for more information. I also eliminated hospitals because they are a separate and distinct type of nonprofit akin to their private sector counterparts. Finally, I eliminated nonprofits that were not actually in Indiana. This led to a total population of 351 nonprofit contractors ( 4 This paper uses a 105 of these BallTransparency-trustpaper.docx 10/7/2013 8

9 nonprofits for preliminary analysis. This is preliminary data for the Global Transparency Conference and will be extended to a random population of all Indiana nonprofits. Choice of Measures Two types of measures were collected: tangible and what I refer to as symbolic. One type of measure is, does the nonprofit use the words that relate to trust and transparency. Examples of symbolic measures are statements upholding high standards of public trust, a statement to be transparent, or a code of ethics. More tangible and specifically recommended in the literature are a list of board of directors or annual reports. Again, the goal is to look for simple measures rather than ones that clearly take more effort such as posting of minutes or the IRS letter of exemption. Further, popular usage demonstrates the confusion a participant, a citizen, a donor, a member might have about what a nonprofit is. Many names for nonprofits are used interchangeably (including the use of the word private to differentiate nonprofit organizations from the public sector). Trust requires awareness that the nonprofit is a nonprofit so a simple measure is, can we tell if it is actually a nonprofit. In a study using a sample of students, the study showed that most students were not able to identify local nonprofits (in Toronto) compared to for profits and governments even though they agreed that nonprofits were more trustworthy than for profits (65%) or government (58%). A majority were able to identify less than 30% of the nonprofits (Handy et al. 2010). To have trust, then involves some ability to recognize that a nonprofit is just that. In the United States, we use nonprofit, not-for-profit, or, less commonly, charity or tax-exempt as indicators of the status of the organization. In addition, some people recognize nonprofits because they are affiliated with the United Way, 5 a BallTransparency-trustpaper.docx 10/7/2013 9

10 nonprofit itself that raises funds for nonprofits through employers. The default is the legal recognition of the nonprofit by the IRS. In the United States, we use odd language, the language of the IRS, to indicate an agency is nonprofit. That is the nonprofit might identify itself as 501(c)3 (the categorization given to nonprofits by the IRS), tax-exempt, provide its 990 form (the form nonprofits submit to the IRs and must be disclosed if requested) or a link to Guidestar, a website that collects IRS 990 forms of nonprofits. The latter two, the 990 form or link to Guidestar, although much more esoteric, also serve as measure of transparency in that they give information about finances. Transparency Measures Is it a nonprofit? To be transparent requires a clear indication that the organization is a nonprofit. A simple measure would be that the organization uses one of the more common words for nonprofit. Most people will not know what tax-exempt, 990 or 501(c)3 mean. I include charity and tax-exempt because the words although less often used and more obscure indicate that an organization is a nonprofit. Words: nonprofit, non-profit, not-for-profit, charity, tax-exempt BallTransparency-trustpaper.docx 10/7/

11 Transparency as symbolic Transparency is now considered a highly regarded value (Etzioni 2010) and as such, the word itself needs to be part of the measure. Transparency often is defined as an open and accountable organization. Any and all words: open, openness, transparent, transparency, accountable, accountability Tangible measures of transparency Can you contact the nonprofit if you have questions? In the course of testing the measures on websites, I found that some basics were often left out. I have included simple measures such as being able to call/ staff and contact the executive director. I discovered that in some cases, an executive director's (CEO, President) name was missing. Sometimes, even when available it was often buried. The critical importance of these simple measures are overlooked or passed over in the literature review. Transparency cannot occur if you cannot find and contact responsible parties. Two simple measures include Executive Director listed Contact information: 1 or on-line site, 1 number and 1 , multiple numbers, multiple s, multiple numbers and- s. Because 1 phone number may have more to do with the size of the agency than transparency, we exclude 1 phone number from this measure of transparency. All nonprofits, at least, have a phone number on their website. BallTransparency-trustpaper.docx 10/7/

12 Fiscal transparency The literature is clear that transparency relates to fiscal transparency. However, neither the IRS or Sarbannes Oxley require any items to be posted on websites so I expect that this is a difficult measure, but is crucial and, therefore, must be included. Further, an audit would give important information. However, it is not required that nonprofits have an audit. Thus, I limit fiscal transparency to three possible measures Any or all Annual Report, 990 form, link to Guidestar Accountability to donors Both Gandia and Dumont and her colleague include an on-line donation as a measure. However, a more practical measure for accountability is what is my money used for? Who is accountable; the Board of Directors is accountable for the financial state of the nonprofit. Board of Directors Donation uses: does the website specify how donations are used Trust Measures I use Bryce's (2007) concept of trust as transactional as the starting point. Trust as transactional 1) by contracting: Has a contract with state government and has indicated funding by government on its website and secondarily on its ) the tax-exemption status itself and donations to the organization To measure this concept requires 3 cumulative measures identifies itself as nonprofit using any or all use words non-profit, not-forprofit, nonprofit, charity, 501c3, 990, tax-exempt and accepts donations and identifies the purpose of the donations 3) commitment to a mission: has an identified mission BallTransparency-trustpaper.docx 10/7/

13 4) employment of social capital, that is how it projects itself, often by its values, its affiliations, shared interests, more so than simply its mission: any and all words: uses volunteers 5) maintenance of its assets that is custodial trust: annual report Symbols of trust A code of ethics was, perhaps, the most frequently cited in the literature as a way to garner trust. However, that requires a good deal of planning and development. I begin by examining whether the nonprofit acknowledges that it is trustworthy, has integrity, is honest. Another simple measure is does it have a mission statement. Secondarily, I look for other policy statements such as a Code of Ethics Any and all the words trust, trustworthy, honest, honesty, integrity Mission or basic historical information about the agency Code of Ethics or other similar policies and statements: privacy statement, antidiscriminatory policy, diversity policies Limitations To measure public trust also requires an investigation of news stories about Indiana's nonprofits. Were there criticisms or even criminal investigations that would affect the public trust no matter what the organization put on the web. Trust has also been viewed as related to the amount of donations and volunteer time, two tangible indicators of trust. To limit the scope of this paper, these measures were not investigated. BallTransparency-trustpaper.docx 10/7/

14 Findings Transparency Findings Is it a Nonprofit? The first hurdle for a nonprofit is to present itself as a nonprofit. As earlier stated, the world of nonprofits is a jumble of names. The database included membership organizations, health clinics, victim services, transition services, resource organizations, foster care and adoption organizations. The search was organized to maximize the number of possible names a nonprofit might use to indicate that they are indeed a nonprofit: nonprofit, non-profit, not-forprofit, charity, tax-exempt. Table 1 shows that fifty-three percent passed this test of basic transparency. Table 1 Transparency Simplified Measures of Nonprofit Transparency Yes Percent Is it clear it is a nonprofit? 56 53% Does it distinguish itself as transparent by the 7 words it uses? Transparent 7 6.7% Open 5 <1% Accountability, Accountable Can you find the Executive Director? BallTransparency-trustpaper.docx 10/7/

15 Measures of Nonprofit Transparency Yes Percent Can you contact? 1 phone number and phone number and multiple s 18 Multiple numbers 10 Multiple s 1 Total can you contact 36 34% Getting hold of the proper person to discuss a service, become a member, speak with the executive director (President, CEO), get help during a crisis is sometimes difficult. We have all experienced the phone with multiple numbers to push before talking to someone. Specifically, can you talk to the Executive Director? Seventy-five percent indicated a name and at times a specific phone number and/or . All nonprofits provide at least a phone number or an , but many used only an on-line format for , not indicating to whom the would go. This seems intended to isolate administration from the public at large and even those who are members, clients, patients and donors. This may be explained in part by the wide array of kinds of nonprofits, some of which provide services to those in crisis such as domestic violence victims. The single phone number is available, but the agency staff do not wish to take harassing calls and provide numbers and as needed. Still, many more of the agencies were helping agencies such as health clinics, foster care organizations, resource organizations such as the Alzheimer's Association and the American Lung Association. BallTransparency-trustpaper.docx 10/7/

16 Is it fiscally transparent? Fiscal transparency is the most common definition of transparency for nonprofits along with accountability to donors. The simplest way is to identify the board of directors. This is a lower burden than having bios of your board members, bi-laws, and an audit committee identified along with the audit report. Sixty-four percent of nonprofits were able to do this. They did not provide the documents that are important to fiscal transparency however. Only 4 out of 105 were able to provide a link and the document itself. Thirty-nine percent had some clear identification of what they used donations for beyond an annotated mission statement. Given that many are using an on-line process to solicit donations these days, this should be far greater. When nonprofits did provide information, they provided a list of tangibles such as clothing or toys or they mentioned a capital campaign and not specific programs. Table 2 reveals trust as a series of transactions that create trust through transparency. Using Bryce's system for the development of trust, transparent organizations are trustworthy because they receive contracts from other agencies. All nonprofits received state funding from the Departments of Child Services, Health, Corrections or Workforce Development. Of the 104 analyzed, 34% indicated so on the website. For contracting transparency to occur it should be obvious then that the nonprofit is receiving government funding. States often pass federal money to nonprofits or other government entities to run a program. Using the simplest measure, government funding of any sort is counted. One nonprofit indicated that it was funded by contracted fees and some large health care clinics indicated that they were federally qualified health centers. Although this requires more insight from the donor, citizen, or participant to understand, these indicators of funding were included as well as well as an BallTransparency-trustpaper.docx 10/7/

17 indication of government funding. Some organizations named the state and local departments that were funding them as partners or supporters just as were foundations and other nonprofits denoting a sense of pride. Table 2 Trust as Transactional Methods to create trust by being transparent Yes Percent Contracting: Is it clear it is receiving 36 34% government funding? Tax-exempt status Nonprofit, charity, 501c (3), 990, tax 56 53% exempt, United Way, tax-exempt Accepts donations or raises funds 74 71% Identifies the purpose of donations 41 39% Commitment to Mission 84 80% Employs Social Capital: uses volunteers 57 54% Custodial Trust Annual Report 33 31% N=105 Following up on this measure, the actual 990s were examined for a portion of nonprofits. On the 990s, 71% reported that they received government grants with anywhere from 1% to 100% of funding coming from government monies. The lack of reporting of government grants by those receiving funding from state government is not indicative of misrepresentation on the 990. Rather, the IRS has not clarified what a government grant means. However, one might expect that those with the greatest amount of funding from BallTransparency-trustpaper.docx 10/7/

18 government would be more likely to indicate this on their website. Of the 8 receiving more than 90% of their funding from government grants, only two indicated any government funding. The two receiving 100% of their funding from state government managed the employment service offices, known in Indiana as Work One, in other states often known as Career Centers or pejoratively called the unemployment office. This is a failure in transparency. Most of us do not review state budget, examine 990 reports, or peruse the Indiana transparency portal. If some nonprofits take pride in their partnerships, evidently there are other nonprofits that do not. A nonprofit shows that it is tax-exempt and thus trustworthy in a three step process. First it shows that it is a nonprofit. The most common indicator of tax-exempt status is the word nonprofit (or some form of the word such as not-for-profit, tax-exempt, charity). One had all 5 indicators, a nonprofit that assists persons during the transition from prison to society. Another three had four indicators. (Note: some nonprofits are not part of United Way because they choose not to be or United Way chooses not to have them as part of its fundraising). Second, it shows that it takes donations; seventy-one percent did so. The final step is to provide information on its use of donations or monies collected from fundraisers. Only 39% did so. The nonprofits were short on specifics about the use of donations. Often they referred to little more than a short-hand version of their mission or simply stated that donations were for our programs and services. These were not included in the count. Where there were specifics it was about in-kind donations such as clothing and toys or capital campaigns. In one case, the nonprofit did have a donor bill of rights. This was counted as an indicator of accountability. BallTransparency-trustpaper.docx 10/7/

19 Although this is a three part test and in that sense difficult, it is a perplexing result given the fact that only nonprofits provide the benefit to donors of a tax-deduction. If a donor doesn t recognize a nonprofit as a nonprofit, how will they know that their donation is tax deduction? If this results holds for the full population of nonprofits receiving funding, then presumably, nonprofits believe that funders, donors, citizens know they are nonprofits and do not need to inform donors on their website that they are nonprofit. This information was compared to a selective group of nonprofits 990 forms Only 22 out of 79 indicated on the 990 that they raised funds or held special events to secure revenue. Again, the IRS does not have clear definitions. Do nonprofits, identify themselves as trustworthy? Table 3 shows that the purpose of the nonprofit is clear. Ninety-three percent provided a history and/or a mission, but few actually stated that they were trustworthy or honest or acted with integrity. More were apt to have specific items such as non-discrimination policies or privacy policies. Few had codes of ethics. Privacy policies were driven by the need to explain to the public their approach to patient privacy for healthcare related nonprofits. Others assured the public using or donating on the website, that their information was safe. BallTransparency-trustpaper.docx 10/7/

20 Table 3 Symbols of trust Measure Yes Percent Symbols of Trust Words: trust, trustworthy, 17 16% honest, honesty, integrity Mission or historical 97 93% information (About us) Words: Code of Ethics, 36 34% Privacy Statement, Antidiscrimination or diversity policy N=104 Conclusion The public often assesses nonprofits simply by familiarity, word-of-mouth, and the visibility of the nonprofit in their community (Szper and Prakash 2011) or increasingly by their websites. This research confirms that whether it is symbolic transparency, such as the words used or more specifics, the idea of transparency, by use of the web, is not in everyday use for nonprofits. As Ball (2009) has stated, transparency is a metaphor to combat corruption, create accountability and promote openness to the public. If transparency is the key to trusting nonprofits, the link is not clear in the nonprofits in the United States. The word transparency, though widely used in Europe, being adopted more and more by politicians in the United States, and argued for by nonprofit professional associations is not yet penetrating the psyche of leaders of nonprofits. Trust is not being promoted by websites. Mission driven nonprofits have long been part of best practices of nonprofits, and this measure is the most prominent. BallTransparency-trustpaper.docx 10/7/

21 Ninety-three percent mentioned their mission or history. A mission does not create the kind of transparency and trust discussed in the literature. Both words have deeper meanings than having a mission. Transparency is a process of opening the organization to the public. One nonprofit, the Arc of Northeastern Indiana (Easter Seals) did fundamentally grasp the idea of transparency and incorporated many of the ideas into its Core Values (Figure 1). BallTransparency-trustpaper.docx 10/7/

22 Figure 1 Core Values - Easter Seals Arc's 'Values' define how we make decisions and interact with each other. These are statements about what we believe and how we work with individuals who are engaged with Easter Seals Arc as clients, donors, volunteers and employees. CUSTOMER FOCUS: We are customer-focused. We value and strive to continually understand and proactively respond to the increasing and changing needs of the people we serve, regardless of their resources. So we need to See It for those we serve. INTEGRITY: We conduct business ethically and with a commitment to moral integrity. We expect people to hold high moral and ethical standards. RESPECT: We respect each other. We value the uniqueness and dignity of each individual and his or her contributions to society. EXCELLENCE: We value excellence. We have a strong commitment to quality and innovation to achieve optimal outcomes for the people we serve. TRANSPARENCY: We are transparent. We support accountability and openness in all our business practices. STEWARDSHIP: We are responsible stewards of our funds and our relationships with clients, donors, volunteers, funders and other supporters. We honor the intent of donors and use resources efficiently and effectively. SHARED PURPOSE: We share a sense of purpose. We are passionate about meeting our mission. We believe that to better meet our mission, we must work as a unified organization. Source: ACCOUNTABILITY: ARC of Northeast We embrace Indiana the principle of See it, Own it, Solve it, Do it Accessed 10/6/2013 BallTransparency-trustpaper.docx 10/7/

23 3rd Global Conference on Transparency Research HEC PARIS, October 24th 26th, 2013 Altman, Stuart., David Shactman, and Efrat Eilat "Could U.S. Hospitals Go the Way of U.S. Airlines? Hospital Market Changes Such as Price Transparency and Specialization Could Have Severe Negative Consequences." Health Affairs 25 (1): Ball, Carolyn "What Is Transparency?" Public Integrity 11 (4): Blodgett, Mark S., and Linda Melconian "Health-Care Nonprofits: Enhancing Governance and Public Trust." Business & Society Review ( ) 117 (2): Brody, Evelyn "Accountability and the Public Trust." In The State of Nonprofit America, edited by L. Salamon. Washington, DC: Brookings Institution. Bryce, Herrington J "The Public's Trust in Nonprofit Organizations: The Role of Relationship Marketing and Management." California Management Review 49 (4): Candler, George, and Georgette Dumont "A Non-Profit Accountability Framework." Canadian Public Administration 53 (2): Colby, David C., Nancy W. Fishman, and Sarah G. Pickell "Achieving Foundation Accountability and Transparency: Lessons from the Robert Wood Johnson Foundation's Scorecard." Foundation Review 3 (1/2): Dumont, Georgette E "Nonprofit Virtual Accountability: An Index and Its Application." Nonprofit and Voluntary Sector Quarterly. Etzioni, Amitai "Is Transparency the Best Disinfectant?" Journal of Political Philosophy 18 (4): Ferman, John H "The Value of Transparency." Healthcare Executive 22 (5):49. Galvin, R "A Historic Change: Now We Have to Make Transparency Meaningful." Modern Healthcare 37 (46):22. Gandía, Juan L "Internet Disclosure by Nonprofit Organizations: Empirical Evidence of Nongovernmental Organizations for Development in Spain." Nonprofit and Voluntary Sector Quarterly 40 (1): Guidestar. The State of Nonprofit Transparency aspx. Handy, Femida, Stephanie Seto, Amanda Wakaruk, Brianna Mersey, Ana Mejia, and Laura Copeland "The Discerning Consumer: Is Nonprofit Status a Factor?" Nonprofit & Voluntary Sector Quarterly 39 (5): Independent Sector Report to Congress and the Nonprofit Sector on Governance, Transparency, and Accountability Final Report. Washington, D.C. Jeremy, Thornton "Nonprofit Fund-Raising in Competitive Donor Markets." Nonprofit & Voluntary Sector Quarterly 35 (2): Keating, Elizabeth K Is It Time to Address Selective Disclosure for Nonprofit Organizations? : The Hauser Center for Nonprofit Organizations Harvard University. McCarthy, Jack "The Ingredients of Financial Transparency." Nonprofit and Voluntary Sector Quarterly 36 (1): McPherson, Bruce "A Transparency Guide." Modern Healthcare 36 (12):22. Melendéz, Sara E "The Nonprofit Sector and Accountability." New Directions for Philanthropic Fundraising 2001 (31): BallTransparency-trustpaper.docx 10/7/2013

24 Mueller, Jens ""When Doing Good Is Just the Start to Being Good": A Possible Tool to Improve the Organizational Effectiveness of Non-Profit Health Care Organizations." Journal of Hospital Marketing & Public Relations 17 (2): National Council of Nonprofits Ethics and Accountability in the Nonprofit Sector. 'accessed' Oct 1. Nezhina, Tamara G., and Jeffrey L. Brudney "The Sarbanes Oxley Act: More Bark Than Bite for Nonprofits." Nonprofit and Voluntary Sector Quarterly 39 (2): O'Neill, Michael "Public Confidence in Charitable Nonprofits." Nonprofit and Voluntary Sector Quarterly 38 (2): Piotrowski, Suzzanne, and Gregg Van Ryzin "Transparency in Local Government." American Review of Public Administration 37 (3): Roberts, Alasdair Blacked Out: Government Secrecy in the Information Age. New York: Columbia University Press. Saxton, Gregory D., and Guo Chao "Accountability Online: Understanding the Web-Based Accountability Practices of Nonprofit Organizations." Nonprofit & Voluntary Sector Quarterly 40 (2): Saxton, Gregory D., Jenn-Shyong Kuo, and Yi-Cheng Ho "The Determinants of Voluntary Financial Disclosure by Nonprofit Organizations." Nonprofit and Voluntary Sector Quarterly 41 (6): Stone, Warren S., and James Wilbanks "Transparency and Accountability: A Look at Non- Profit Internet Website Content." Insights to a Changing World Journal (3): Szper, Rebecca, and Aseem Prakash "Charity Watchdogs and the Limits of Information- Based Regulation." Voluntas: International Journal of Voluntary & Nonprofit Organizations 22 (1): Taylor, Marilyn "Between Public and Private: Accountability in Voluntary Organisations." Policy and Politics 24 (1): Excludes religious organizations although some file; excludes nonprofits with less than $50,000 in gross receipts. See IRS 2 The Guidestar survey found only 43 percent posted their annual reports. A much smaller proportion (13 percent) posted their audited financial statements, and a miniscule number (3 percent) posted their letters of determination. 3 I found no nonprofits contracting with the Department of Education. 4 By fiscal year, by agency name, by account name 5 The United Way, itself a nonprofit, is an organization that serves as an umbrella agency to raise and distribute donations for nonprofits by raising funds from employees through payroll deductions. Thus it is an indicator that an organization is a nonprofit. BallTransparency-trustpaper.docx 10/7/

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