Transparency boosts contributions to nonprofits—by 62% 

Nonprofits are facing fierce competition for funding amid increased demand for services. We need to find ways to get donors’ and funders’ attention—whether individuals, foundations, or corporations—with a compelling case for support. At Candid, we’ve long believed that one way is to be transparent—publicly sharing information about their work and their outcomes. Our latest white paper backs this up. Data confirms that nonprofit transparency boosts contributions—in fact, funders give 62% more on average to organizations that devote the time and effort to earn a Candid Seal of Transparency.   

What are ‘transparent’ organizations? 

One way nonprofits can demonstrate transparency to funders is by earning a Candid Seal of Transparency. Candid creates an online profile for every tax-exempt organization in the United States. Nonprofits can choose to share information about their organization on their profiles—including mission, donation information, program information, financial reports or IRS filings, and/or leadership and board demographics. They can earn a Bronze, Silver, Gold, or Platinum Seal of Transparency depending on how much information they provide. 

We explored the return on investment of earning a Seal of Transparency and whether it led to more donor contributions.  

About the dataset   

We examined 501(c)(3) organizations that filed the IRS Form 990 in fiscal year end 2022 and 2023 (the most recent years for which the IRS has released comprehensive filing data). Of the 148,786 nonprofits analyzed, 23% had a Candid Seal of Transparency displayed on their profile. We examined whether having a Seal (among other organizational characteristics) in 2022 impacted contributions the following year.  

n = 148,786 

Here’s what we learned: 

Finding 1: It pays to be a transparent organization 

Our study found that organizations with a Candid Seal of Transparency averaged 62% more in donor contributions than those without a Seal. We used best practices for assessing the impact of transparency as established in previous academic research and leveraged statistical methods to control for a variety of other organizational characteristics that could influence contributions, e.g., organizational size, financial health, age, governance practices, and the likelihood of being transparent in the first place. The results demonstrated that, even accounting for those other factors, nonprofit transparency was associated with higher contributions. 

Finding 2: Small organizations also benefit from nonprofit transparency 

We were particularly interested in understanding the benefits of transparency for small nonprofits—defined as those with under $1 million in revenue or expenses. We found similar results as for the overall dataset: Small nonprofits with a Candid Seal of Transparency received 61% more contributions than comparable organizations without one.  

This is encouraging, as earning a Seal of Transparency may help level the playing field for small organizations. The research indicated that increased contributions are also linked with having large fundraising budgets and sizable assets—but these are, by definition, inaccessible to small organizations. Transparency, however, is possible for nonprofits of any size. Small nonprofits likely have more limited capacity, but earning a Seal is not arduous; we estimate that it takes about 15 minutes to share the basic information required to earn a Bronze Seal of Transparency.  

Our results affirm that funders value nonprofit transparency. In fact, it may be more important now than it was 10 years ago, when researchers first examined this question. There is, of course, no guarantee that earning a Seal of Transparency will automatically increase donations—successful fundraising still requires delivering strong programs, being fiscally healthy, and actively engaging with donors. But transparency matters and contributes to more funding.  

How to show you’re a transparent organization 

Start by claiming your organization’s Candid profile. You can decide what information you want to share about your organization with potential funders on your profile. If you earn a Seal of Transparency, be sure to share it on your website and social media channels. Small nonprofits get an extra benefit: Those with annual revenue or expenses below $1 million that earn a Gold Seal of Transparency are eligible for a free year of access to Foundation Directory Professional to identify and connect with potential funders.   

For more detailed research results and methodology, please see our white paper.