Transparency is one core components of accountability. It often involves making information about the nonprofit organization available for public scrutiny. This research study examines the use of transparency by 501c3 nonprofit organizations in Spartanburg, South Carolina and compares that to other nonprofits organizations throughout the United States.

1. Best Practices in Nonprofit Transparency:
A Comparative Study of Upstate South Carolina and the United States
Angela Cannon, Alexander Dukes, Joyasha Hicklin, Julia Holt, Laurel McAlister, Shelby
McKinney, Nicholle Oltz, Suzi Sears
Nonprofit Leadership
Johnson College of Business and Economics
160 East St. John St., Spartanburg, SC 20306
cannona6@email.uscupstate.edu, dukesag@email.uscupstate.edu, hicklinj@email.uscupstate.edu,
holtjy@email.uscupstate.edu, mckinnsf@email.uscupstate.edu, oltz@email.uscupstate.edu,
searsm@email.uscupstate.edu
Abstract – Accountability is a cornerstone of successful nonprofit organizations. Although definitions vary, it is often defined as
the means by which nonprofit organizations are held responsible for their actions. (Edwards, 1996) Transparency is one core
components of accountability. It often involves making information about the nonprofit organization available for public
scrutiny. This research study examines the use of transparency by 501c3 nonprofit organizations in Spartanburg, South Carolina
and compares that to other nonprofits organizations throughout the United States. The results indicate that 501c3 nonprofit
organizations in Spartanburg should better align their transparency reporting to best practices standards.
Keywords – accountability, transparency, nonprofit, best practices
Introduction
“Being transparent with relevant information is how nonprofits demonstrate accountability.”(GuideStar, 2009)
Nonprofit organizations have a legal and ethical obligation to be transparent and accountable. (SCANPO, 2007)
The more open and trustworthy organizations are, the more they will be viewed by the public, donors, and funders
as deserving of their support. Operating in a transparent manner is one of the best ways to develop and maintain
trust with the public. The most recent survey by GuideStar USA, Inc. (2009) suggests that a majority of nonprofits
in the United States disclose some information on-line but few adhere closely with published best practices.
(Gandia, 2011; McCarthy, 2007; Nezhina, 2010; Saxton, 2011). The purpose of this research study is to compare
nonprofits in Spartanburg, South Carolina to nonprofits across the United States and make best practice
recommendations where appropriate.
Methodology
In order to compare best practices in nonprofit transparency between Spartanburg, South Carolina (local) and the
United States (national), a sample size of 287 organizations were randomly selected from 905 possible
organizations. The sample size was determined by using the finite population correction factor. (Lind, 2010)
GuideStar, an on-line watchdog nonprofit organization based in the United States, was used to identify the local
organizations. (GuideStar USA, Inc. (2009) A data collection template using Microsoft Excel was developed for
documenting program information, board and staff members, letter of determination, annual reports, audits, and
privacy policies.
Chi-squared statistics were used to test the null hypothesis that there was no difference between transparency
reporting in Spartanburg, South Carolina and United States nonprofits at the .05 significance level with a critical
value of 3.841.
Results
Using chi-square test statistics the null hypothesis was rejected in the following areas (p-value <0.001). On-line
transparency (local verse national) was found to be:
• Programs/services (27% vs. 93%);

2. • Board list (28% vs. 73%);
• Staff list (19% vs. 70%);
• Annual report (13% vs. 43%);
• Audited financial statements (6% vs. 13%);
• Privacy policy (8% vs. 37%)
Researchers failed to reject the null hypothesis regarding the on-line reporting of IRS letters of determination
(9% vs. 3%, p-value 0.01).
Conclusions
Many nonprofit governance practices have transparency as one of its main guiding principles. Some of the
transparency principles are required by law while others represent the belief that they should be used as a matter of
good accountability practices. GuideStar USA, Inc. (2009) represents the leading standards for transparency and
recommends that nonprofits should regularly update their websites by posting: program and evaluative information;
names, titles and biographical information on board members and key staff; annual reports; audit statements; and the
IRS letter of determination. The South Carolina Association of Nonprofit Organizations, the South Carolina
nonprofit advocacy group, recommends that “organizations prepares and makes available to the public annually a
report that includes information about the mission, programs, basic financial data, board and staff members and
volunteers.” (SCANPO, 2007, p. 11)
It was concluded that nonprofit organizations in Spartanburg, South Carolina were statistically different, i.e., less
transparent, in most cases when compared to other nonprofits throughout the United States (on-line reporting of
programs, board and staff members, annual reports, audited financial statements, and privacy policies). There was
no evidence of a difference in transparency between Spartanburg and United States nonprofits with reporting on-line
letters of determination.
Non-profits in Spartanburg especially, but nonprofits throughout the rest of the United States as well should
better align their on-line reporting with current best practices in transparency.
For an on-line example of best practices, nonprofits may review the Nonprofit Leadership Alliance (NLA) home
webpage at www.nonprofitleadershipalliance.org. The NLA annually posts on-line their by-laws, annual reports,
conflict of interest statements, audited financial statements, IRS Form 990, and provides links to the nonprofit
watchdog groups GuideStar (www.guidestar.org) and Charity Navigator (www.charitynavigator.org). One of the
nine competencies identified by the NLA for emerging nonprofit professions is: Financial Resource Development
and Management - Transparency and accountability as critical values in nonprofit organization.
Acknowledgements
The University of South Carolina Upstate Nonprofit Leadership Alliance Student Association would like to thank
our faculty sponsor and advisor, John T. Long, Ph.D., USC Upstate, Johnson College of Business and Economics,
Nonprofit Leadership, for his guidance with this poster presentation.
Thanks also to: Dr. Frank Rudisill, USC Upstate, Dean of the Johnson College of Business and Economics for his
statistical assistance and Dr. Ron Romine, USC Upstate, Professor Emeritus, Political Science, Department of
History, Political Science, Philosophy, and American Studies for his financial assistance.
References
Edwards, M., and Hulme, D. (1996). Too Close for Comfort? The Impact of Official Aid on Nongovernmental
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Gandia, J. (2011). Internet Disclosure by Nonprofit Organizations: Empirical Evidence of Nongovernmental
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3. GuideStar USA, Inc. (2009). The State of Nonprofit Transparency, 2008: Voluntary Disclosure Practices,
Washington, D.C., retrieved from http://publications.guidestar.org/transparency-report/ on December 10, 2012.
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