The Importance of an Open-Book Policy

By Yoram Samets

[ed. note: This post was written for eJP with the synagogue world as the intended audience. As the issues raised have wide applicability, with the permission of the author, we have modified the post to reflect the broader organizational world.]

I believe it is every stakeholder’s (including employees and members) responsibility to provide financially for the success of their organization. I also believe that there are many different ways to financially support your organization. One opportunity that would make a big difference to the organization’s financial success would be to bring the financial/business issues out of the back room.

Most of us receive yearly fundraising appeals, membership dues reminders, and messages about the myriad schemes created to raise money for our organizations. But few of us understand what is behind the ongoing need to raise money. Few of us think about our organization as a business, or understand what it takes to run an organization today.

By and large, the system most organizations use to financially run their operations is directly related to the past, and not the future. The costs of operating our organizations – and how they will raise the revenue necessary to be successful – is often a closed-door conversation among a few board members and key staff.

Many businesses have moved to an “open-book” policy – where they share the financial successes and failures with their employees. The primary purpose of this kind of transparency is to get more employees to think like owners. If business can move toward an open structure that results in a more successful operation, why don’t Jewish organizations follow?

As a nonprofit business, the organization already publishes its revenue and expense budgets for the stakeholders to see and vote on (including the filing of IRS 990). Why not take “open-book” approach and make it part of the organizations’s ongoing culture?

Here are some of the advantages to exploring this idea:

• Teach and motivate your members. You have already opened the books to get your budget approved by the board (or membership), why not update the numbers monthly? This will unify and motivate everyone to act differently.
• Increase organizational trust. In the culture we live in, we see the continued erosion of trust in our institutions. Operating in an open-book environment increases trust through open, honest information.
• Open-books end organizational ignorance. Most organizations have a constant need to raise more revenue. Everything costs more today, even if you do nothing to add to expenses. Having an open-book process enables more members to understand the business of the organization. It enables stakeholders to see the strengths and the weaknesses of the business side of the congregation. This is all about providing information on an ongoing basis. Information leads to greater business success.
• Community teamwork. Neither being on the fundraising committee or being the member that is asked for money is an enjoyable situation. And both roles are often made worse because neither really understands the business issues that are driving the need for the revenue. When all members have the same financial understanding, they tend to support one another, pull together, and achieve the community’s objectives.

Open-books encourage innovation. Your organizations’s successful financial future is directly tied to improving its process and procedures. Open books will engage more stakeholders to contribute more money, volunteer more time, and provide new ideas to improve the organization’s operation.

So what are you waiting for? Open your books and you will see many wonderful improvements in your community.

Yoram Samets is co-founder of Jvillage Network.