Room to Read recently earned our eighth consecutive 4-star rating from Charity Navigator, an honor bestowed upon only 1% of their rated charities. To learn more about this recognition read our press release here.
Joanne Chou has served as Room to Read’s Chief Financial Officer since 2008. She has over 20 years of experience in law, banking and international trade, real estate and corporate finance, investment management and marketing strategy. We sat down with Joanne to ask about the importance of sound financial management for the nonprofit industry and share her thoughts.
Why is sound fiscal management so important in the nonprofit sector?
In order for the nonprofit sector to truly effect change, it must abide by the same set of business principles as the for-profit sector. Ethics, transparency, and accountability are assets to every organization and crucial to gaining and maintaining public trust. The market for philanthropic investments is becoming increasingly competitive. Intelligent and savvy donors want to ensure their funds are being utilized responsibly and nonprofit organizations must be accountable if they seek to uphold a positive reputation.
What are some ways Room to Read uniquely maintains its commitment to financial responsibility and efficiency?
Room to Read was set up with a clear business model based on sustainability and efficiency. We keep our overhead low by watching our expenses and using in-kind donations, particularly for program needs. We take great pride in our financial efficiency, our accountability to donors and beneficiaries, and our transparency. Because we believe the best way for projects and programs to succeed is to have them run locally, we maintain offices in each of our countries to do the work in the field. We also ask that the communities themselves invest in the projects, whether through labor, supplies or services—that approach keeps our expenses lower, but also ensures a local buy-in which makes the libraries and schools a real part of the community and supports long-term sustainability. Our chapter network, the enlistment of 14,000 volunteers in nearly 50 cities who are committed to fundraising and raising awareness about Room to Read and the issues of literacy and gender equality, also helps ensure we use every dollar contributed as efficiently as possible. This network of passionate individuals raises approximately 1/3 of our annual budget each year.
Why are ratings and reviews from third party organizations like Charity Navigator important?
Charity Navigator, as an independent evaluator of U.S. charities, provides a benchmarking system against which the financial and reporting behaviors of rated charities can be assessed. Every non-profit espouses its own various operating procedures and not all processes, albeit ethical, lend themselves to the criteria of certain benchmarking systems; however, for Room to Read and many of our investors, our 4-star rating is a testament to our core business principles of accountability and transparency. In our experience, it encourages supporters to place their trust in us as we direct their investments toward our programs and operations.
As a finance and accounting professional, what advice would you give other nonprofits?
A nonprofit environment requires as much rigor and accountability as a for-profit environment and it’s important to maintain a culture where that is embraced and understood throughout the organization. Staying in touch with the organization’s mission is critical and it is important to take actions to ensure that staff worldwide, including finance and accounting teams, are exposed to the organization’s programmatic work—this deepens their understanding and commitment to the tasks they do. Finance and accounting professionals have a strategic role in a nonprofit—in terms of operations, reporting, and decision making.
To take a deeper look into our finances, please visit the financial page on our website.