Budget Transparency

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Budget Transparency

Budget transparency is one of the financial processes where the government or private bodies disclose all the necessary financial information in a systematic and timely manner. Budget transparency requires that all the stakeholders are involved during the budgeting process to foster transparency and eliminate the issues of corruption and improve on accountability. It also allows the stakeholders to contribute their views on how the money can be used. One of the issues that is clearly evident in the case of American Library Association is the lack of budget transparency in the body. The leadership of the organization made decisions that impacted the financial status of the organization thus creating enormous deficit. When members of the ALA met during their Midwinter meeting, the primary objective was to discuss issues of governance within the body. However, this did not happen because of financial issues that came up during the meeting.

The American Library Association was operating on a deficit of two million dollars and this came as a surprise to the stakeholders. What is clear from this meeting is that most of the stakeholders were not aware that the ALA was operating on a deficit. This shows the inadequacies from the management who were not transparent on the budgeting process of the organization’s funds. Another effect of budget transparency that came out during the meeting is the sale of the organization’s headquarters. The members from various divisions were surprised to learn that the proceeds of the sale of the organization’s headquarters had been placed into the endowment despite the shortfall on the operating funds in the organization. This is another case of lack of transparency from the organization’s management. According to Schwartz (2020), “Brown acknowledged “significant unplanned deficits” and “significant missteps,” and committed to “better communication” and “repairing trust.” Brown’s admission of significant unplanned deficits demonstrates a lack of budget transparency in the American Library Association and this is the major cause of the deficits experienced in the organization.

Budget transparency is one of the leading causes of better budgetary outcomes. Budget transparency is often facilitated by the people in leadership positions in organizations. These are the people who determine the outcome of a budget. Poor leadership during the budgetary process affects the financial status of organizations and can lead to financial deficit as depicted by the financial crisis in the American Library Association. As noted by American Library Association leadership in their response to the Midwinter meeting that ended with frustration from members, “ALA policy, divisions and other units are expected to be strong, strategic stewards of their funds and provide fiduciary oversight” (ALA, 2020). ALA leadership acknowledged in their response that Divisions and other stakeholders should play an oversight role in ensuring that there is transparency on how finances in the organization are utilized. However, it is clear from the Midwinter meeting that there is a lot of financial information that was not shared by the management of the ALA and this resulted in a deficit that affected the operations of the organization. Therefore, leaders play a critical role in ensuring that there is transparency during the budgeting process in organizations.

References

American Library Association. (2020, February 14). ALA responds to financial situation [Press release]. Retrieved from http://www.ala.org/news/press-releases/2020/02/ala-responds-financial-situation

Schwartz, M. (2020, February 7). American Library Association’s $2 million shortfall prompts demands for transparency, reform. Retrieved February 13, 2020, from Library Journal website:

https://www.libraryjournal.com?detailStory=American-Library-Associations-2-Million-Shortfall-Prompts-Demands-for-Transparency-Reform-ALA-Midwinter-2020