Finally, the nonprofit sector will get the international financial standards we need

Blog

July 16, 2019

Finally, the nonprofit sector will get the international financial standards we need

By Tim Boyes-Watson

Global Director, Alliances & Advocacy

Trust in our sector and civil society space are under attack. So how, as operations staff, can we best defend our organizations and our sector? By doing what we do best - ensuring we do high quality work and then reporting on that work with full transparency and accountability to all our stakeholders. This requires standards.

And yet unlike the private and public sectors, the non-profit sector has no international accounting standards. Instead the trillions of dollars that get spent by our sector get reported on in all sorts of ways in different countries, creating complexity, confusion, duplication waste and sometimes fraud in international grant-making. This undermines transparency, accountability and trust in our sector. 

We, as a global community of non-profit professionals, have been working with many partners for nearly 10 years to make the case for international accounting standards in the non-profit sector. We started this campaign with a call to Stand up for Standards in the Charity Finance Yearbook of 2011.

This led in 2012 to a meeting with representatives of the International Accounting Standards Board (IASB) and the International Public Sector Accounting Standards Board (IPSASB), together with senior members of three leading UK professional accounting bodies and the Charity Commission.

In 2014, CAAB, which is a joint platform of the UK and Ireland’s accounting bodies, funded independent research into the need for international accounting standards for not for profit organisations (NPOs). This found that 72% of 605 respondents involved in NPO reporting in 179 countries agreed that, “It would be useful to have international standards for NPO accounting.”

This research persuaded the IASB to consider extending its remit to cover non-profit accounting in 2015. However, despite receiving more responses than ever before to a public consultation on this matter, the IASB decided against this at that time. Crucially, the IASB's Trustees did state that they support the need for transparent financial reporting requirements for nonprofit organizations. They therefore decided that the IASB should be involved in any initiatives or working groups regarding financial reporting standards for the NFP sector and contribute as necessary. We'd like to remember the 162 non-profit organizations that supported our campaign back in 2015, many of who wrote letters to the IASB, and therefore helped secure this commitment by the IASB. We've included the names of all those organizations at the end of this article to say thank you and acknowledge their vital support. We hope these NGOs will now engage in developing the new guidance.

We are extremely grateful for the leadership shown by CIPFA in working with the International Forum of Accounting Standard Setters (IFASS) to create a non-profit working group to take on this opportunity provided by the IASB. This led, in 2017, to the launch of an international not-for-profit reporting platform on CIPFA's website.

Since 2017, Humentum and CIPFA have been working to attract support from the funding community for the IFASS non-profit working group to develop much more robust and rigorous guidance on financial reporting for the non-profit sector, which requires extensive engagement and consensus building between accounting standard setters from many countries and other stakeholders especially funders, governments, regulators and non-profit organisations.

We are therefore thrilled that two of the world’s largest funders of the non-profit sector globally have agreed to be founding funders for this initiative: The Ford Foundation and the Open Society Foundations. Humentum has been working with these foundations for some years to help them grapple with the complexity, variability and sometimes questionable quality of their grantees' audited financial statements. Ford and OSF are leading by example, backing an initiative that will solve a key pain point in a way that will benefit all international grant-makers. You can hear from John Bernstein, COO at Ford Foundation, about why they are backing the initiative.

Ford and OSF are the founding funders for this initiative, but we will need the support of many more funders if we are to achieve our ambition of developing the guidance needed over the next 5 years. If you are a funder who might be interested in making a contribution to this project, or can introduce us to a funder that might, please contact our Project Director Samantha Musoke, at sam.musoke@humentum.org, or contact me on Linked-in.

We were so excited to launch this project in the heart of our Humentum community at our conference attended by over 1000 non-profit professionals in Washington DC on July 11, 2019. The press release is available here.

The future guidance that will be developed over the next 5 years will only be as good as the engagement we get from all key stakeholders across the world in its development. We are working to ensure this will be as inclusive as possible and will be organizing events and roundtables in many countries over the course of the project. We also need to recruit members of Practitioner Working groups. To find out more and register to engage and receive updates please visit our project page NOW! Be part of our journey to a more transparent, accountable and trusted sector. Our sector needs you!

We'd like to acknowledge and thank all the following organizations that joined our campaign in 2015 to secure support for developing the world's first ever international financial reporting guidance for the non-profit sector:

 

ACCESS Development services

ADRA China

ADRA Pakistan

Adventist Development and Relief Agency Timor-Leste (ADRA Timor-Leste)

Adventist Development Relief Agency Sri Lanka (ADRA SriLanka)

AECP Niger

AFOH-UNOPS

Agency Coordinating Body for Afghan Relief and Development (ACBAR)

Alhammad Educational Society Sargodha Pakistan

ALIVE Medical Services

Alliance for Development Solutions

Anglican Aids Programme

ANMA-KENYA

ARAMA RWANDA

ASMEDI asbl

Association of Evangelicals of Liberia (AEL)

Assocation pour le developpement et la solidarite islamique

Asylum Access, Tanzania

Baptist Aid-BBCF

Bareebo

Bawinanga Aboriginal Corporation

Blue Diamond Society

BNWLA-Bangladesh National Women Lawyers Association

Breakthrough

British Council

Broederlijk Delen vzw (Belgium)

Caritas Banmaw

CENTRE D'APPUI PEDAGOGIQUE

Centre for Environment, Human Rights and Development

Center for Justice and Peace Studies (CJPS)

Charity Centre for Children and Youth Development

Chibuzor Human Resources Development Organization

Childfund Sri Lanka

Child Soldiers International

Child's I Foundation

CHS Alliance

Coalition of Women Living with HIV/Aids (Cowla)

Community Development Agency

Compassion International

Concern Worldwide

Connect Network

CONSEIL NATIONAL DES ONG DE DEVELOPPEMENT DE LA RDC

Dambari Wildlife Trust

Deepti Bhuban

Development Workshop

DirectAid

Disabled Peoples Oganisations Denmark - DPOD

Elison Decision Support Services

Equal Education Fund

EUCORD

FECCLAHA

Felix Foundation

Fern

FNV

Forest Peoples Programme

Friends-International

Fundacion Manos de Amor

GF

Ghana Developing Communities Association

Global Aid Hand

Global Mass Community (Welfare Organization)

Global Media Foundation

GOD'S LOVE HOME

Grenoble School of Management

GROUPE D'APPUI AUX EXPLOITANTS DES RESSOURCES NATURELLES - RDC

HELPAGE INDIA

HelpAge International

HELVETAS Swiss Intercooperation Ethiopia

Hope Trust

Human Expectation

Human Resource and Social Information Centre (HURESIC)

HURESIC (Human Resource and Social Information Centre)

INITIATIVE FOR EDUCATION AND DEVELOPMENT

Integrated Regional Support Program (IRSP)

International Rescue Committee

InsideNGO

Jewel Health and Development Initiative (JEHDI- Nigeria)

Karopa Intergrated CBO

Kukumbi Mozambique

LIVELIHOOD DEVELOPMENT FOR HUMAN RIGHTS PROMOTION- SIERRA LEONE

Lungujja Community Health Caring Organisation

Manion Daniels

Marie Stopes Sierra Leone

Media Monitoring Project Zimbabwe

MEK Community Development

MHA MacIntyre Hudson

Molly's Network

MSF Southern Africa

MU-JHU Care Ltd

Myanmar Red Cross Society

Nascent Solutions Inc.

National Election Observation Committee

National Service Learning Institute - Liberia

Near East Foundation

Ngo-Federatie

NhakaAfrikan Worldview Trust

OCAM National organization South Sudan

Open Society Foundations

Organization for Non-violence and Development 

Oriental Women Organization

Oxfam Novib 

Pacific Theological College

Pancaran Anugerah

Pastoralist Development Network of Kenya (PDNK)

Patient Helping Fund - Sudan

Pentecostal Mission Unlimited-PMU Liberia

Plan International

Prison Fellowship Zimbabwe

Queen Mary University of London

Queens World Network 

RADDHO

Renew'N'Able Malawi

Rescue Heart Africa Foundation

Research Triangle Institue - International, LEAD Nigeria Project

RETRAK

Restless Development

Right To Play, Ghana

Rinda Ubuzima

RUJEWA INTEGRATED EFFORTS TO FIGHT POVERTY (RIEFP)

Save the Children International 

SEARCH - Liberia

Send a Cow

Share An Opportunity Uganda

Siiqqee Women's Development Association (SWDA)

SIL International

Social Welfare Advancement Committee (SWACO)

Somali Humanitarian and Development Action (SOHDA)

SOS Children's Villages Nigeria

SOS Sahel Ethiopia

South Sudan Action Network On Small Arms (SSANSA)

S.T.R.A.W. Inc. Center for Young Women

Street child of Sierra Leone

Substance Abuse Research Association (SARA)

Sudan Open Learning Organization

TAYA

The Asia Foundation

The Children Support Organisation Mpigi

The Foundation for Civil Society

The Gardener Africa Foundation

THETA UGANDA

Transparency International Cambodia

Trócaire

United Mission to Nepal

VisAbility Limited

Vision Welfare Group

Vivekananda International Health Centre

Volta Educational Renaissance Foundation (VEReF)

Vredeseilanden VZW

War Child

WaterAid

Welthungerhilfe

Women Acting Together for Change (WATCH)

Women Against Violence and Exploitation in Society

Women LEAD

Women's network for environmental sustainability

World Vision International

WSM Wereldsolidariteit -Solidarité Mondiale (Belgium)

WWF International

Youth Business International

Youth Empowernment Strategies In Developing Opportunities (YES I DO)

YUWA

ZOA

 

## Comments

Login to join the discussion.