Accounting Board of Standards -- New Demands on Non-Profits

Today the Accounting Board of Standards' Non-Profit Advisory Committee released its finding that non-profits should improve their financial reporting.  Hurrah.

The Committee made recommendations for changes in accounting rules that would:

• Make it easier for donors to compare organizations' financial information.
• Provide analysis similar to what for-profit companies give to their shareholders.
• Reduce complexity in financial reporting.

Strong non-profits -- no matter how large or small -- require strong financial management.  And if an organization is well managed financially, it is not so difficult to tell that story to the public...

To share 990 and audit reports... To provide information about the cost (and real value) of infrastructure... To talk about the return on investment in program accomplishments.

The standards for disclosure, appropriate costs for fundraising and management, dialogue with donors on organizational financial performance are all CHANGING.

We can be dragged into the new world in a way that does everything BUT inspire donor confidence, or we can get ahead of the curve by adopting standards for accountability that build donor trust and support. Seems like an easy choice to me.

Is There An Upside to Telling Donors When Things Go Wrong?

An interesting blog for the Chronicle of Philanthropy highlighted a new effort by a Canadian non-profit, Engineers Without Borders Canada,  to be upfront about their own mistakes and "to get a seemingly simple but virtually non-existent practice adopted throughout the development sector.”

They have a website which explains the effort called  admittingfailure.com.

Do donors and prospective donors want us to admit failure?  Sometimes the truth is a powerfully good thing and increases an organization's credibility; sometimes it is the last thing people really want to hear.  Whomever is the first to gain the publicity on telling the truth will certainly receive acclaim.  

It's a bold move to emphasize the power of collective learning over the fear of potentially upsetting a funding source.  A donor I worked with many years ago, who over the course of our working relationship gave several million dollars to the charity that employed me said recently that it was the quality of our relationship that made the organization I worked for stand out among other charities.  It was, I think, our willingness to be optimistic but honest that set us apart.