Nonprofits Spend Too Much Time Reporting To Funders: A Single Universal Template Could Help

(MENAFN- The Conversation) Imagine being asked to prepare monthly reports that all demand their own classifications, measurement bases and templates.

This is the reality that nonprofit organisations (NPOs) face across the world.

In a recent paper, my co-authors and I present findings from interviews with 21 nonprofit stakeholders from South Africa, the UK, the US, Sweden and Uganda. The aim was to understand the reporting challenges they faced, and to consider possible solutions.

One NPO spends two weeks each month just reporting to donors. The problem is not how much information is required, but that each donor uses different templates to request largely the same information.

The lack of standardisation matters because funding is scarce and every hour and dollar spent repackaging the same information is an hour and dollar not spent, for example, feeding vulnerable children, protecting endangered species or educating disadvantaged communities.

Part of the problem is a lack of globally accepted and adopted reporting frameworks that satisfy donors' and other users' financial and non-financial information needs. At present, many NPOs comply with financial accounting frameworks. But these were designed for entities with a fundamentally different purpose: profit-making.

The International Non-Profit Accounting Standard, launched in 2025, marks a significant milestone for NPO standardisation. But, while it includes some non-financial reporting, it is primarily a financial accounting framework.

Consequently, many donors need more non-financial information and design their own templates. However, these often request irrelevant information while omitting other useful information.

Our research developed the Civil-Society Organisations Reporting Practice (CORP) framework. The goal is not another layer of compliance reporting, but a common reporting structure that integrates financial and non-financial information to meet users' general information needs.

This reduces the need for donors to waste time developing templates themselves. It also reduces NPO stress and anxiety when trying to meet all their stakeholders' needs.

Why profit tells the wrong story

Financial reporting is largely developed around the needs of investors and lenders. They care about cash flows, financial position and a company's ability to generate financial returns. Applied to nonprofits, these metrics can distort more than they reveal.

Read more: Nepal floods: China's strict control of Tibet makes it harder to prepare for Himalayan disasters

Why?

Because NPOs deliver social and environmental services to those who cannot pay for them. They don't try to make profits. To illustrate, consider two otherwise identical NPOs that each receive R10 million.

NPO A spends R1 million on salaries and R9 million delivering services. At year-end, it reports no surplus and no financial return.

NPO B also spends R1 million on salaries but nothing to advance its mission. At year-end, it reports a R9 million surplus, R9 million in net cash inflows and a strong balance sheet.

NPO B appears to significantly outperform NPO A but has provided no social or environmental services. In contrast, NPO A used all its resources for precisely its intended purpose.

While deliberately extreme, the example highlights why using financial performance alone can be misleading and incentivise bad behaviour. Organisations can appear financially stronger by accumulating cash and cutting programme costs – precisely the behaviours that limit impact.

Non-financial information is vital. Suppose a maths tuition NPO delivers 1,000 lessons. This is its output. Comparing participants' and non-participants' pass rates helps assess outcomes. Most importantly, impact asks what happened in the longer term: did participants enter and graduate from university, find employment and ultimately improve their households' circumstances?

The distinction between outputs, outcomes and impact matters. NPOs can be busy but make no difference to society. Outputs speak to effort; outcomes to short-term changes; and impact to whether NPOs are actually making a difference.

Reporting impact is the hardest and could be costly. Accordingly, reporting must be proportional, balancing costs with benefits.

Accountability in both directions

Donors dominate what nonprofits report as they, understandably, want evidence that their money is being used as intended. It's known as upward accountability.

But this risks letting donors define what“good” and“bad” NPO performance looks like, potentially driving undesirable behaviour.

It can also exclude the people that NPOs exist to serve.

Downward accountability is needed to balance this power relationship. Beneficiaries should be able to evaluate NPO performance and influence service delivery. A tuition programme may have excellent pass rates but inadvertently exclude under-resourced learners if lessons finish after the last bus departs, leaving those without private transport unable to attend. Such feedback helps NPOs and donors understand what is needed to drive impact.

An integrated structure

Our framework contains five elements.

First, a report from the CEO or trustee explaining:

the NPO's theory of change – how its activities are expected to create impact

strategy – how it plans to achieve its objectives

commentary on past performance and future expectations.

This will help donors and beneficiaries assess whether their interests and needs align with the NPO's mission and activities.

Second, a report providing key historical financial and non-financial information with year-to-date information – what we've termed a flash report. This is key because contexts change quickly and users need certain information to stay up to date.

Third, a statement of credibility addressing legitimacy risks, including concerns about NPOs being used for self-enrichment. It reflects the NPO's legal status, governance structures, assurance arrangements, track record and key partnerships, which provide important signals about which NPOs to engage and which to avoid.

Fourth, a statement of activities in which the NPO integrates financial and non-financial information to tell its story and facilitate comparability.

Financial statements, summarised or linked, complete the picture.

Next steps

Standardising reporting structures is not the same as making NPOs look alike. The content will – and should – differ. A common structure reduces the cost and anxiety of reporting while allowing users to find what they need without first decoding unfamiliar documents.

Helping the NPOs that serve society and the environment requires NPOs, governments, donors, beneficiaries, academics and standard-setters to work together towards a commonly accepted and adopted NPO integrated reporting framework.

The International Non-Profit Accounting Standard provides an important foundation in this direction while our framework provides a complementary non-financial starting point for further testing, refinement and, ultimately, acceptance by those who produce and use NPO reports.

MENAFN08092026000199003603ID1111636433