Nonprofit organizations worldwide spend significant time and resources preparing reports for their funders, often duplicating the same information in different formats.
A recent paper based on interviews with 21 nonprofit stakeholders from South Africa, the UK, the US, Sweden, and Uganda highlights the scale of the problem.
One nonprofit, for instance, dedicates two weeks each month solely to donor reporting.
The core issue, according to the research, is not the volume of information requested but the lack of standardization. Each donor tends to use its own template, asking for largely the same data in different ways.
This inefficiency diverts time and money away from the organizations’ core missions, such as feeding vulnerable children, protecting endangered species, or educating disadvantaged communities.
Part of the challenge stems from the absence of a globally accepted reporting framework tailored to nonprofits. Many organizations currently comply with financial accounting standards designed for profit-making entities.
These frameworks focus on metrics like cash flow and financial returns, which can be misleading for nonprofits that aim to deliver social and environmental services rather than generate profits.
The International Non-Profit Accounting Standard, launched in 2025, was a step forward for standardization, but it remains primarily a financial framework.
As a result, donors often create their own templates to gather non-financial information, which can lead to requests for irrelevant data while omitting useful details.
To address this, the researchers developed the Civil-Society Organisations Reporting Practice (CORP) framework.
The goal is not to add another layer of compliance but to offer a common structure that integrates financial and non-financial information, meeting the general needs of report users.
This approach could reduce the time donors spend designing templates and lessen the stress nonprofits face in trying to satisfy multiple stakeholders.
The paper illustrates the pitfalls of relying solely on financial metrics with a hypothetical example. Two identical nonprofits each receive R10 million.
One spends R1 million on salaries and R9 million on delivering services, reporting no surplus. The other spends R1 million on salaries but nothing on its mission, reporting a R9 million surplus and a strong balance sheet.
By financial measures, the second appears to outperform, yet it has provided no social or environmental services. This extreme example shows how financial performance alone can incentivize behaviors that limit impact, such as accumulating cash and cutting program costs.
Non-financial information is crucial for understanding true performance. The paper distinguishes between outputs, outcomes, and impact.
Outputs measure effort, such as the number of lessons delivered by a tuition program. Outcomes look at short-term changes, like comparing pass rates between participants and non-participants.
Impact assesses longer-term effects, such as whether participants went on to university, found employment, and improved their households’ circumstances.
Reporting on impact is the most challenging and potentially costly, so the paper argues that reporting should be proportional, balancing costs with benefits.
Donors dominate what nonprofits report because they want evidence that their money is used as intended, a concept known as upward accountability. However, this dynamic can let donors define what good performance looks like, potentially driving undesirable behavior.
It can also exclude the very people nonprofits serve. The paper calls for downward accountability, where beneficiaries can evaluate performance and influence service delivery.
For example, a tuition program with excellent pass rates might inadvertently exclude under-resourced learners if lessons end after the last bus departs, leaving those without private transport unable to attend.
Such feedback helps nonprofits and donors understand what is needed to drive impact.
The proposed CORP framework includes five elements. First, a report from the CEO or trustee explaining the organization’s theory of change, strategy, and commentary on past performance and future expectations.
This helps donors and beneficiaries assess whether their interests align with the nonprofit’s mission. Second, a flash report providing key historical financial and non-financial information with year-to-date data, recognizing that contexts change quickly.
Third, a statement of credibility addressing legitimacy risks, including legal status, governance structures, assurance arrangements, track record, and key partnerships. Fourth, a statement of activities that integrates financial and non-financial information to tell the organization’s story and facilitate comparability.
Finally, financial statements, either summarized or linked, complete the picture.
Standardizing reporting structures does not mean making nonprofits 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 decoding unfamiliar documents.
The paper concludes that helping nonprofits requires collaboration among organizations, governments, donors, beneficiaries, academics, and standard-setters to work toward a commonly accepted and adopted integrated reporting framework.
The International Non-Profit Accounting Standard provides a foundation, while the CORP framework offers a complementary non-financial starting point for further testing and refinement.
Source: The Conversation