It may sometimes feel like you are checking those boxes and tallying those numbers for no reason at all. And often it can be a thankless task; so why are you are doing it, and why does it matter so much?

In short, the financial statements have less to do with you and more to do with the members of your NFP and its statutory legal obligations under the law. And depending on the bylaws for your organisation, club or charity, will determine exactly what information is presented to its members and the general public. However, balance sheets, bank statements and budgets fall under the financial statements which are often required. At least a broad overview of your non-profit’s finances is necessary, and that goes for money in as well as money out.

Because charities, clubs and non-profits exist to engage in services or activities that are for the public benefits, strict laws are maintained by state, territory and Commonwealth government. Regulation is necessary to ensure that no individual or group takes advantage of the law and its non-profit labelling. Periodic reporting is a minimum requirement for all NFPs.

But even more than the legal requirements, financial statements go a long way to demonstrate the efficient management of the organisation and accountability to all involved. These statements also assist with decision-making strategies such as fundraising, sponsorship and event management. Are the goods and services being delivered? Are Government grants required? Do you need to push the fundraising or sponsorship side of things in the next financial quarter? Is there enough cash in the kitty to cover the next major marketing event? These are all important questions which can be answered by a glance at the financial information of your organisation.

A donor generally does not make decisions on the back of a fancy website. They require at least a quick familiarisation of the statements and cash flow to determine the viability of their donation.

The statements which are arduously maintained by yourself may also be audited by an independent reviewer to meet legal or NFP regulations. This extra step provides additional reassurance for those on the board, its donors and members of the community who work tirelessly in support of your NFP.

Of course, not all NFPs are the same, and its size and type will also determine the specific and legal requirements. As you can see, these financial statements aren’t just required to please the board but can affect long-term cash flow for support and strategy. So, next time you feel frustrated about the idea of keeping the bookwork up to date, know that you are playing more than a small part in the running of the NFP. In fact, you just may have one of the most important jobs there is.