In Australia, NFPs are required by governing bodies such as the Australian Charities and Not-for-Profit Commission (ACNC) to file reports about their charity annually. The types of reports that are required mainly depend on the size of your nonprofit, so volunteer treasurers and other board members must take care to ensure that their NFP is in compliance with these requirements as part of their due diligence.

Filing Requirements are Based on NFP Size; Do You Understand What Reports Need to be Filed?

Small charities have revenues of less than $250,000 per year, and are only required to file the Annual Information Statement. Since 2014, this statement has also included information about basic financial questions. Small NFPs normally can choose whether or not to use the cash or accrual method of accounting for their revenues, and are not required by the ACNC to have financial statements reviewed or audited, although it is still a good idea to do so.

Medium sized charities have revenues between 250,000 and $1 million, and are required to submit a financial report that has been reviewed or audited, along with their Annual Information Statement and answers to basic financial questions. Large charities earn more than $1 million dollars in revenue each year, and are required to submit audited financial reports along with their Annual Information Statement.

Effective reporting does not end with filing the correct report by its due date. In order to ensure transparency, there are some additional steps that NFPs can take to help all stakeholders gain a clearer picture of the NFP’s mission, progress, impact, and true financial condition. By revealing more information, NFPs help their boards and others to have the information that they need to further the NFP’s mission and to make adjustments in policy and procedure to help ensure the NFP’s long-term sustainability and survival.

7 Strategies to Improve your NFP’s Reporting

Do you understand your NFP’s objectives?

Many Information Statements list their NFP’s objectives, but you can increase your understanding about what it is your NFP wants to achieve and how it plans to achieve it by providing added details about your NFP’s operations, activities and funding.

How does your NFP plan to meet its objectives and responsibilities?

Include a summary of your NFP’s short and long term strategies, as well as the benchmarks and measures of progress so that your board and other stakeholders can easily see your NFP’s progress as well as reveal your NFP’s specific obstacles and challenges.

Increase Transparency and Accountability with a Detailed Governance Statement

Consider including a comprehensive governance statement in your report to increase the transparency about your board, the background and qualifications of its members as well as information about your board’s activities.

What are the risks and challenges that your NFP faces?

No one likes to be caught unprepared. You can improve planning and risk management activities by including a section on your NFP’s specific weaknesses and potential risks that it faces. Be certain to include a list of procedures and controls that your NFP has in place to identify and mitigate risk, as well as reveal any risks that have actually occurred and the steps that your NFP has taken to reduce exposure and liability.

Don’t Forget to Include Information that is Important to All Stakeholders.

Your report should disclose your NFP’s major stakeholders, as well as include information about volunteers and employees and the policies that your NFP takes to recruit, train and protect them. Include the impact of your NFP on all stakeholders, as well as information about your NFP’s performance, and returns on investment.

Disclose Major Donors and Provide Detail About Funding Sources and Sustainability of Funding.

In the interests of both transparency, and effective management and oversight, your information report should also disclose your NFP’s list of major donors, as well as provide details about sources of funding for your NFP, and how likely these funds are to continue over the long haul.

Learn More.

Of course, there are several additional steps that NFPs can take to beef up their reporting beyond the barest minimum of requirements. For more tips on how to increase the meaningfulness of your NFP’s reports, be certain to check out the Chartered Accountants (CA) helpful guidelines which are found in their report, Enhancing Not-for-Profit Annual and Financial Reporting.