A project to develop the first international financial reporting standards for the not-for-profit sector with the aim of reducing inefficiencies for funders and charities launched earlier this week.
Humentum and the Chartered Institute of Public Finance and Accountancy (Cipfa), with support from The Ford Foundation and Open Society Foundation, launched the five-year project earlier this week in Washington DC.
The organisations aim for their International Financial Reporting for Non-Profit Organizations (#IFR4NPO) initiative to command support from charities, accountants, funders and regulators.
It aims to bring “clarity and consistency” to the voluntary sector while reducing the current burden for charities and funders in meeting multiple and sometimes conflicting financial reporting requirements.
The project’s four initiative objectives are to:
- Set a clear, consistent benchmark of what good financial reporting looks like for charities internationally.
- Support greater harmonisation of funders’ financial reporting requirements to save time and administrative costs for funders and charities.
- Provide a basis for comparison between charities across jurisdictions.
- Create a collaborative and inclusive process involving charity stakeholders and standard setters from around the world.
‘By the sector, for the sector’
Ian Carruthers, standards chair at Cipfa, said the project will be created by and for the charity sector.
He said: “As a charity itself, Cipfa is delighted to be able to bring its standard setting experience and contacts across national and international standard setters to create this unique partnership with Humentum.
“Through the complementary skills and contact networks that two organisations bring, the new guidance, will genuinely be created by the sector, for the sector.”
Meanwhile, John Bernstein, chief operating officer at the Ford Foundation, said: “For too long, the lack of financial reporting standards has created inefficiencies for both funders and for the non-profit organisations we support.
“The Ford Foundation is proud to support this much needed tool for the social sector that will help build stronger and more resilient organisations.”
And Tim Boyes-Watson, global director of alliances and advocacy at Humentum, said: “I am really proud that our Humentum community will play a leading role in developing the first ever international financial reporting guidance for the non-profit sector.
“This will make a major contribution to strengthening transparency, accountability and trust in our sector.”
CFG: 'A welcome step'
Roberta Fusco, director of policy and engagement at CFG, said: “The development of accounting standards for charities in the UK over the last 20 years has strengthened charities considerably, and our accounting standards are considered a model elsewhere in the world.
“For some time CFG, along with other bodies, has been pushing for an international standard for charities to allow for more cross-border comparability and to help us move towards something more suitable specifically for not-for-profit entities, rather than an adaptation of for-profit standards.
“This is a welcome step in this direction and we await developments with keen interest.”