The purpose of annual reporting is to provide relevant information on the operations and activities of an organisation to key stakeholders to make informed decisions. However, if you are involved in the not-for-profit sector, you’ll be acutely aware of the shortcomings of traditional annual reporting.
Traditionally, annual reporting for not-for-profit organisations has focused on financial information:
While these measures are useful and important to understand the financial health of an organisation, they don’t tell the full story of not-for-profit organisations.
Consider two sporting organisations contesting a major funding contract to deliver a wide range of services to a population. Traditionally, annual reporting would focus on:
While this information is useful, it does not provide insight into the impact the two organisations have had on the population it seeks to service and a funder needs to understand how effective the organisations are at delivering their required services.
The two sporting organisations probably have non-financial measures they use internally, which they may even report on in their annual report. These non-financial measures are critical for funders who rely on this information, along with the financial statements, to make funding decisions.
Up until now, there has been no set framework to guide the reporting of this non-financial information, which means the two sets of non-financial information presented by the organisations are unlikely to be comparable. This makes it very difficult for the funder in this situation to differentiate between the effectiveness of the two entities.
With the new Service Performance Reporting standard, reported non-financial information will be relevant, understandable, comparable and verifiable.