October 2, 2011 | Read Time: 1 minute
The Financial Accounting Standards Board, which sets the rules most organizations follow for their financial reporting, has been asked to consider changes in the way nonprofits tell creditors, grant makers, and others about their operations.
Among the suggestions an advisory group to the board has made: Allow nonprofits to explain their finances in a narrative, much like businesses do.
Some groups already use the corporate world as their model for reporting. For example, the American Cancer Society this summer published its first stewardship report, a document that is based on the financial reports that publicly traded companies file with the U.S. Securities and Exchange Commission.
“Even though we are not publicly traded, we are publicly held,” said Catherine Mickle, the American Cancer Society’s chief financial officer. “We wanted to communicate in common-sense language everything about the organization. Why we make the decisions that we do—the good, bad, and the ugly.”
The project took about two years, Ms. Mickle said, and involved combining pieces of the organization’s annual report, its financial statements, and its Form 990 informational tax return.
“We had all the pieces, but it was really getting it together and updating it all. This isn’t pages and pages of a 990 or a financial statement,” Ms. Mickle said. “And it’s done in a format that is already familiar to some constituents.”
A copy of the American Cancer Society’s Stewardship Report can be viewed below.
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