National Nonprofit Financial Reporting Initiative

The National Nonprofit Financial Reporting Initiative is designed to measurably improve the quality of financial reporting in the nonprofit sector. The nationwide initiative includes tools, education and resources for individual nonprofits as well as and advocacy with public and private funders to make reporting requirements streamlined and uniform. Click on the links below for more information about this cutting-edge initiative.

Background and Goals
Unified Chart of Accounts
Training and Consulting
CAN Financial Services
Advocacy
NNFR Task Force
NNFR Initiative Supporters
Questions?

NNFR Initiative Background and Goals

Good quality financial data is essential to effective decision-making and public trust in nonprofits. Public policy decisions, grant-maker decisions, organizational growth or retrenchment choices, and program decisions rely heavily on quality data. Unfortunately, decisions are often based on financial information that is defective, incomplete, confusing and incompatible.

As a result of this and other factors, public trust in the nonprofit sector is in decline: Studies show that, since September 11, 2001, the nonprofit community has lost a significant degree of the public’s trust. Regardless of the fact that most nonprofits operate with the highest level of accountability and honesty, there is widespread evidence that nonprofit accounting is not at the quality it needs to be.

CAN believes that quality data is elusive for two basic reasons.

First, some systemic realities stand in the way of producing quality data:

IRS Form 990 is the only report that nonprofits are required to make available for public inspection, making it the central resource for policy, funding, and program decisions in the sector.
IRS Form 990 has a high rate of errors and omissions. Studies show that at least 50% of Forms 990 contain errors and omissions – seriously limiting its usefulness for decision-making and public trust, as well as for advocacy on behalf of nonprofits.
Differing reporting requirements cause inconsistencies within nonprofit accounting systems and financial reports. Nonprofits' heavy reporting burden is made heavier by foundations, government, regulatory authorities, and others who require essentially the same information but in widely differing formats and terminologies.

Second, individual nonprofits have insufficient resources to produce quality data.

Auditors and oversight groups must often spend their contracted time cleaning up or redoing nonprofit accounting systems, and many accountants are unfamiliar with nonprofit accounting. Compounding the problem is the fact that many nonprofits, particularly small ones, rely on board members or volunteers who are familiar only with for-profit accounting.
Tools, information and knowledge about nonprofit accounting are not reaching the groups that need them most. CAN knows that nonprofits are eager to produce quality financial reports, however they often do not have the accounting tools or systems they need to do so effectively.
Current information systems are not designed to accommodate accounting and reporting needs in a nonprofit environment. Reducing the costs of producing quality data will improve the cost-effectiveness of the information systems that support decisions about all aspects of nonprofit activities.

Although we usually look to government regulatory agencies to provide effective enforcement mechanisms, we cannot rely on oversight groups or government to improve financial accounting and reporting for us. Those of us who work in and care about the nonprofit sector are the best and the most likely to advocate for vigorous efforts to improve financial reporting and enhance nonprofit accountability.

The goals of the National Nonprofit Financial Reporting Initiative are to:

Measurably improve nonprofit accounting practices, financial reporting and money management, ultimately improving consistency, professionalism and respect for the nonprofit accounting process.
Reduce the time and financial costs of nonprofit accounting.
Improve the consistency and accuracy of Form 990 data.as well as consistency in language, expectations, definitions, and reporting styles of nonprofit accounting.
Persuade influential organizations (e.g., American Institute of Certified Public Accountants) to endorse and adopt the UCOA and the Nonprofit Accounting Certificate program as standards for nonprofit accounting.
Increase public trust in nonprofit organizations as well as funder and government confidence in nonprofit financial reports.

Unified Chart of Accounts (UCOA©)

The Unified Chart of Accounts is an activity-based accounting system that incorporates the reporting requirements of many institutional funders and can be tailored to each nonprofit’s changing needs and existing system. The UCOA is designed to allow nonprofits to add as many reporting requirements as necessary – while still allowing you to use just one system for accounting and reporting. For more information on the UCOA, click here.

Training and Consulting

The National Nonprofit Financial Reporting Initiative's training and consulting activities aim to enhance the professionalism of nonprofit accounting practices and procedures. Training programs include:

Consulting activities assist organizations with implementing UCOA and developing an accounting and reporting system that is consistent with their own needs and programs. Click here for more information on consulting services.

Advocacy

Advocacy is an ongoing component of the program aimed at encouraging government agencies and private donors to develop consistency in application and reporting requirements in order to decrease the burden on nonprofits in developing reports.

NNFR Initiative Supporters

CAN is grateful to the S. Mark Taper Foundation and the Hearst Foundation for major support of the National Nonprofit Financial Reporting Initiative.