Welcome to our May newsletter. At first glance, ‘International Non-Profit Accounting Guidance’ sounds like a technical accounting project (and it is!) – but it is also pivotal in transforming the entire global funding ecosystem. It will be a game-changer for trust-based philanthropy and locally-led development. The financial reports will show information that goes beyond the specific needs of providers of project-based funding, improving transparency and building trust with a wider range of stakeholders and civil society.

In this month’s newsletter, check out some easy videos to warm up for Exposure Draft 3, and register for our July webinar series. Add your name or logo to our new ‘Support us ’campaign. You can also apply to join one of our new standing Focus Groups, and follow progress from the Advisory Groups.

Mark your calendars for 28 May!️ We’re gearing up for the launch of International Non-Profit Accounting Guidance, Exposure Draft 3. Prepare to dive into the text itself, the summary in three languages, and the video resources. Get updates on INPAG ED3 by clicking here.

To share your feedback as part of the public consultation on ED3, it will help to understand what it contains! During this webinar series, we will present the proposals and have time for questions and feedback. Each free webinar will run for 60 minutes starting at 11:00 UTC/GMT.

You can participate in English, with resources in Spanish and French, and auto-translation into 28 languages.

• 09 July: ‘Classification of expenses’ covers presentation and disclosure, including support costs, fundraising costs and capital expenditure.
• 10 July: ‘INPAG and Donor reporting’ covers a harmonised format for supplementary statements, and a bridging note in the main accounts.
• 11 July: ‘Fund accounting’ explains how NPOs can keep track of different grants and unrestricted funds.
• 17 July: ‘Other topics in ED3’ includes fair value, leases, assets and impairment, and related party transactions.
• 23 July: ‘Illustrative financial statements’ walks you through an example set of INPAG compliant accounts containing common NPO transactions.

You can register here.

You and your organistaion can now express your support for the goals of INPAG on our website: improved quality of reporting and reduced burden from multiple formats.

Click on the link to add your name or your organisation’s logo.

Back in 2021, Samantha Musoke ACA and Karen Sanderson recorded some conversations with stakeholders about challenges with financial statements presentation, cost classification, asset accounting and asset valuation in NPOs. These issues remain relevant, and we believe the proposals that INPAG Exposure Draft 3 will address them!

• Financial statements presentation in NPOs
• Cost classification in NPOs
• Asset accounting and valuation in NPOs

We are looking to establish 4 diverse standing focus groups that we can consult as we finalise INPAG following analysis of feedback from the various Exposure Drafts. The 4 groups will be:

1. Accounting for grants and donations
2. Presentation of financial information
3. Narrative reporting
4. Scope of NPO financial reporting

Read the ‘Terms of Reference’. To apply to join the INPAG Focus Group, please click here.

Practitioner Advisory Group (PAG): The PAG met on 2 May 2024, to discuss feedback from Exposure Draft 1 about defining NPOs and narrative reporting. The discussion included:

• How to define the boundary between public benefitand private gain. Should INPAG be applicable to NPOs that don’t exist for social good (and who defines social good?) – eg private schools, political parties, association of pharmaceutical scientists, fundamentalist religious organisations.
• Should INPAG expressly prohibit government (or local government / parastatals) from using the guidance? If so, how?
• How to avoid NPOs from ‘greenwashing’ in their narrative reporting without excessively onerous sustainability reporting requirements?
• How to responsibly signal if ‘sensitive information’ has been omitted from the narrative report?

The papers and recording are available here.

Technical Advisory Group (TAG): The TAG met on 14 May 2024. They discussed the analysis of the responses to Exposure Draft 1 on the topics of narrative reporting, defining NPOs, and the concepts and pervasive principles.

I was delighted when one stakeholder emailed me to say, ‘Did I see a quote from my submission in the TAG paper?’. They were right – it was there – and being used to influence the forward discussions.  Your efforts to respond make a difference!

The formal write up will be published shortly, but one noteworthy decision was to address the need for transparent and comparable information about ‘general reserves’, as an important indicator of NPO financial health and resilience.

The papers and recording are available here.