Disclosure overload

Speaking as a donor and as an employee of a NFP, I’m experiencing disclosure overload.  Last year, our disclosure checklists (Q&A to determine what disclosures need to be made in audited GAAP financial statements) were a whopping 204 pages long.  This year, they increased more than 70% to 350 pages.  Thats 350 pages of questions  just to figure out which disclosures should be made!

What I find most frustrating is not the complexity of the assessment.  I’m frustrated with the result.  Very few of the new disclosure assessment questions address issues which would be relevant for a donor.  As a donor, I want to know more about how a company interprets and defines functional expenses between its program services and its support services.  Or if an organization has more than one program, how does management describe its different program services?  The added disclosures about fair level inputs and major security types for investments don’t provide me the donor with useful, relevant information for making decisions about whether a charity is accountable with their resources and how effective they are in implementing their programs. 

I find myself asking, who does the FASB think uses NFP financial statements?  It’s no wonder websites like Charity Navigator or other watchdogs get so much traffic – as imperfect as their ratings are, they at least consider their audience in determining what to present about a charity.   With a few (keyword few) footnote disclosures around Charity Navigator’s raw data, it could be quite useful to a donor.


1 Response to “Disclosure overload”

  1. November 1, 2010 at 9:53 pm

    The Seattle Foundation has a new website that provides some good disclosure and does a good evaluation of local nonprofits based on a template used for their grantee applications and evaluations.

    Here is a link to their website -http://www.seattlefoundation.org/givingcenter/Pages/default.aspx

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