The joy of multiple programs is
multiple funders each with their own reporting requirements including level of
detail, frequency, templates, portals, and restrictions. As the Director of
Finance for a mid sized not-for-profit, I had over thirty programs funded by over
a dozen major sponsors to contend with, and sometimes even the same funder has
different requirements for each of their programs. Unfortunately, there are
situations where certain funders assume they are the only program we are
running; probably because they themselves despite having multiple deliverers,
are only running one program. The result of this can sometimes lead to angst
and increases administration costs of program delivery.
Before we get into the details of
funder reporting, let’s have a discussion on why we are reporting in the first
place.
When you tender a requirement for a
contracted good or service, regardless if you are a for profit business or not,
you review the bids for value for money and select the appropriate bid given
various criteria not just limited to price. As long as the goods or services
are delivered to your expectations, you pay the provider with no further questions
asked.
With a cost plus an allowable profit
portion contractual arrangement, it is a different story in that you negotiate
the costs line by line then must account for the actuals at a later time.
Unfortunately, this later arrangement is common in the not-for-profit sector,
less the plus part. Regardless, this leaves service providers with the sometime
onerous task of funder reporting.
Having worked in both government and not-for-profit,
I prefer a hybrid approach where we negotiate the terms and conditions
including a line by line for establishing the price, then as long as the
deliverables are met, the payments are satisfied; if the deliverables are not
met, then we have a conversation. Unfortunately, there are many funders who
want a detailed accounting even if you exceed their service deliver
expectations; for those who argue they are protecting either the taxpayer or
their funder’s donations, I will remind them that the more we spend on
unnecessary administration, the less we spend on front line service delivery.
In order to maintain information for
funders, managers, regulators, and auditors, we set up various horizontal and
vertical accounts. By horizontal accounts I am referring to the lines you normally
see in a financial statement such as salaries, benefits, rent, utilities etc;
by vertical, I mean the name or nomenclature of the program these items apply
to. Although we strive to match our horizontal lines to what the various
financial statement users demand, when funders have different requirements, you
cannot use a one-size-fits-all approach. Further complications include for
example travel alone can be found in different places depending on the funder:
travel costs for transporting clients, travel for staff to attend clients, and
travel for staff to attend other functions such as training. For some financial
statement users, it is just travel. Further examples of varying detail are one
funder would like to know natural gas versus electricity versus sewage, where
another just wants to know your utilities costs; others want to know what you
spent on cleaning supplies versus maintenance, versus pest control, where
others only want to know your building operating costs. Even better, is when a
funder simply wants to know the total cost of accommodation which even
incorporates rent, property tax, and insurance.
So, why do we have these varying
details of reporting? In my opinion it comes down to trust, or lack of it, and
the need to exercise control. Unfortunately, there are funders who treat not-for-profit
organizations as through they are extensions of themselves versus an
independent contractor; having been a federal government regional comptroller
who worked with both service contracts and grants, I would have been happy with
less detail unless your total costs appeared to be unreasonable given the
economic conditions of the service area. But then again, I am a strong believer
in autonomy until something negative happens which then leads me to change this
approach.
Regardless of whether you are able to
customize reports in your accounting program, or are handy with spreadsheets,
you will still have to transpose your data into either the funder’s spreadsheet
or portal. Further to this, frequency and timelines of reporting vary. For example,
some require an annual report, others quarterly, some monthly, and one I work
with requires the first report after four months, the second after six, then
next after eight, the final after the year is complete.
A unique situation I encountered was
one where a government department had a contract with Not-for-profit - A to
deliver a particular program but also provided a grant to Not-for-profit - B
for a specific initiative in which Not-for-profit - B subcontracted Not-for-profit
- A, and others, to carry out this particular service. The government agency
then demanded the subcontractors including Not-for-profit - A report the
results of their own program as well as their application and use of the funds
provided via Not-for-profit - B. The proper treatment would have been for Not-for-profit
- A to report the results of that specific initiative to Not-for-profit - B who
would then in turn report to the government department. The reason for this, is
Not-for-profit - A is accountable to Not-for-profit - B as this is who their
contract is with, and Not-for-profit - B is accountable to the funder being the
government department. This is Contracting 101; my experience however, is many
program managers in the public sector are not versed on business concepts such
as accounting and contracting, which is the reason for me writing this book in
the first place.
Another situation which is discussed
later in the chapter on Capital Assets, is how a donor of such items requests
reporting of these versus how the recipient must report it according to
accounting practice. The issue is that for the donor this is a one-time grant
in the year it is given, where for the recipient it is the donation of a
capital asset which must be capitalized and depreciated over time and the
corresponding donation revenue amortized in conjunction. Please make certain
you read that chapter if you are dealing with Capital Assets.
As indicated earlier, there can be
other discrepancies with funder reports such as items they consider ‘expensed’
where you placed them into inventory or listed as prepaid expenses due to your
own accounting principles. In these situations, I suggest you prepare a
reconciliation schedule.
Finally, timeliness of reporting. Most funders require accountability
reports at very least once per year, and within 30 days of the year-end. I once
encountered a situation when the funder finally asked for a report four years
after the fact, and by that time both the manager and accountant had changed.
On one hand you could argue the contractor should have submitted the report
without waiting for the request; on the other, the funder was not acting as a
reliable steward of the funds by not questioning the service provider’s
spending and resulting surpluses in a timely manner. In this case, it was a
government department where we are talking about the public’s taxation dollars.
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