Initial insights into NPO reporting in a South African context

Abstract

Non-profit organizations (NPOs) support societies' efforts to meet their social and environmental goals. Donations, subsidies, and grants are major sources of funding for these entities. Funders require useful financial information regarding the stewardship of their financial contributions. This research report provides insight into the current South African NPOs' financial reporting practices and what information South African NPOs deem useful to their users. Using content analysis over the financial statements and websites of 50 NPOs, South African NPO financial reporting practices were studied. The findings suggest that NPO financial reporting may have complexities. NPOs lack a profit motive in contrast to corporatecompanies, which may render current financial reporting standards largely irrelevant in the NPO space. There is a lack of guidance and knowledge regarding how NPOs should report their financial and social responsibility to their donors, beneficiaries, and other stakeholders, specifically in a South African context. The findings of the paper suggest that this lack of financial reporting guidance leads to the lack of standardisation of NPO financial statements. This study provides context on South African NPO financial reporting on which future research can be based