Developing a Culture of Reporting Transparency and Accountability: The Lessons Learned from the Voluntary Sector Reporting Awards for Excellence in Financial Reporting Transparency

Abstract

The nonprofit sector in Canada is large and very diverse, ranging from religious groups and front-line charities to sport clubs and cultural organizations of all types and sizes. In 2007, the CA-Queen’s Centre for Governance established the Voluntary Sector Reporting Awards to encourage more transparent financial reporting in the not-for-profit sector. Since then, we’ve had the opportunity to examine at the annual reports of over 70 different Canadian charities ranging in size from $250,000 to over ten million in revenue. Given these organizations self-select into the competition, if anything we are seeing reports of not-for-profits that think they are doing a good job of reporting. We find that the common theme for superior annual reports is the telling of a story that engages readers and gives them sound reasons for supporting a charity and its work. But this is not just a creative writing opportunity or an advertisement; it is an accountability document for an organization’s stakeholders that can be very much improved on as a comparison of the best practices we found across organizations shows. Hence, we discuss ten lessons that we learned in the VSRA competition about how to improve this important accountability document.

Keywords: financial reporting, transparency, corporate governance, not for profits

JEL Classification: M40, M41, M14, L30, L33, D64