Are You Scrambling to Show Donors Your Results? Well, Join the Club

With donor demands rising, nonprofits are changing how they report results of their work, according to a new survey. 

Nearly half of nonprofit leaders in the survey by Marks Paneth, a New York accounting firm serving large organizations, said that it’s challenging or extremely challenging to raise money now, given the growing demand for a social return on investment among grantmakers and other donors. 

A majority of respondents, including executives, board members, and other nonprofit leaders from 114 organizations with budgets up to $200 million, said they’ll change how they report results within the next three years. The goal: improving how they meet donor expectations.

More than half of respondents in the survey said that they can now report social impact returns within a year’s time, and nearly 20 percent said that donors allow some of their gifts to be used to measure results.

And, despite the challenging fundraising climate noted by many respondents, only 4 percent said that donor expectations are unreasonable.

Already, some organizations have changed the way they report results, said Michael McNee, a Marks Paneth accountant, in an interview with Inside Philanthropy. Along with rising donor demands, he said, a recent revision of the 990 informational tax return helped prompt the changes.  

Using the 990 form and, to a lesser extent, notes in audited financial statements, organizations such as Goodwill are now reporting more results, said McNee.

In addition to stating that Goodwill served 20,000 people per year, the charity also reports the number of job placements it has made and other results on Schedule O of the 990, McNee said. That way, he added, “donors don’t feel that their dollar is just going down a pit.”

In addition to more robust reporting on the 990, McNee said that he has seen more detail in reports on grantmaking outcomes.

He said he noticed the rising demand for more impact and accountability about three years ago, when the chief executive of the Robin Hood Foundation said in an interview that his organization would not continue supporting charities that failed to show results within a fairly short time frame.   

Such attitudes have become increasingly common among donors like Bill Gates and other younger entrepreneurs who have made their fortunes in social media or technology, said McNee. “Don’t discount the millennials in this.”