Picture a small grassroots organization doing vital work in their community. They spend countless hours juggling different reporting requirements for each funder. Hours that could be spent serving their mission are instead lost to financial acrobatics. Now, multiply this problem across millions of non-profits worldwide. Then add the extensive time wasted by foundations and regulators. The scale of wasted time and missed opportunities is staggering.

But what if there were a solution? A common financial language that all nonprofits could use, no matter where they are in the world. The International Financial Reporting for Non-Profit Organizations (IFR4NPO) initiative, led by Humentum and the Chartered Institute of Public Finance and Accountancy (CIPFA), has been working on this since 2019. While some countries, like the UK with its SORP standard, have their own systems, these vary widely. Now, over 161 countries have expressed interest in creating the world’s first International Non-Profit Accounting Guidance (INPAG).

An international standard like INPAG could unlock vast amounts of funding by overcoming one of the biggest hurdles in philanthropy: transparency and trust in financial reporting. A chronic pain point for some funders is that this barrier prevents them from getting grants out the door fast enough.

With INPAG, the benefits are clear:

• Simplified Reporting: Nonprofits can focus more on their mission and less on administrative tasks.
• Increased Transparency: Donors can easily assess and compare the financial health of nonprofits.
• Targeted Funding: Funders can confidently direct resources to where they are needed most.”

As Propel Philanthropy emphasizes, small, strategic investments can lead to transformative results. The INPAG initiative needed just $50,000 to bring key stakeholders together and map out a global adoption strategy. Recognizing the immense potential, a funder stepped in. The risk was small, but the possible impact – revolutionizing financial reporting in the nonprofit sector globally – was enormous.

This approach mirrors a long tradition in philanthropy: taking calculated risks for greater good. Since the Council on Foundations’ inception, funders have ventured into uncharted territory, often starting with modest grants that laid the groundwork for significant change.

After analyzing the details, the funder could see that substantial groundwork had been laid. Five years of consultations with partners, and other resources, had already been invested. A survey in 2014 had shown that 72% of respondents from 179 countries believed a standard would be useful. A highly inclusive and consultative approach was being followed.

These and other factors gave strong indications that this initiative has garnered enough momentum to achieve a first significant international breakthrough. Although the work is complex and progress may be slow, the effort is worthwhile. Even if we must factor in that the INPAG initiative does not revolutionize a pillar of the social sector, the learnings will be invaluable and have a ripple effect. 

This is the type of perspective Propel Philanthropy hopes more funders will consider. We can be “venture social sector builders”,  absorbing small risks that could lead to extensive results. Not everyone needs to have big bet budgets, because more modest grants can achieve significant gains, including some that far exceed our hopes or expectations.

By embracing small, strategic risks, we also open the door to novel outcomes. As the nonprofit sector faces increasingly complex challenges, it’s time to think boldly—starting with initiatives like INPAG that could reshape the future of philanthropy.

Find out more on the IFR4NPO Project website

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