Financial reporting to beneficiaries – why?
Why report to beneficiaries?
It might feel easier to think of the reasons why NOT to report to beneficiaries:
- ‘They don’t need to know’
- ‘They won’t understand the figures’
- ‘We already have to report to our donors and the Board’
- ‘We’d like to, but we don’t have time or money to do it’
In fact there are compelling reasons why we SHOULD report to beneficiaries
Benefits of downward accountability in finances
- Financial reporting to beneficiaries improves NGOs’ impact
- Beneficiaries can make sure that funds are spent on their real priorities
- It reduces the risks of fraud and inefficiencies
- It empowers beneficiaries to make their own decisions on their own behalf
Participation in finances
It is widely recognised that one of the key factors that determines the impact of NGOs’ field work is the quality of participation by beneficiaries.
'Participation is an end, and not simply a means; the central point of development is to enable people to participate in the governance of their own lives'.– Allan Kaplan.
In order to participate fully in an NGO's work, beneficiaries need access to information about the NGO’s plans, resources and activities. Put another way, participation depends on NGOs being accountable to beneficiaries.
Most NGOs recognise the need for downward accountability. But few have set up systems to deliver it: there is rarely any external or financial incentive to set up these systems. Most NGO systems focus on upward accountability, such as reporting to donors, boards and head offices.
The costs of downward financial transparency
Introducing this level of financial transparency may naturally hit some obstacles, such as adding to the burden of already busy staff and challenging the way things are done. Meaningful participation takes time and effort, and can slow down an NGO’s work.
The long term benefits far outweigh the costs.
If you're convinced that it is worth doing, see how to do it.