Nonprofit Organizations' Accounting Reporting Efficiency in Meeting Funders' Reporting Requirements

Nonprofit organizations (NPOs) operate for social benefits, depending on the financial resources they receive from contributors that normally require reports about the use of funds. NPOs may lack efficiency in generating accounting reports to meet funders' requirements and need a method of measuring efficiency. Such a method would ensure reporting compliance, avoid cash flow difficulties that risk their operation of services to communities in need, improve relations with funders, and bolster public trust in NPOs. The purpose of this descriptive study was to determine the efficiency of NPOs in meeting funders' reporting demands. Guided by the principal-agent theory, accountability, resource dependence theory, accounting and financial reporting framework, and the theory of constraints, the main research questions focused on the relationship among measures of efficiency, difference in efficiency across NPOs' of various sizes, and the relationship among the sizes of NPOs and their perception of efficiency. The study consisted of a quantitative research method and a survey design, with the participation of 69 NPOs from 31 states. Repeated measures ANOVA found significant differences in efficiency among types of measures of efficiency, nonsignificant differences across sizes of NPOs and efficiency scores, and nonsignificant differences among the sizes of NPOs and their perception of efficiency. According to this study results, the accounting reporting process in NPOs was not deficient, and the size of the organization did not affect their efficiency or their perception of efficiency. The outcomes of this study contribute to positive social change by providing a tool to NPOs for the measurement of efficiency to improve their reporting processes and ensure their sustainability.