Teresa Gordon S Thoughts on User Needs (As of 4/27/11)

As a donor to philanthropic causes, I would like to know “what they did with the resources expended.” Preferably that would be some sort of service efforts and accomplishments (SEA) nonfinancial data. Since that is not readily available and not auditable, the next best thing is re reporting of “mission-related expenses” as compared to total expenses. Here is where a statement of functional expenses is essential.
However, for many types of “reciprocal donations,” I’m repaying for past services (think universities and hospitals). So I probably don’t care a lot about the financial statements unless I’m making restricted gifts. Most alumni giving comes from the bachelors’ level graduates. I expect that a lot of gifts to hospitals are out of gratitude for the excellent care received by a family member.
For certain types of entities, I’m worried about whether the entity will survive to conserve and protect tangible and some intangible assets, Examples include land, waters, rivers, art treasures, historical artifacts, artistic traditions (music, dance, cowboy poetry, etc. ). This concern is much less of an issue for donations intended for immediate expenditure to solve current problems.
Note that continuity of NFP existence is probably an issue for at least some types of donors making “reciprocal” gifts - we want to make sure the college we attended is there for our children.

As a “member” (of a church, public radio/TV station, country club, trade association) I want to know that I’m getting my “money’s worth” from my membership dues. The benefits received are not necessarily commensurate with amounts contributed – however, “member dissatisfaction” is unlikely to lead to additional contributions/dues. Accordingly, this is not really a financial statement question because I can evaluate quality of service (programs I like to watch, conventions that are useful, well-maintained golf course, etc).
So the financial statement questions would be focused on efficiency of management to answer questions like why are they raising my dues? In this evaluation, I think I’d want more than functional expenses because I’d need to know the functional revenues too. Examples: For a trade association, are the convention revenues covering the convention costs? For a country club, are the revenues for the dining room covering the costs? Maybe this is more “segment reporting” than “functional reporting” because the revenues need to be associated with the program/segment expenses. To the extent that dues are paid for by employers (trade associations), there is probably less member concern/analysis of operations.

Most volunteer work is not recognized in financial statements at all. From my own experiences with an academic association, members may be concerned that volunteer hours be reported even if not recognized.
Volunteers involved with fundraising we call special events would want to know about the success of their efforts. For example, putting on an annual “gala ball” for an art museum or a fun-run to help tsunami victims takes lots of volunteer effort. Is it worth it financially (revenues > expenses) or maybe worth it in some other way (goodwill generated through recognition of donors, etc.) {This information would also be useful for board members}.
Volunteers involved in general fundraising efforts want to know how the money they raised was used. So this would parallel donor needs – SEA would be great, functional reporting is a must. For NFPs that operate with few (if any) paid staff, volunteers may be directly familiar with the outcomes of the activities and therefore unlikely to expect to find this information in the financial statements.
Board members are the most important group of volunteers when it comes to financial reporting. As volunteers, they may not have access to information available to employees. Specialized reports are not the subject of “general purpose financial statements.” However, general purpose financial statements may provide a large percentage of the financial information available to board members.