Should different nonprofits have different financial reporting requirements?
What is it about?
In this paper we analyse two different types of nonprofit entities - those that are public-benefit (i.e. charities) and those that are mutual-benefit (e.g. clubs). We consider their regulation in respect of financial reporting requirements. We find stark differences in that mutual-benefit entities are smaller but in New Zealand, they currently have few financial reporting requirements compared to public-benefit charities. We analyse submissions to regulatory reform and conclude that members should monitor mutual-benefit entities, but that, because they also receive tax breaks, government has a right to demand reporting, especially from larger mutual-benefit entities.
Why is it important?
The costs and benefits of regulation are hard to measure. This research of a statistically random sample of two different nonprofit entity types, shows that there could be an argument for differentiated regulation. However the costs and benefits to the regulator and risks, must also be addressed.
The following have contributed to this page: Professor Carolyn J Cordery