Understandability and Transparency of the Financial Statements of ...

eporting, outcome reporting and financial viability as part of performance
accountability, is investigated.
8.3.3 The enduring importance of outputs
Even given the limitations identified earlier in this chapter (section 8.2), there is still a
place for output reporting in a performance accountability framework. This is
particularly so in relation to fundraising charities that have no direct link with the
beneficiaries of the charitable activity, but are conduits through which monies pass from
the donor to the service-providing charity. In this case, output measurements are
important and necessary. This is evidenced by recent New Zealand examples profiled in
the media, including the Epilepsy Foundation, which collected monies on behalf of
Epilepsy New Zealand, but passed on only 2% of what was received (Television New
Zealand, 27 July 2009).
Internationally, the requirement for output reporting is intended to ensure that efficient
means of achieving real difference in beneficiaries‟ lives are achieved, rather than
donations being directed towards funding an unnecessarily large number of
administration staff. Philip Stevens, from the International Policy Network based in
England, spoke for many when he said ``It is perhaps not coincidental that thousands of
highly paid jobs and careers are also dependent on it [charitable funding]''
(Anonymous, 2009, p. A21). Two of the worst cases of monies not being used for the
benefit of the beneficiaries in recent times involve Afghanistan where “A US funded
road leading to the Kabul airport was built for US$3.7 million per mile (1.6km), four
times the average cost of most roads in the country” (Anonymous, 2008d, p. B1), and
East Timor, where as little as 10% of donations was used for the intended purposes and,
even worse, as little as 5% of the United Nation‟s mission budget, was spent in East
Timor (Deutsch, 2009).
A key theme from the UK government‟s „The Private Action, Public Benefit‟ report
published in 2002 was the need “to get charities to focus much more on their outputs
and outcomes as a basis for performance management and better accountability”
(Hyndman & McMahon, 2010, p. 10). Several authors agreed with this focus on
outcomes and outputs (Ashford, 1986; Connolly & Hyndman, 2004; Grimwood &
Tomkins, 1986). However, this focus does not ensure the charity‟s survival into the
future, i.e. the financial viability of the charity, which is of great importance to enable
continuing improvements in their beneficiaries‟ lives.
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