RAND Study Finds Nonprofits Spend Much Time and Money Meeting Reporting Requirements

For Release

July 12, 2006

A RAND Corporation study issued today recommends actions that nonprofit social services providers can take to reduce the large amount of time and money they spend complying with reporting requirements set by organizations that provide them with funding.

In a yearlong in-depth examination of one nonprofit social services agency in Western Pennsylvania, RAND researchers found that employees of the agency spent nearly half their time collecting information needed for compliance efforts imposed by funding organizations. These included activities such as writing reports, tracking expenses and attending meetings.

The nonprofit organization agreed to provide RAND researchers with full disclosure of its operations and financial records, under the condition that it was not identified by name in the study.

The RAND Labor and Population study found that work hours spent on compliance reporting consumed 11 percent of the nonprofit agency's annual budget.

“This is the first and most accurate exploration of how nonprofits balance their staff, time and finances between the services they provide and their commitments to the groups that fund them,” said Sandraluz Lara-Cinisomo, a RAND developmental psychologist and lead author of the study.

“If nonprofit social services groups can find ways to comply with reporting requirements more effectively and efficiently, they will have more time and money to help the clients they serve,” Lara-Cinisomo said. “Additionally, if funding agencies can find ways to limit the type of information they request of nonprofits to the most necessary and relevant, the cost of compliance can be reduced.”

The report recommends that nonprofit groups providing social services consider the following steps to reduce the amount of time and money they spend on reporting requirements:

  • Develop a client information system that allows staff to create reports, update records and share files with each other.
  • Provide comprehensive computer training and laptop computers to enable staff to access their files off-site.
  • Develop an agency-wide procedure for completing compliance activities that would clearly define reporting goals, reduce staff tensions and increase office productivity.
  • Educate staff about compliance issues and the importance of reporting agency data to the appropriate funding organizations.

The study also offered recommendations for funding organizations to consider when drawing up their reporting requirements:

  • Design internal measures that will examine the burden placed on staff of nonprofit social services agencies, to decrease worker stress and increase staff performance in completing compliance activities.
  • Evaluate compliance collection needs and requirements, and assess whether the data funding organizations need is critical to all participants, including the nonprofit staff and their clients.
  • Conduct open discussions with nonprofit staff members on compliance issues that are sensitive to the power disparities existing between the nonprofit agency and its funder.

RAND researchers spent a year examining financial records and interviewing 41 field and management staff members at the nonprofit social services organization to prepare the study. The social services organization focuses on preventing and treating child abuse. The agency — like many nonprofits — receives funding from several sources, including county and states agencies, as well as private foundations and the United Way.

RAND researchers interviewed staff members at the social services agency about major tasks and details involved in the organization's funding compliance. Interview topics included: whether field staff were properly trained to create comprehensive client reports; challenges staff faced accessing necessary data from each other; and how staff felt overall about the experience of meeting reporting requirements.

Researchers also found that management and field staff expressed dissatisfaction with the lack of clear and consistent procedures spelling out how to write reports to meet compliance requirements, along with complaints about delays in receiving edits and comments on their reports from colleagues.

Funding for the study was provided by the Forbes Funds in Pittsburgh.

RAND Labor and Population examines issues involving U.S. labor markets, the demographics of families and children, social welfare policy, the social and economic functioning of the elderly, and economic and social change in developing countries.

Copies of “Meeting Funder Compliance: A Case Study of Challenges, Time Spent, and Dollars Invested” (ISBN: 0-8330-3956-3) can be ordered from RAND's Distribution Services (order@rand.org or call toll-free in the United States 1-877-584-8642).

About RAND

RAND is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous.