The First Global Accounting Standard for Nonprofits Just Launched - And It Might Actually Matter

Disclaimer: I work for the Centre for Effective Altruism, though these are purely my personal thoughts and should not be taken to represent my employer or any other organisation. I'm interested in this topic as someone who values organisational transparency and financial accountability across the nonprofit sector, not because of any organisational mandate.

TLDR: 

After 50+ years of for-profit companies having international accounting standards, nonprofits finally have their own: INPAS (International Non-Profit Accounting Standard), launched in October 2025. This could make it easier to compare nonprofits across borders, reduce administrative overhead, and build donor trust. However, adoption is uncertain and there are legitimate concerns about implementation burden.

Why this matters (even if accounting sounds boring)

Picture this: You're trying to decide between two global health charities. One operates in Kenya, the other in India. You want to know which uses unrestricted funds more efficiently. But their financial statements use completely different accounting frameworks, making apples-to-apples comparison nearly impossible.

This has been the reality for decades. While for-profit companies got international accounting standards starting in the 1970s (the International Accounting Standards Committee was established in 1973, evolving into today's IFRS), nonprofits have been operating in a fragmented landscape with up to a dozen different systems worldwide.

INPAS is the nonprofit sector's attempt to catch up.

What problem is this actually solving?

The transparency gap: Ever wondered why some organisations are weirdly vague about their "unrestricted funds" or "administrative costs"? Often there's no consistent way to report this information across different regulatory regimes. INPAS specifically addresses how to present restricted vs unrestricted funds, which matters enormously when:

• Donors want to know an org's true financial flexibility
• Nonprofits are trying to make the case for unrestricted funding
• Anyone is doing "room for more funding" analysis

The reporting burden problem: Individual donors and foundations sometimes impose their own reporting requirements. This creates a somewhat inefficient and burdensome system where nonprofit staff spend time customising reports instead of doing their actual work. Major donors like the Ford Foundation, Oak Foundation, and Open Society Foundations have all expressed support for INPAS.

The global coordination problem: EA organisations increasingly work across borders. Current accounting fragmentation makes consolidation and comparison difficult. If you're trying to evaluate GiveWell-recommended charities that operate in multiple countries, you're effectively comparing financial statements written in different "languages".

The case for cautious optimism

1. It's based on proven frameworks
INPAS isn't starting from scratch — it draws on IFRS for SMEs (small and medium enterprises), full IFRS standards, and International Public Sector Accounting Standards. It's standing on the shoulders of giants rather than reinventing everything.

2. It addresses nonprofit-specific needs
Unlike forcing nonprofits to use corporate standards, INPAS was specifically designed by the sector, for the sector. The IFR4NPO project (launched in 2019) gathered input from nonprofits, regulators, donors, and accountants across 80+ countries.

3. Short-term pain, long-term gain?
Yes, there are transition costs: training staff, updating systems, possibly running parallel reporting for a while. But if this succeeds, organisations should eventually benefit from simplified reporting to multiple funders, and better access to sophisticated donors who can actually read the nonprofit financials.

4. The timing might be right
The EA community has already pioneered rigorous evaluation (GiveWell's cost-effectiveness analysis, public reasoning about grant decisions, etc.). We could be natural early adopters who help prove the standard works.

The case for skepticism

1. Adoption is far from guaranteed
As of the time of this writing, national regulators haven't officially mandated INPAS anywhere yet. Australia has used elements in "guidance", but that's not the same as required adoption. There's a long history of attempted international harmonisation efforts that stalled, e.g. US GAAP vs IFRS.

2. Short-term costs are real
Especially for smaller organisations, the transition burden could be significant. If major funders don't require or incentivise INPAS adoption, many nonprofits may rationally decide "why bother".

What could the EA community do about this?

If we think this is important infrastructure for the nonprofit sector, there are concrete actions:

For EA grantmakers:

• Consider incentivising INPAS compliance for future grants
• Fund implementation support for high-impact organisations transitioning to INPAS
• Commission research on whether INPAS adoption correlates with organisational effectiveness

For charity evaluators:

• Incorporate INPAS compliance into evaluation criteria
• Publish analyses comparing INPAS vs non-INPAS financial transparency
• Develop guidance on interpreting INPAS-formatted financial statements

For EA organisations:

• Be early adopters and document lessons learned
• Provide feedback to INPRF on what works and what doesn't for mission-driven orgs
• Share implementation resources with other nonprofits

For individuals:

• Ask charities you support about their plans for INPAS adoption
• Preferentially donate to organisations with demonstrably strong financial transparency
• Spread awareness in nonprofit networks outside EA

My tentative take

I think this is genuinely important infrastructure that's been missing for too long. The fact that nonprofits are 50+ years behind for-profit companies in having international accounting standards is pretty shocking. And it probably contributes to the sector's persistent trust and credibility challenges.

That said, new standards succeed or fail based on whether they get adopted, and adoption depends on incentives. If major funders don't care about INPAS, most organisations won't adopt it. The EA community's combination of analytical rigor, international scope, and emphasis on institutional improvement could make us uniquely positioned to help INPAS succeed — if we decide this is worth prioritising.

Questions I'm still uncertain about:

• Is INPAS actually detailed enough for the complex international structures many nonprofits may have?
• What's the realistic timeline for meaningful adoption globally?
• Could early adoption actually disadvantage transparent orgs if others aren't adopting?

Feedback welcome: I have not posted often on the forum, so I'd appreciate thoughts and feedback you may have. Thank you for reading!