Our associate Dott. Gianni Mario Colombo, administrative and tax expert, analyzes the new guidelines for drafting the social account of Third Sector Entities.

Source: Ratio Quotidiano

The Decree of July 4th 2019 of the Ministry of Labor and Social Affairs (Gazzetta Ufficiale August 9, 2019), provided “guidelines for drafting the social accounts of Third Sector Entities“.

The documentation is divided into seven sections. The sixth of these sections, refers to the “structure and content of the social report“. The sixth point of this paragraph, concerns “the economic and financial Situation“.

We would like to focus on this particular issue, because shares a lot of similarities with the Estatutory Financial Statement.

This is necessary because social and economic dimensions are strictly connected between them, therefore they must be analyzed simultaneously.

Information provided by paragraph 6 is:

Origin of the Economic Resource

The document requests exclusively to point out the origin of the economic resource, specifying separately public and private contributes.

However, it is useful to add more information on the type of incomes received. (i.e. performance revenues, donations).

It is interesting to observe how the guidelines given do not request any information about management charges. This remains unclear: it’s very useful knowing the amount of available resources, but, in terms of transparency, it may also be useful knowing their destination.

The Ministerial Model concerning financial statements (art. 13) might be helpful in this sense, in case of adopting a management areas structure, classifying costs and charges based on their destination.

Specific Information on Fundraising Activities

It is not necessary providing specific information on fundraising activities (such as collected amount, expenses, destination of the amount raised for every single fundraiser etc. etc.), but it is asked to provide simple information on “general and specific purposes of the fundraiser, ways adopted to give information to the public on the collected resources and their destination“.

It would be appreciated if ministerial guideline on fundraising (art.7 of the Scientific and Technical Committee) could give more precise indications in order to meet stakeholders’ expectations.

Directors’ Report About Possible Difficulties Emerged During the Management

In the management report for companies, under a financial-economic point of view, directors have to give information on management critical issues as part of the balance sheet (art.13 D.Lgs. 117/2017), and, we believe, also in the mission report of Third Sector Entities.

In this case, there could be the threat of a duplication of these contents, such as other information contained in the balance sheet.

In our opinion, this section of the social account should be related to the mission report, which constitutes one of the three balance sheet documents.

As stated in art.13 par.1 of the D.Lgs. 117/2017, the balance sheet must containbudget items, economic and management performance of the entity and how to pursue statutory purposes”.

Finally, these guidelines require “to highlight the efforts made in order to prevent negative effects“: this is a duty very often forgotten by directors of entities, and in some cases causes a serious damage to the entity’s asset.

(Image credits: DPP Law)