Accounting & taxation, Blog: 02.03.26NGO accounting: balancing transparency, constraints and impact levers

Swiss GAAP FER 21, Zewo standards, restricted funds, gross presentation, consolidation. Closing the annual accounts of a public benefit organisation is anything but routine. For Swiss NGO leaders, each financial year is an opportunity to strengthen the transparency and rigour their stakeholders expect. This guide takes you step by step through the preparation and review of your 2025 annual accounts.

Public benefit organisations operate within a specific reporting framework. In Switzerland, Swiss GAAP FER 21 is the standard dedicated to non profit public benefit organisations and has been in force since 1 January 2016. Any NGO may choose to prepare its accounts under this standard, regardless of whether it is certified. Organisations certified by the Zewo Foundation commit, as part of the label requirements, to preparing their accounts under Swiss GAAP FER and also complying with the 21 Zewo standards (revised 2024 edition).

In practice, this means your year end closing must meet two sets of requirements: those of the Swiss Code of Obligations (CO) and those of the Swiss GAAP FER framework. For smaller organisations, it is sufficient to comply with the Conceptual Framework, Swiss GAAP FER 21 and the fundamental FER standards (standards 1 to 6). Larger organisations must also apply Swiss GAAP FER 10 to 28, and Swiss GAAP FER 30 where consolidation is required.

This combination of frameworks may seem complex. But it is also a powerful credibility lever with donors, partners and supervisory authorities. Well prepared accounts are the clearest proof that every franc is used in line with its intended purpose.

Correct fund classification lies at the heart of NGO accounting. Here are the key principles.

Unrestricted funds: usable within the statutory purpose

A fund is considered unrestricted when the donor has not expressed a specific intention for its use, or when the fundraising appeal clearly indicates unrestricted use. These funds are recognised within the organisation’s capital, which includes base capital (foundation, cooperative), tied capital (purpose defined by the organisation itself) and free capital (retained annual results).

Restricted funds: an obligation towards the donor

A fund is restricted when the donor has indicated a specific purpose, either explicitly (agreement, will, indication at the time of payment) or implicitly (the fundraising appeal refers exclusively to a particular project or activity area). These funds feed into the fund capital, a specific balance sheet position that is not part of the organisation’s equity under Swiss GAAP FER 21. It is a separate category, presented as a distinct line on the liabilities side.

Overall impression: the decisive test

Swiss GAAP FER 21 (para. 33) states that a restricted fund arises either from an explicit donor restriction or from the circumstances of the donation. For certified organisations, Zewo Standard 18 goes further, highlighting a point often underestimated: it is the overall impression created by the fundraising appeal on the target audience that determines whether a fund is unrestricted or restricted, not a single disclaimer in small print.

If your campaign highlights a specific project, the funds raised will be considered restricted, even if a footnote mentions unrestricted use.

Common pitfalls include vague wording such as “and elsewhere” or “where the need is most urgent” without sufficient context, project examples not clearly labelled as examples, or an unrestricted use disclaimer hidden in very small font or buried in a block of text.

Swiss GAAP FER 21 requires gross presentation (no netting off) for restricted funds. This means that in the statement of changes in capital, allocations to and utilisation of each fund must be shown separately, even if a donation is received and spent within the same year.

This gross presentation principle also applies to fundraising activities. Fundraising costs are a key indicator used to assess fundraising organisations. All expenses linked to fundraising must therefore be presented gross in operating expenses. It is not permitted to net campaign costs against the income generated, including where external service providers are involved, charity galas are organised or merchandising items are sold.

Key point: restricted income shown in the income statement must match the allocations recorded in the statement of changes in capital. This reconciliation is reviewed by the statutory auditor.

Swiss GAAP FER 21 provides a presentation framework for the income statement, including multiple levels of result. At minimum, your income statement should show:

• Operating result
• Financial result
• Non operating result
• Extraordinary result
• Result before change in fund capital
• Change in fund capital
• Annual result (before allocations to the organisation’s capital)

An important detail: the change in fund capital may be presented net in the income statement (a single figure), but the gross breakdown into allocations, releases and internal transfers must appear in the statement of changes in capital.

Zewo certified organisations must also allocate all operating expenses into three categories: project or service costs, fundraising and general publicity costs, and administrative costs. This allocation is calculated using the Zewo methodology (Standard 13), including staff costs, and must be disclosed as such in the financial statements.

Good news: in principle, it is possible to produce a single set of financial statements that satisfies both CO and Swiss GAAP FER requirements, provided you exercise the Swiss GAAP FER 21 options in a way that aligns with CO provisions.

The most delicate issue is the balance sheet presentation of fund capital. Swiss GAAP FER 21 places it in a separate position, neither within equity nor within liabilities. The CO, however, requires a strict split between these categories. Several approaches can be defensible in dual format statements: fund capital may be included within liabilities (as a sub category or at the same level) or shown as a separate section between equity and liabilities.

Whatever option is chosen, one point is non negotiable: for capital protection in case of over indebtedness (Art. 84a CC), fund capital must be treated as liabilities insofar as it is restricted to a specific use (Swiss GAAP FER 21, paras. 7 and 8). These resources cannot be used for general restructuring.

Another point of attention since the Swiss company law revision effective 1 January 2023: retained earnings brought forward and the result for the year must now be presented as separate components of equity. The structure of your organisation’s capital in dual format statements must reflect this requirement.

The type of audit depends on the size and legal form of your organisation. If your association or foundation is subject to a statutory audit obligation, it will take the form of a limited audit or an ordinary audit under Articles 69b and 83b CC.

For organisations not subject to a statutory audit obligation, particularly small associations, Zewo Standard 14 requires at minimum a review (limited assurance engagement) under Swiss Auditing Standard (NA CH) 910, performed by an independent auditor. If your statutes or governing body require a more extensive review, you must of course comply.

Would you like a positively worded audit opinion? Even if you are only subject to a limited audit or a review, you may mandate a voluntary audit under the Swiss Auditing Standards for financial statements (NA CH), which will provide a report in line with ISA CH 700 (February 2026 version). This is a strong trust signal to stakeholders.

Good to know: under Swiss GAAP FER 21 (para. 28), the performance report must not contradict the presentation of the economic situation in the annual accounts, but it is not audited. Auditing standards nevertheless require the auditor to read it to ensure there is no inconsistency with the financial statements.

Transparency is not limited to projects, it also concerns governance. Under Swiss GAAP FER 21 (para. 24), the notes must disclose the total remuneration paid to members of the supreme governing body (committee, foundation board) and the total remuneration paid to management. For Zewo certified organisations, Standard 8 adds further requirements, including separate disclosure of the chair’s remuneration.

“Total remuneration” should be understood broadly: it includes expense allowances, role stipends, lump sum allowances and attendance fees. Only reimbursements of documented expenses are excluded. For foundations, the Swiss Civil Code (Art. 84b CC) also requires annual reporting to the supervisory authority.

Transactions with related parties must also be disclosed. This includes current and former members of the supreme body, organisations they control, major donors or founders exercising significant influence, support associations and organisations with a shared presence in the market. For each material transaction, the nature, amount and essential terms must be disclosed.

Consolidation is required as soon as a public benefit organisation controls another entity (para. 2). In the NGO world, control does not necessarily arise from shareholdings: it may be sufficient to be able to appoint the majority of the supreme governing body or to hold substantial instruction rights based on contractual or statutory provisions (para. 30).

What matters is the ability to exercise control, not whether it is actually exercised. A foundation created by an association, a wholly owned company carrying out commercial activities, or a foundation board composed of the same individuals as an association committee can all trigger consolidation requirements.

Consolidation rules are governed by Swiss GAAP FER 30. Once an NGO controls another entity, consolidation is required regardless of size. Smaller organisations (balance sheet under CHF 10 million, revenue under CHF 20 million, fewer than 50 full time employees) may limit their reporting to the Conceptual Framework, Swiss GAAP FER 21, the fundamental FER standards (1 to 6) and Swiss GAAP FER 30.

1. Classify donations upon receipt. Do not leave fund restriction decisions to year end. Align fundraising and accounting upfront: each campaign should be qualified (unrestricted or restricted) before launch.
2. Check consistency throughout the year. Restricted income in the income statement must match allocations in the statement of changes in capital. A quarterly check avoids unpleasant surprises.
3. Document the use of each restricted fund. Agreements, invoices, bank statements, internal recharges for staff costs: justification must be traceable transaction by transaction.
4. Anticipate transfers between funds. If a restricted fund can no longer be used for its original purpose, seek donor consent where possible. Otherwise, the supreme governing body decides and the transfer must be individually justified in the annual accounts.
5. Prepare the notes with care. Remuneration, related party transactions, methods for allocating administrative and fundraising costs, and presentation principles: the notes reflect your governance.
6. Engage early with your auditor. Do not wait until year end to discuss sensitive areas. An interim management letter helps identify and correct issues before closing.
7. Digitise your accounting processes. A suitable accounting system that supports restricted funds, the statement of changes in capital and the Zewo methodology saves time and significantly reduces error risk.

Producing annual accounts compliant with Swiss GAAP FER is not merely a technical requirement. It is an act of transparency that strengthens donor trust, supports relationships with institutional funders and builds long term credibility. For Zewo certified organisations, it is also a key condition for maintaining the label.

The 2025 closing is also the right time to review your tools. Can your accounting system easily manage the restricted versus unrestricted split? Can it generate the statement of changes in capital automatically? At Synergix, our IODD platform offers exactly these capabilities, with real time access to your financial data and fiduciary support tailored to NGO specific requirements.

A question about your 2025 closing? Our team is here to help.