The New England Not-For-Profit Accounting Advisor

FASB Eliminates Extraordinary Item Requirements

Posted by Mark Winiarski on Fri, Jan 30, 2015 @ 11:30 AM

As part of its efforts to simplify financial statement reporting, the Financial Accounting Standards Board (FASB) recently streamlined its treatment of extraordinary items. Entities will no longer have to separately classify, present and disclose extraordinary events or transactions.

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Tags: ASU, not-for-profit, FASB, Mark Winiarski

Best Practices in Accounting for Fundraising Costs

Posted by Heather Hernandez on Fri, Jan 30, 2015 @ 09:05 AM

Many not-for-profit organizations rely on various methods of fundraising to further their mission and tax-exempt purpose and to ensure a sustainable future. As such, they engage in fundraising efforts, either using internal resources or by using the help of an outside, professional fundraiser, to attract potential donors.

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Tags: not-for-profit, fundraising, Heather Hernandez

Mitigate Your Risk of UBTI

Posted by Joe Giso on Tue, Jan 27, 2015 @ 02:05 PM

A recent report from the IRS suggests unrelated business taxable income (UBTI) for tax-exempt organizations will be a key focus of IRS scrutiny as it pursues new government revenues.
Not-for-profits earn UBTI from a regularly carried on trade or business that is “not substantially related” to their purpose. Activities qualify as substantially related (and therefore tax-exempt) if a causal relationship exists between the activities generating income and the accomplishment of the entity’s defined mission. Read More

Tags: not-for-profit, UBTI, Joe Giso

Protect Your Executives and Board from Excess Compensation Risks

Posted by Priya Kapila on Fri, Jan 23, 2015 @ 09:41 AM

Not-for-profits must closely monitor the line between reasonable and excessive compensation. With the increasing IRS scrutiny on compensation levels, not-for-profits must be vigilant to ensure their pay and other transactions to key personnel remain reasonable.

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Tags: not-for-profit, executive compensation, compensation risks, Priya Kapila

2015 Preview: Not-For-Profit Accounting and Tax Changes

Posted by Mike Burns on Thu, Dec 18, 2014 @ 09:06 AM

Not-for-profits experienced relatively few changes impacting accounting and tax reporting in 2014. It seems 2015 will not be as quiet based on items proposed and those expected to be proposed for the future. With the consolidation of the OMB Circulars, new revenue recognition standards and FASB’s financial statement project, not-for-profits and educational organizations should keep an eye on how these items may impact measurement, management and disclosures. Some of the key items that should be on your radar are as follows:

ASU 2013-06, Services Received from Personnel of an Affiliate

This accounting update affects fiscal year ends ending June 30, 2015 and later. It requires not-for-profits to recognize services provided by their affiliated entities effectively at the cost of those services. If recognizing at cost will significantly overstate the value of the services received, then the not-for-profit may elect to recognize at either the cost recognized by the affiliate for the personnel providing the service, or the fair value of the service. While this will not affect the bottom line, it will provide more transparency relative to dependence on such services and their magnitude. While many organizations have long billed for such services, this requires those who did not book such to reflect the economics.

Most entities getting such services will increase contribution revenue and a corresponding expense with healthcare organizations taking a somewhat different approach.  

See the following for more information:

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Tags: Accounting and tax changes, Mike Burns, 2015 Tax Changes

2014 Schedule A Expands Reporting Requirements for Supporting Organizations

Posted by Betty Isler on Wed, Dec 17, 2014 @ 10:00 AM

Tax filing may be a longer process for supporting organizations this year. The recently released 2014 Form 990, Schedule A, Public Charity and Public Support indicates 509(a)(3)s will face additional reporting requirements. Organizations that are not functionally integrated with the public charities they support will face the brunt of the additional requirements, which come as part of the changes required by the Pension Protection Act of 2006.

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Tags: Form 990, Betty Isler, Schedule A

Why Your Not-for-Profit Needs a Business Continuity Plan

Posted by Mark Madar on Tue, Dec 16, 2014 @ 12:00 PM

Create an actionable plan that is both easy to implement and cost effective.

Disasters come in a variety of forms, from tornados and winter storms, to water main breaks and other miscellaneous building damage. Even minor incidents such as power outages and technical glitches can paralyze not-for-profit organizations if they are not adequately prepared. Business continuity plans help keep your not-for-profit organization afloat in the wake of a disruptive event. Disaster recovery and continuity plans can prevent unnecessary costs, protect valuable data and help your not-for-profit quickly respond to the crisis and resume its operations after the event has occurred. A comprehensive plan can also reduce your insurance costs. Insurance companies often reward organizations that take proactive steps to mitigate their risks with lower premiums.

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Tags: not-for-profit, business continuity planning

Manage Your Not-for-Profit’s Risk in 10 Steps

Posted by Remonde Brangman on Fri, Nov 21, 2014 @ 09:24 AM

Not-for-profits are not known as risk takers. Unlike some commercial entities, not-for-profit organizations tend not to have pressure to take internal or strategic risks. Today’s world, however, holds its share of risks for not-for-profits. From unstable funding sources to regulatory pressure and stakeholder concerns, not-for-profits face numerous unique challenges.

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Tags: not-for-profit, risk, Remonde Brangman

Web Presence & Internet Concerns for Not-for-Profit Organizations: Liabilities

Posted by Amy O’Loughlin on Thu, Nov 20, 2014 @ 09:41 AM

(Editor’s note: This is the final article in a three-part series on internet concerns for not-for-profit organizations. To read parts one and two, please visit: Web Presence & Internet Concerns for Not-for-Profit Organizations: Hyperlinks and Web Presence & Internet Concerns for Not-for-Profit Organizations: Fundraising, respectively)

Most not-for-profits these days no doubt use the Internet to connect with their community and distribute valuable information and resources. The unlimited access to online content provides opportunities to educate the public about the importance of your not-for-profit’s mission.

Unfettered access and content, however, comes with potential liabilities of which not-for-profits should be aware. From copyright issues to privacy and the potential for defamation, many risks are associated with your organization’s website. A not-for-profit must monitor its online presence closely. IRS agents  might be looking for these liabilities and can easily “audit” your website by just browsing through it.

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Tags: not-for-profit, Amy O’Loughlin, internet concerns

Determine Your Organization’s Appropriate Level of Reserves in Five Steps

Posted by Joyce Masse Troy on Tue, Nov 18, 2014 @ 09:31 AM

Reserves for your not-for-profit can be a valuable resource when unexpected challenges arise. Not-for-profits can use their reserve funds to address these unexpected situations and remain financially stable. Additionally, reserves demonstrate to your community and donors that your organization can continue to fulfill its tax-exempt mission during periods these challenging periods.

Your organization’s reserves must come from a designated pool of unrestricted, liquid assets. Other than that, the Internal Revenue Service (IRS) does not have standard guidance about what an organization’s reserve level should be. The appropriate amount will vary from organization to organization because the reserve should reflect specifics about your level of risk, financial performance, corporate structure and business model.

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Tags: Joyce Masse Troy, not-for-profit, reserve funds