The New England Not-For-Profit Accounting Advisor

Low unemployment, strong stock market performances, and increases in corporate profits made 2018 a stellar year for grant-making foundations and charitable trusts. The sector is primarily fueled by private contributions from individuals and corporations, investment returns, and capital asset gains, so when economic conditions are favorable, grant-makers do well, too. And when grant-makers do well, it benefits the not-for-profit organizations that rely on donations, grants, and endowments to support their programming efforts.

Topics: Donations, Grants, Endowments, IBISWorld

Recently, the IRS made several changes to the rules related to hardship withdrawals for not-for-profit organizations. The changes may be adopted by plan sponsors as early as Jan. 1, 2019 or, if later, the first day of the plan year beginning after Dec. 31, 2018.

Topics: not-for-profit, NFP, nonprofit, IRS, 403(b), hardship withdrawals

Data can say a lot about which processes work and which don’t, but with the volume of information a not-for-profit organization is collecting on a daily basis, that message can easily get lost in the shuffle. Robust data analytics programs help to separate the story from all the numbers.

Analytics programs help to do the heavy lifting when it comes to information processing, distilling volumes of data into real time, and actionable insights. When a data analytics program is properly constructed, it can support risk management efforts, budget decisions, and strategic planning. Data analysis helps identify areas of key risk and fraudulent activity. It can be used to evaluate a program’s ability to meet its targets and highlight any inefficiencies. Data analytics can also play a role in donor management, picking up trends in contributions and charitable giving that may not be immediately obvious to a not-for-profit’s board or management team.

Topics: non-for-profit, Non-profits, nonprofit, data analytics, analytics, Scott Moody

Not-for-profit organizations face a big question going into their next fiscal period: how will the revenue recognition standard affect the not-for-profit sector? The answer is: it depends.

If your organization uses a basis of accounting other than the U.S. generally accepted accounting principles (GAAP), such as a cash basis of accounting, then the changes to revenue recognition under ASC Topic 606, Revenue from Contracts with Customers will not impact your organization. Organizations that follow U.S. GAAP will have some evaluating to do, particularly if your entity receives a high volume of contributions, is a membership organization, or provides goods or services (such as by operating a gift shop). 

Topics: Not-for-Profits, NFP, Holly Perez, Revenue recognition, ASC Topic 606

The risk of significant financial fraud may be lower for not-for-profit organizations than it is for for-profit entities, but its impact can be just as paralyzing.

Not-for-profit organizations represented only 9 percent of the Association of Certified Fraud Examiners’ study of 2,690 fraud cases in its 2018 Report to the Nations. Regardless of the incidence, there’s an obvious financial impact from fraud. Total fraud cases in the 2018 Report to the Nations resulted in estimated losses of $7.1 billion, which the ACFE acknowledged is only a fraction of the true cost of global fraud. The study concluded that the median cost of fraud to not-for-profit organizations was $75,000, but these costs do not include the cost of attorneys, forensic accountants, and other specialists who will be called upon to assist with the investigation.

Topics: non-for-profit, Non-profits, nonprofit, nonprofit fraud, fraud, John Mulvaney

The effective date for the new leasing standard under ASC Topic 842 will be here before you know it. Not-for-profit organizations that issue or are conduit bond holders for securities that are traded, listed, or quoted on an exchange or over-the-counter market begin adoption for fiscal years beginning after Dec. 15, 2018 (and interim periods within those fiscal years), and all other organizations must adopt the standard for fiscal years beginning after Dec. 15, 2019 (Jun. 30, 2021 financial statements).

Topics: not-for-profit, NFP, tax-exempt, IRS, nonprofit, Leasing, asc topic 842, GAAP, Lease Standards

In the spring, we did a deep dive into the core Form 990 and provided compliance tips for Part I through Part XI. Keeping your supplementary schedules up-to-date is also critical to your compliance. Below are some tips for the Form 990 Schedule A, Schedule R and everything in between. If these schedules are applicable to your organization, the following information can help ensure that you are filing a complete and accurate Form 990 that presents your not-for-profit in the best light and helps avoid IRS scrutiny.

Topics: not-for-profit, NFP, Lisa Burke, Form 990, tax-exempt, IRS, Form 990 Roadmap, Form 990 Schedules, nonprofit

Not-for-profit organizations should take a page from the public company playbook when it comes to their governance. The Sarbanes-Oxley Act of 2002 (SOX), makes it a requirement for public companies to have an audit committee that follows several key mandates for reporting annual financial statements. Regardless of size, all not-for-profit organizations can benefit from having an audit committee as well, that can help with governance strategies and, ultimately, provide the best chance to ensure the organization’s success.

Topics: not-for-profit, NFP, nonprofit, Audit Committee, not-for-profit board of directors, SOX

It’s a tough time for any organization looking to hire right now. The unemployment rate in July was at its lowest level since 1969, and all signs indicate that the trend will continue. Baby boomers will also continue to retire, leaving a massive void in the workforce.

Topics: not-for-profit, NFP, nonprofit, CFO, not-for-profit talent, Jay Meschke, competing for talent, retain talent, recruiting, not-for-profit recruitment

The 2017 tax reform law gives donors more of an incentive to make charitable contributions, increasing the deduction allowed for cash contributions to public charities from 50 to 60 percent of adjusted gross income. Substantiating that deduction, however, may be more challenging due to recently finalized IRS regulations.

Topics: Charitable contribution planning, charitable giving, not-for-profit, Charitable Contribution Deductions, Tax Reform, Taxes, Bill Smith, Nate Smith