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Posted by Dyan Reinhold on Thu, Dec 5, 2013 @ 09:39 AM

GAAPA diversity of practices exist when it comes to accounting for fundraising costs. Since this is an area that is likely to receive increased attention by the IRS in the coming years, we advise not-for-profit organizations to review their approach and ensure proper fundraising cost reporting is taking place. 

There are a number of considerations that nonprofits must take into account when accounting for fundraising costs.

Here are 6 key considerations to keep in mind:

  • Fundraising costs include all activities related to the fundraising operations such as mailing list development/maintenance, event coordination, and the management of such operations and related activities.
  • Generally accepted accounting principles (GAAP) require that the amount spent on fundraising be disclosed.
  • GAAP suggests that direct assignment of costs to fundraising activities is preferable to other methods where possible.
  • GAAP requires that revenues and expenses be presented on a gross basis.
  • There are special considerations related to purpose, audience and content in allocating costs to fundraising when a "joint activity" occurs.
  • There are additional disclosures required in the financial statement footnotes when allocating fundraising costs under joint activity rules.

If you need additional information or assistance to ensure that your organization is in compliance with GAAP related to fundraising, contact us here.

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 Dyan Reinhold is a Principal in the Not-For-Profit & Education Practice. She can be reached at 617.761.0553 or DReinhold@cbiztofias.com.

Copyright © 2013 CBIZ & MHM (Mayer Hoffman McCann P.C.). All rights reserved. CBIZ and MHM are separate and independent legal entities that work together to serve clients. CBIZ is a leading provider of tax and consulting services. MHM is an independent CPA firm providing audit and other attest services. This article is protected by U.S. and international copyright laws and treaties. Use of the material contained herein without the express written consent of the firms is prohibited by law. Material contained in this alert is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their business.

Tags: GAAP, Dyan Reinhold, non-for-profit, Non-profits

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