Utilizing Internships - Topic for March 23, 2010

Are you a Finance Department of 1 wishing for additional staff to assist with the seemingly never-ending responsibilities of nfp finance? Or are you part of a Finance Department staff that still has trouble meeting deadlines because of excessive workload? If either of those scenarios look familiar to you, then make plans to join us Tuesday, March 23, 2010 when Allison Roba, Internship Program Coordinator at the John Cook School of Business will present information about internships and how nfp's can successfully attract skilled interns and run ongoing finance internship programs.
Some key areas Allison will cover are:

• What students are looking for in an internship
• Student capability levels 
• Availability of graduate students for internship
• Availability of undergraduate students for internship
• What is expected of the on-site supervisor
• How nfp's can compete with paid internships
• Other ways to recruit interns
• Benefits and drawbacks of hiring interns

Attendees also will receive tools and materials to help you kickstart your internship programs.

Promises, Pledges, and Receivables - It's all in the Intention

On Tuesday, February, 23, 2010, Donna Wallace of Kerber, Eck, & Braeckel presented the latest GAAP and best practices for Promises, Pledges and Receivables. The first bit of information we learned was that "promises" is the accounting term for what fundraisers call "pledges." The second piece of information we learned was that all donor contributions begin with "intentions." As you can see from reading the bullet points below, this topic is a bit complex and one we will probably re-visit in the future.

Here are some basic key points:

 

• If the donor expresses a plan or hope for future giving, but does not provide further detail, then their communication is an intent to give, and is not booked as a receivable.
• If the donor expresses a clear commitment to donate, either in writing or orally, then their communication can be interpreted as a promise to give and booked as a receivable.
• If the promise to give is based on the performance of a goal, then that promise is a conditional promise to give (not the same as a restriction) and will either be recorded as a receivable and restricted contribution at the time the promise was made, or recorded when the conditions were met, depending upon how likely the conditions will be met.
• If the receipt of the promise depends only on the passage of time or a demand for performance, then the promise may be recorded as a receivable in the period in which it was made.

Promises, Pledges, and Receivables - Topic for February 23, 2010

Ever find yourself in continuous "discussions" with the development department over when promises or pledges should be recognized as revenue? Or engaged in heated debate with fundraisers over what promises or pledges should be invoiced, or whether those invoices should even be booked as receivables?

If the scenarios described above seem familiar, then make plans to attend the next nfpFMA meeting Tuesday, February 23, 2010 when Donna Wallace of Kerber, Eck & Braeckel will instruct nfpFMA members on the fine points of promises, pledges and revievables. She'll cover the distinction between them, how best to account for them, strategies for collecting and managing them, and how they move from the temporarily restricted classification to the unrestricted one.

It will make for a very informative meeting. Promise.

Accounting for Endowments - Get UPMIFA'd

On Tuesday, January 26, 2010, Ted Williamson of RubinBrown discussed the impace of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) with the nfpFMA members. UPMIFA was signed into Missouri law on July 10, 2009 and Illinois law on June 30, 2009. UPMIFA replaces the Uniform Management of Institutional Funds Act which had been in effect in Missouri since 1976 and Illlinois since 1973.


Though, as always, donor intent reigns supreme, in the absence of specific donor instructions, UPMIFA requires preservation of principal through the practice of a “total return focus” which allows the nfp to spend gains as well as earnings. This applies even for underwater investments provided that what is expended is “prudent for the uses, benefits, purposes, and duration for which the endowment fund is established.”

Also, under UPMIFA, endowment earnings are considered donor restricted until formally approved for expenditure by the organization (usually by board decree). Thus earnings on endowments are considered temporarily restricted until appropriated for expenditure by the organization.

UPMIFA applies retroactively to all previous endowment gifts.

FASB 117-1 adjusts accounting rules for the effects of UPMIFA and applies retroactively to all existing endowments. This means unappropriated earnings in prior years should be reclassified from unrestricted to temporarily restricted net assets. However, prior year financial statements should not be restated because UPMIFA is a change in the law rather than a change in accounting, and the financial statements should reflect the laws in effect during that accounting period.

FASB 117-1 also requires certain disclosures on the financial statements that provide information about the composition of the endowment, a roll forward of the endowment by net asset classification, and certain policy statements, in addition to disclosures required by other FASB statements: the nature and types of temporary and permanent restrictions (FASB 117), and the aggregate amount of underwater endowments (FASB 124).


Recommended Action Steps:
• review existing endowment agreements to see which have spending provisions that will take precedence over UPMIFA
• consider rewriting standard donor endowment agreements to comply with UPMIFA
• work with legal counsel to develop an interpretation of state law relative to the balance of endowments that must be retained permanently
• develop a formal investment policy, or revise the existing policy, to conform to the provisions of UPMIFA
• develop a formal endowment spending policy to conform to the provisions of UPMIFA
• develop a policy regarding the expenditure of underwater endowments
• develop a formal process for appropriating endowment earnings for expenditure
• develop a system for tracking endowment balances by individual endowment fund and allocating earnings and distributions to these funds.

Accounting for Endowments - Topic for January 26, 2010

Make plans to join us Tuesday, January 26, 2010, as we kick off the New Year with a meeting devoted to accounting for endowments. We'll learn to distinguish between temporarily restricted and permanently restricted donations, as well as the criteria needed to release the restrictions.

Grant-making Roundtable - What's the Objective?

On Tuesday, December 1, 2009 representatives from two local foundations, the Missouri Foundation for Health and the Lutheran Foundation of St. Louis treated nfpFMA members to a lesson on the inside workings of funding decisions.  They stressed these key factors for drafting a strong grant application:

• Emphasize measurable outcomes (behavioral change over time) over measurable outputs (number served)
• Provide financial information that reflects financial stablility
• Request funding for programs that fit into the nfp's core (rather than fringe) strategic plan goals
• Demonstrate commitment to excellence through a diverse, professional board of trustees
• Emphasize qualitative data (stories) over quantitative data
• Demonstrate an understanding of the difference between activities, objectives, and goals

Grant-making Roundtable - Topic for December 1, 2009

During these tough economic times, not-for-profits struggle to replace lost revenue, maintain donors and giving levels, and develop new revenue streams. Accounting methods usually don't factor in to fundraising efforts, but the exception to this is grants. How we manage and report grants can play a role in whether the grant will be repeated.

With this in mind, make plans to join us Tuesday, December 1, 2009 for a Grant-making roundtable. You'll hear from various grant-making organizations and foundations and learn what key indicators they review when selecting grant recipients.

Please note - this meeting has been scheduled a week later than usual to avoid conflicts the regularly scheduled meeting date (the Tuesday before Thanksgiving) would have brought on. We will resume our regular 4th Tuesday of the month schedule with the January, 2010 meeting.