Month: May 2013

Guest post – GIK Valuation: The issues not being discussed

The following is a guest post submitted to me from a reader. As I read the article, it became obvious that the author is familiar with the issues of the relief and development organizations.  Whether the author is an outside auditor, accountant inside an NPO, or even a medical vendor does not matter. Obviously the comments reflect the author’s opinion and not those of his/her employer.  This also does not reflect my opinion.

Agree or disagree as you wish, here are ideas deserving your careful consideration:

GIK Valuation:  The issues not being discussed

While there are many, if not dozens, of misconceptions and false information floating around pharmaceutical values, GIK values, and NPOs supposed conspiracy to inflate revenues to improve their Charity Navigator rating, I thought I would point out a few things to try to bring the conversation around to the big picture rather than focusing on the quite narrow discussion around non-FDA approved, 500mg mebendazole.

500mg mebendazole is a red herring

(more…)

Jim Ulvog

“If We Want Our Funding to Change the World…”

Great video explaining it takes more than the fun, visible program costs to change the world. If We Want Our Funding to Change the World…

[youtube=http://www.youtube.com/watch?v=z_w3v6TxJZQ]

I’ll mention just two sentences from the video by Donors Forum:

The true list of what it takes to run a nonprofit’s mission and not just their program is long. If you want success you must pay what it costs to succeed.

Check out their suggested reading list. There are links to lots of good stuff.

Jim Ulvog

Food for the Hungry financial statements and 990 are available for 2012

The audited financials are available on the finance page of their website here. Their 990 is not yet available on their website but is available at the North Carolina Secretary of State’s website here.

I think the financials were posted in the last few days. The N.C. material has a date stamp of 5/17/13. 

Just a few brief tidbits from the reports. (more…)

Jim Ulvog

Conversation underway on previous guest post

The guest post from Friday is generating some good discussion. If you haven’t looked at that post since it was published, you might enjoy the conversation. Several different people have joined in.

Here is the post:  Guest post – Determining FMV is difficult. Let’s keep in mind the good that is accomplished by donated meds.

Anyone have more thoughts on what’s been said?

Jim Ulvog

Overhead ratios are the wrong way to look at charities

Dan Pallotta has a superb TED Talk explaining the fallacies of using overhead as a measure for charities: The way we think about charities is dead wrong.

[ted id=1688]

Just a few highlights to share along with my observations (comments in italics are my paraphrase of his points):

We have created different rules for the for-profit world and the charity world. There are five areas of discrimination: (more…)

Jim Ulvog

Thank you

It is the VETERAN, not the preacher,

who has given us freedom of religion.

It is the VETERAN, not the reporter,

who has given us freedom of the press.

It is the VETERAN, not the poet,

who has given us freedom of speech.

It is the VETERAN, not the campus organizer,

who has given us freedom to assemble.

It is the VETERAN, not the lawyer,

who has given us the right to a fair trial.

It is the VETERAN, not the politician,

Who has given us the right to vote.

Source unknown

Jim Ulvog

Guest post – Determining FMV is difficult. Let’s keep in mind the good that is accomplished by donated meds.

The following is a guest post submitted anonymously. The writer raises some good points and good questions. I’ll post it verbatim except for breaking two large paragraphs into smaller ones for easier reading. I hope the title of the post, written by me, fairly summarizes the ideas. 

One of the cool things about blogging is the ability to provide links to cited sources – if the author would like to forward links for the two quoted sources, I will add them.

Thanks to the author for taking the time to write. Here are his or her thoughts:

(Update 5-31: In case it wasn’t obvious, this post reflects the author’s opinion and not that of his/her employer. It does not reflect my opinion.)

Thank you for providing a space for this conversation. I have studied this specific aspect of researching fair market value (FMV) of donated items in depth. As with any discussion we must ensure that we start with the same definition of fair market value.

Accounting guidelines state that FMV is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To bring it into simpler terms, if I am selling apples and you are looking to buy apples, what price can we agree upon?

There are three points that I would make to start the conversation on the valuation of donated goods.

(more…)

Jim Ulvog

Another unsettling thing I’ve learned while blogging – the definition of poverty p0rn

If you want to stretch your brain farther than you thought possible, start blogging.

You can stop laughing now. As a cautious, restrained, introverted CPA, it is usually a half-inch journey to travel the entire distance of my comfort zone.

Starting my own business stretched that zone. Blogging shredded it.

One of the opened frontiers for me was looking at fundraising and international aid in a completely new way. A while back I saw some materials from one of the international aid NGOs. With my new vision I could see the manipulative story and oddities in the video. Evoking pity was the goal throughout.

Having already been stretched, I was able to see things differently. Like noticing every helping face in a brochure was white. Like realizing every needy face was brown or black. Further reflection revealed the only happy black face was next to a newly painted hut (which was probably provided by an aid organization and the cause of the smile).

I now know the name for that:

(more…)

Jim Ulvog

Overview of what churches should include in board minutes

For a quick summary of how to prepare minutes of church board meetings, check out Mastering Minutes for Church Business Meetings at Church Law & Tax. The article is written by Frank and Elaine Sommerville.

Churches often struggle with preparing minutes that are appropriate, helpful, and not dangerous.

Read the full article for a great primer.

Here is what minutes should do: (more…)

Jim Ulvog

Guest post – What about underreporting GIK?

Mr. Jeff Beaumont is a CPA working for a firm that focuses on serving the nonprofit community. His opinions are his own and do not reflect the opinions or positions of his firm in any way. Because he speaks for himself, I won’t identify him or his firm in any more detail. He doesn’t speak for me either.

He has experience as an auditor working on the issues discussed on this blog.  He took me up on my invitation for guest posts, so here is Jeff:

 

by Jeff Beaumont, CPA

There has been quite an amount of discussion, articles, and consideration given to recording gifts in kind.

However, I would like to ask nearly the opposite question: what about organizations that don’t record gifts in kind?

(more…)

Jim Ulvog

Other disclosure issues for GIK medicine

Since starting to write about GIK valuation issues, I’ve noticed there are a few disclosure items that don’t seem to be visible in the financial statements of NPOs who receive large volumes of donated medicines. As I have time, I’ll start accumulating examples.

Concentrations – In general, if a line item of a financial statement contains a concentration, that concentration should be disclosed. The concept is one donor or lender or customer or vendor could go away. If loss of one counter-party would adversely impact an organization, the concentration should be visible. For example, if a huge portion of cash contributions come from just a couple of donors, that probably should be disclosed.

Concentration of revenue – (more…)

Jim Ulvog

Explain to me again why targeting NPOs was needed because the Determination Unit was swamped by the overwhelming flood of (c)(4) applications

The huge increase in 501(c)(4) applications is the cited reason for targeting some applications for additional review.

Two problems with that explanation.

First, the increase of (c)(4) applications in 2011 and 2012 is a very small portion of Determination Unit caseload.

Second, the ideological targeting started well before the volume of applications increased.

Increase in (c)(4) applications was cause for targeted review

Appendix I (page 22) of the TIGTA report identifies objective I of the investigation as: (more…)

Jim Ulvog

Call for guest posts on GIK valuation

I’ve noticed a remarkable lack of conversation on the ‘net for the GIK issue from people who think the current methodologies are reasonable and appropriate. Perhaps part of that is the lack of a place to comment.

I’m willing to host guest posts on the GIK valuation issue if someone would be interested in writing something. Rules would be simple. Be professional, no ad hominem attacks, advance the conversation. I will do minimal editing without permission.

Since this is a blog, length is not an issue. Brief or long, your choice.

Since comments are moderated, you could reply to any post and I’ll see it.  Leave a comment and we can start a conversation.

Make up a good nom de plume and leave me a note if you are interested.

Jim Ulvog