Non-profit accounting

Do heavy staffed foundations have better outcomes than lean staffed foundations? Can lean staffed foundations still get the job done?

Writing at Inside Philanthropy, David Callahan follows up on his previous article about the intentionally heavy-staff model used by many legacy foundations.

He asks Can Lean Foundations Do Smart Grantmaking? Here’s a Study That Says “Yes”.

He cites a study by Exponent Philanthropy that surveyed nearly 800 members of the organization. The survey, of people associated with foundations with little or no staff, found that foundations can stay informed, make lots of grants, and produce reasonable returns on the invested funds with very low staffing levels.

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Jim Ulvog

More good stuff for charities and board members

Articles on warning signs that a charity’s financial processes aren’t working well, the debate on DAFs, and a way-out-there charity.

4/10 – GuideStar – Ten Signs of Financial Trouble for Board Members – If you are on the board of a larger-sized charity, might be helpful to check out this list of warning signs that something is wrong in the financial function. Applies to any charity in New York.

Just a few tidbits:

1.FINANCIAL INFORMATION IS LATE–

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Jim Ulvog

Look for exposure draft on NPO accounting overhaul in mid-April

Thomson Reuters Tax & Accounting News reports Not-For-Profit Financial Statement Proposal Set for April Release.   The exposure draft from FASB is expected in mid-April.

Comment period will be open until end of July. Article says there is no current indication of an effective date.

My previous comments here and here.

Jim Ulvog

Price cut on print books

I’ve dropped the prices for the print copies of my books available at Amazon, Barnes & Noble, and iTunes store.

Here is what you can find on-line:

tragedy-cover

 Tragedy of Fraud – Insider Trading Edition

Story of Scott London’s fall from regional audit partner at KPMG to prison inmate because of his insider trading.

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Jim Ulvog

More discussion on how to analyze a charity’s financial statements. Red Cross as an illustration.

There is some dialogue in the nonprofit world on how to characterize the ‘overhead’ of American Red Cross. Here’s a few articles.

1/9 – ProPublica – Senator Demands Answers on Red Cross’ Finances – Sen. Grassley is asking the American Red Cross to explain the math behind their widely repeated public comments that 91% of donations go to their services. Article says their audited financial statements reportedly show that 26% of expenses are for fundraising.

01/2015 – Charity Watch – Don’t Be Misled by Deceptive Charity Efficiency Claims – Do you see a big difference between these two statements?

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Jim Ulvog

Major overhaul of charity accounting rules on the near horizon

Thomson Reuters Tax & Accounting News reports Proposed Changes for Not-for-Profit Reporting May Come in March. An exposure draft from FASB could be out in March.

This would be the biggest overhaul of NPO rules since statements 116 and 117 were released back in 1993. Has it been 20 years already? Wow.

Article point to several major areas of change: (more…)

Jim Ulvog

A few articles of interest in the fundraising world

I haven’t seen a lot of articles in the last few months on the overhead and “worst charities” issue. Haven’t seen anything on deworming meds in a long time. Maybe I’ve just not been paying close enough attention.

Here are a few articles I’ve noticed lately. First, on for-profit thrift stores, and a few old stories gaining new coverage. Finally, a couple of articles on donor advised funds.

For-profit thrift stores

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Jim Ulvog

An illustration why interpreting functional allocation information is difficult: the Wounded Warrior Project financials

Apparently there is conflict going around on how to interpret the functional expense allocation information for Wounded Warrior Project.

All their info is laid out in their audited financial statements, which you can find here. Their annual report, audited financial statements, and 990s for the last eight years are all available on their website. Good on them for making all that info readily available. That is an example for all charities to follow.

How can three different calculations all be correct?

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Jim Ulvog

FASB is starting to write a major overhaul of NPO accounting

One discussion inside the accounting rule maker deals with a massive restructure of the accounting for nonprofit organizations. The FASB staff have started drafting the changes.

Exposure draft might be released in early 2015. Adjust the estimate by a few months to allow for the complexity of a rewrite that affects such a wide variety of organizations and I’ll guess we may see an exposure draft in spring or summer 2015.

Thomson Reuters Tax & Accounting News reports Not-for-Profit Proposal Targeted for 2015 Release.

If you are involved in the finance or accounting areas of the NPO world, it might be worth keeping your eye out for this issue.

Jim Ulvog

A few minutes of tax reading

For a quick tax update, I recommend you frequently visit Corey Pfaffe’s blog, MinistryCPA. Better yet, set up an RSS feed so you get his articles as he posts them.

Here are three of his recent articles that would help your understanding:

 

Jim Ulvog

Primer on fraud in local governments

If you work in a local government, are in leadership there, or provide audits in that sector, you really ought to check out Charles Hall’s book, The Little Book of Local Government Fraud Prevention.

I bought & read a copy a while back and really, really want to write a review of the book, but haven’t been able to pull together my thoughts.  (Sorry Charles!) It is a good read.

(cross-posted from my other blog, Attestation Update.)

Until I pull together my thoughts, just know that I believe you would benefit from reading the book.

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Jim Ulvog

More good stuff on overhead ratios and impact 8/5

Here are a few more articles in the ongoing conversation of overhead and the “worst charities.”

Good discussions are developing on the Alliance for Charitable Trust Linked-In group. That’s where I found two of the following articles.

3/24 – Skoll world forum – Reimagining the ‘overhead’ debate– Article provides an example of full costing instead of ‘overhead’ ratios. The organization calculated the grand total of cost for their program in Malawi is $885,767. They then provided three paragraphs explaining what that $886K accomplished. Great illustration of outputs with several outcomes included in the narrative instead of a supporting services ratio. Donors can make their own decision whether that program deserves their support. (more…)

Jim Ulvog

It’s complicated. Evaluating charities and doing business in China version. Part 2

First post in this series looked at another illustration of the complexity of doing business or ministry in China.

This blog has looked several times at the issue of how complicated life is.

This post ponders complexity in terms of how to evaluate and compare charities that have vastly different operating circumstances.

Complexity of evaluating charities

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Jim Ulvog

More good stuff on overhead ratios and “worst charities.” 7/16

Here are a few more articles in the ongoing conversation of overhead and the “worst charities.”

“Overhead ratio”

7/11 – Chronicle of Philanthropy – Wounded Warrior CEO Rips Rating Systems as ‘Ineffective and Misinformed’ – CEO says Wounded Warrior could have modified their operations to manage the overhead ratio, but they choose instead to focus on long-term service to their community, which involved upfront costs and other efforts that affected ratios. They disagree with the attitude that overhead is bad and fundraising is either a sign of inefficiency or fraud. In the tell me how you really feel category, the CEO says this of the rating agencies:

“Essentially what these groups are doing is passing judgment on decisions that were made by charity boards and staff on how to best fulfill their missions, meet the needs of their constituencies, and sustain their organizations over the long term,” he said.

He also mentions what few others will discuss: not all charities are completely honest in their functional allocations.

7/15 – Huffington Post – Measuring Charity Effectiveness: Manage Your Mission, Not Your Rating – Steve Nardizzi, CEO of Wounded Warrior Project goes in-depth on why the overhead ratios and rating agency methodology is out of line. This is a must read if you have been following the overhead debate. Several quotes:

The two main issues with ratings agencies (sentence diagrammed by me for emphasis): (more…)

Jim Ulvog