Nonprofit finance, accounting, and tax news. Other tidbits of interest to the charity community.
For quite a while now I’ve been fascinated by the rapid increase in oil production in the Bakken field in North Dakota.
Have had a lot of posts on my blog Outrun Change. Under 1% unemployment in one county. Production graphs that are going vertical. More oil produced in ND than California. That kind of stuff.
This month my interest level took off like those oil production charts.
In Toxic Charity – How Churches and Charities Hurt Those They Help (and How to Reverse It), Robert Lupton describes the harmful unintended consequences of the way we usually do charity.
In 1981, he moved into the neighborhood where he was serving. On Christmas Eve, he was visiting the home of some new friends.
Mom, dad, and the kids were anxiously awaiting visitors. There was one strand of lights on the small artificial tree in the corner. The nicely dressed people from the suburbs arrived with armfuls of nice presents wrapped so pretty.
In the midst of the unwrapping, the father slipped out of the house. Later one of the kids asked where he was. Mom said he had to go to the store.
The Wall Street Journal discusses ‘benefit corporations’ in their article, With New Law, Profits Take a Back Seat.
This is a traditional for-profit corporation modified to so the entity can have social or environment issues as a priority. Profit or the interest of stockholders can take a back seat to those self-defined issues.
Why take the benefit corporation approach?
I have a post on my other blog, Outrun Change, that discusses the reshoring trend. More companies are bringing their manufacturing back to the U.S. because of changing economics of offshoring. One challenge in reshoring is improving the skills of American workers so they can use the latest technology.
Reshoring – huge opportunity if we want it and a skill-set challenge we can overcome
In his article When Hubris Comes to Church, Thom Rainer describes the danger to churches of thinking they are the reason for their success, which can lead to pride and arrogance.
He correctly labels this hubris:
Simply defined, hubris means pride or arrogance. It has its origins in Greek tragedy, where an excess of ambition or pride ultimately caused the transgressor’s ruin.
Previous post quoted disclosures made by Feed the Children in their 2010 audited financial statements. Essence of that note is that deworming medicine valued in the 2009 financial statements at $544M would have been valued at $21M if the 2009 financial statements had used the pricing information that was in use for 2010.
This post will look at the 2008, 2009, and 2010 financial statements through the lens of the two different valuation rates.
Here are the spreadsheets that support my comments in this post. Remember your Algebra teacher telling you to show your work? Well, here’s my work. I’ve posted this here to keep the other post a bit less messy.
In a huge ruling today, the Supremes agreed that religious schools may hire and fire ministers of the gospel without being subject to court review of their decisions.
Specifically, a terminated employee who is a ‘minister’ role can not sue such an employer for discrimination.
UPDATE: After reading a few articles, it looks like this was a much more serious case than I thought. By the time the SCOTUS looked at the case, it may have developed into a general attack on all churches who have any pastors.
There are lots of places NPOs can get themselves into trouble by violating rules they didn’t know about.
Katie Thomas, CPA, has a great survey of a few places that can cause problems for NPOs in her post, You Don’t Know What You Don’t Know, at the Nonprofit GPS blog. She mentions: (more…)
Previous post here discussed the impact of changes in valuation of GIK caused by new accounting. I already discussed World Vision’s financials. Next I will look at Feed the Children’s financials.
The beginning point of my discussion was a Forbes article, by William P. Barrett: Donated Pills Make Some Charities Look Too Good on Paper. This series of posts started here. I hope my observations from a CPA’s perspective will contribute to this growing discussion.
After looking at World Vision’s financials, I looked at the financial statements of several other NPOs trying to figure out the impact of FAS 157 and especially the change in valuation of deworming medicine.
Mr. Barrett has accumulated some good numbers. I looked at publicly available audited financial statements and 990s available from GuideStar. I could not get a clear understanding by combining information from his published report with public data to let me get a clear understanding. Just not quite enough data there to work with.
Then I looked at the Feed the Children website. Kudos to them for making their 2010 financial statements available online, which you can find here.
Wow. Found some superb information in the footnotes. Check out this comment in note 2 on page 11, which I will quote at length:
A peculiar irony of charity is sometimes you get the unintended consequence of creating problems when you are trying to help someone.
I have several things to say on point. Currently I’m reading Toxic Charity: How the Church Hurt Those They Help and How to Reverse It, by Robert D. Lupton. Very sobering – $11 on Kindle.
Before I talk about Mr. Lupton’s book (and I’ll have *lots* to say), I wanted to share an experience I had a long time ago.
While working at another CPA firm, I had the incredible, delightful opportunity to do several audits on the overseas operations of a large international NPO. Their name doesn’t matter, because they are not part of the story. I have tremendous respect for them and the work they are doing. If you have known me a while, then you know who I am talking about.
Francine McKenna asked me to combine my short comments on the Olympus fraud into a guest post on her blog.
I’m quite happy to announce my revised, expanded, and edited discussion is available. You can read the full thing at How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud
Many thanks to Francine for the wonderful opportunity to speak to a big audience.
Mark J. Perry compares how long it takes to buy an electric kitchen oven in 1966 versus what you could buy today for the same number of hours of labor. See his visual illustration at Living the Good Life: The Good Old Days Are Now.
He translates the cost of an oven in 1966 into the number of hours labor needed to buy it at the average hourly wage then. He figures out the average hourly wage today and figures out what home appliances could be purchased for the same number of hours work. The cost reductions are amazing.
What in the world is Swedow?
In writing about GIK and deworming meds, I’ve learned some fancy words, like Albendazole, Mebendazole and Swedow. I’ve also started reading discussions in places I usually don’t go.
For example, Good Intentions are not enough is a great blog written by Saundra Schimmelpfennig. She has lots of posts about the complexities of doing foreign aid well.
While visiting that site, I read a guest post by Juanita Rilling: Compassion on Sale.
She has a sobering discussion of the unintended waste of sending drinking water as part of humanitarian relief. (more…)
Wow. When I started blogging about GIK valuations, I knew there was a major issue, but didn’t quite grasp how big it really is.
The beginning point of my discussion was a Forbes article, by William P. Barrett: Donated Pills Make Some Charities Look Too Good on Paper. In this post I will look at the impact of a change in accounting rules on the valuation of GIKs.
Additional background
Several articles by Caroline Preston in The Chronicle of Philanthropy outline the issues. One deworming medicine, Mebendazole, seems to be the biggest issue. In her article Aid Charities’ Accounting Practices Draw Criticism, she quantifies the significance of that one med: (more…)