Nonprofit finance, accounting, and tax news. Other tidbits of interest to the charity community.
A: a computer.
As you are well aware by now, I get a kick out of Mark J. Perry’s blog, Carpe Diem. He links to a photo comparing an IBM supercomputer with 5MB storage being lifted into the side of an aircraft with a forklift in 1956 to a 128GB flash drive today: 1st Super-Computer (1956) v. Today’s Flash Drives
That prompted me to make another comparison of then versus now.
I picked for comparison the first laptop that showed on an Amazon search. (more…)
Now that the new year is approaching, it’s time for bloggers to float their top ten posts. Here is one I enjoyed. Might list a few more if there are some that particularly catch my eye.
Good Intentions are not enough is a blog I just found this past week. Lot’s of great discussion there of the challenges to do international aid well. I’m late to the party since the author has already cut back on posting earlier this year.
Here’s their list:
Good Intentions’ Top Posts for 2011
My three favorites: (more…)
Mark J. Perry at Carpe Diem often uses a delightful formula that consistently makes me thrilled to be alive today.
General formula is this: You could have bought item X in whatever year. For the same amount of inflation adjusted dollars or same hours of labor, today you could buy X, plus Y and Z, along with A, B, C, D and E.
His post yesterday, The Magic and Miracle of the Marketplace: Christmas 1964 vs. 2011 – There’s No Comparison, has cool pictures from the 1964 Sears Christmas Catalog.
One of those really cool, great big, color TV consoles that takes up an entire wall could be had for $750 back then. Adjusted for inflation, that would cost you $5,300 in 2010. What could you buy today for inflation adjusted $5,500 today? His shopping list:
Before looking at some actual financial statements that have been affected by the changes in valuation of GIK, I thought it would help to look at a simple picture.
This is a continuing series of posts looking at deworming meds, especially Mebendazole, which started here.
A major component of this discussion is new accounting rules that change the definition of how to value GIKs. Those changes are discussed here.
I am quickly learning that this whole GIK valuation thing is a bigger issue than I realized and already has some interest. I hope I will be able to contribute to the discussion from the accounting side.
To illustrate the change in valuation rules, I have made up two sample financial statements. The numbers are small and simple so we can see the overall picture. I set the internal relationships so they are representative of an actual NPO.
This would be a good time to explain how I make changes on posts. The etiquette in the blogging world seems to be that changes and corrections should be clearly identified. That’s a great idea.
Here’s my protocol:
The original comments will be left in the post.
Corrections and deletions will be marked through with strikeout.
Update comments will be identified Update: with the word update and italicized comment.
Small updates will be italicized right after a strikeout. For illustration example.
Minor typos will be corrected without a special notation, unless it has significance to the article.
With two different series of posts I’m working on now, I’m making a number of corrections, so thought it worthwhile to mention this.
Two previous posts discussed the issues raised by an article in Forbes about the valuation used by some nonprofits in their financial statements for recording donations of deworming medicine.
I’d planned to look at the impact on some specific financial statements next, but think it would be better to look at what the accounting rules have to say before doing some number crunching. This will be a really long post, so please bear with me.
The Forbes article by William P. Barrett is Donated Pills Make Some Charities Look Too Good on Paper.
Previous post discussed an accounting issue raised by Forbes about valuing deworming medicine. Forbes magazine thinks some nonprofits are using a valuation that is too high for recording donated meds in their financial statements.
The Forbes article, by William P. Barrett, is Donated Pills Make Some Charities Look Too Good on Paper.
My first post describes some of the valuations that are in use.
This post discusses where the valuation amounts came from. (more…)
The IRS’ e-File system for Forms 990, 990-EZ, 990-PF will be down for January and February 2012, according to the IRS web site. Will not affect the filing system for 990-Ns.
See their announcement here.
Forbes magazine dives into the nonprofit community’s GIK valuation issue in an article by William P. Barrett, Donated Pills Make Some Charities Look Too Good On Paper. (In print the article had a cooler title – Magic Pill, Magical Accounting)
GIK valuation is difficult and messy. Before anyone gets mad at me for airing dirty laundry from the NPO community, keep in mind that Forbes has a circulation that is somewhere in the range of, say, one gazillion times larger than this little blog. The article appears in Forbes magazine guys, and on their website. Don’t get mad at me.
My point in writing these posts? The issues we are struggling with in the religious NPO world are getting attention from secular media. It would be wise for NPOs and auditors to deal with this on our own. Quickly.
The Evangelical Council for Financial Accountability (ECFA) released their second Annual State of Giving Report.
Donations to all of their members in 2010 increased by 5.8% over 2009.
A few comments on interpreting the data.
Some ministries are engaged in activities overseas that are moral and ethical by our standards but may not meet with full approval of the government of other countries.
If that is the case (and you know if that description applies to you!), you would be well advised to ponder the incredible technology capabilities available to governments.
I have a post at my other blog, Outrun Change, discussing a series of articles that have appeared in the Wall Street Journal. My post: Cool internet capabilities can be used for censorship and suppression of dissent.
Might be worth checking out that article.
Check out Supply & Demand: A Thug Story
Government interference with the pricing mechanism produces shortages which are resolved by non-price mechanisms: discrimination, waiting lines, rationing, black markets, or favoritism. Markets messed up? Look for government messing with price signals to find the cause.
[youtube=http://www.youtube.com/watch?v=7MY7E_VhKMM&feature=player_embedded#t=149]
IRS announced new standard mileage rates for 2012 in Notice 2012-1:
55.5 cents per mile for all miles of business use (business standard mileage rate).
23 cents per mile for use of an automobile …for medical care
23 cents per mile for use …as part of a move for which the expenses are deductible
14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization
If you come across some things that make you think there are some shenanigans going on, your first reaction will be to look at it some more.
While you will obviously want to look at something so you can understand it, don’t get too far into an investigation. If you think you’re looking at actual fraud, you need help. Someone trained in investigations.
I have a series of posts up on my other blog, Outrun Change, discussing the radical changes in how books, music, and video are distributed today without having to use a traditional middleman. There is a dramatic shift when it doesn’t cost anything to make and distribute one more copy of something.
This doesn’t just impact writers and musicians. This has a huge impact on nonprofits that want to get their message or resources out, or businesses that want to start producing materials for education and promotion.
Check these out: