Update on exposure draft for increased GIK disclosures

December 19, 2019, 11:17 am

Image courtesy of Adobe Stock.

FASB update presentation today (12/19/19) indicated the GIK disclosures project is moving forward as previously outlined.

An exposure draft is expected to be released in January 2020.  There will be a 60 day comment period.

Previous post described the outline and limited scope of the project as approved by FASB:

In condensed form, the project will require separate disclosure of donated goods on the face of the statement of activities and require some additional disclosures in the notes. There will not be any change in valuation of donated medicine.


More articles on GIK valuation. The issue isn’t going away.

November 20, 2019, 10:09 am

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Nicola White, writing at Bloomberg Tax, has several articles following up on the GIK valuation issue after the veto of California AB 1181 by the governor. If you have been following the issue, you will want to check her recent writing.

End of this post discusses the departure from FASB of a project manager long involved with nonprofit rulemaking.

The articles, with a few highlights:

11/4/19 – Bloomberg Tax – Small Fixes Eyed for Charity Accounting as California Backs Off – Article describes why FASB is strongly resistant to any change in GIK valuation.

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FASB provides outline for new disclosures on GIK

November 19, 2019, 7:52 am

Image courtesy of Adobe Stock.

On November 6, 2019, FASB discussed the GIK valuation project.

Back on August 21, 2019, FASB set the scope for the project to include only nonfinancial GIK with measurement (that means valuation) off the table. Staff was directed to work toward an exposure draft (ED) that would address only presentation and disclosure. That means an ED will only describe how GIK is presented on the statement of activity and what information is explained in the notes.

According to minutes of the 11/6/19 meeting, available here, FASB ratified that previous scope.

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How big is the world of donated medicine? Updated estimate.

October 29, 2019, 7:42 am

Medical factory storage warehouse. Image courtesy of Adobe Stock.

This post updates the previous estimate of the volume of donated medicine for the relief & development community of the nonprofit world.

There are a few charities receiving big volumes of medicine donated by the pharmaceutical companies. Those charities then get all those meds distributed to charity clinics and hospitals around the world. That is incredible work which is improving the lives of millions upon millions of poor people around the world.

Following is an estimate of the size of that sector, with subtotal of charities with over $20 million of donated medicine and supplies, under $20 million, and zero reported meds:

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Governor vetoes AB 1181. More details and background on override.

October 13, 2019, 2:58 pm

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On Saturday October 12, 2019, Governor Newsom vetoed California AB 1181. The bill would require charities filing financial statements with the state Registry of Charitable Trusts to value donated medicine at the fair value in the market the medicine would be distributed.

Essentially this would have required charities to use values in the international market instead of the U.S. market.

The governor announce a list of bills he signed and vetoed. You can find the list here. By my count he signed 69 and vetoed 58 on Saturday.

Veto message

The governor’s veto message can be read here. In it he said:

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Governor vetoes AB 1181

October 13, 2019, 6:19 am

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On Saturday October 12, 2019, Governor Newsom vetoed California Assembly Bill 1181, which would have required charities filing financial statements with the state Registry of Charitable Trusts to value donated medicine at the fair value in the end recipient market. Essentially this would have required charities filing in the state to use values in the international market instead of the U.S. market.

More discussion will follow later today.

Update: more details in followup post.

Update: The post you are reading here was the initial one published immediately after I learned the governor vetoed the bill. Later on Sunday a wrote a longer post which provided far more background. For some reason, the majority of traffic coming into this blog is going to this short post. To provide more value to those arrive in this page, I will copy the additional info on the longer post here. Hope this info is helpful.

Followup to this post, which was previously published here. Additional info is the text of the governor’s veto message, background on the veto override protocol, and my assessment whether the bill is totally, completely dead or not:

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More details on Food for the Poor’s settlement with Michigan Attorney General

October 11, 2019, 9:01 am

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Previous discussion on 10/4/18 provided details on a settlement between Food for the Poor and the Michigan Attorney General.

Prior post provided explanation of the FFP appeal claiming 95% efficiency, the cost of 6 cents to provide a meal, and joint cost allocation of speakers who go out to raise funds.

I have obtained and read a copy of the settlement agreement with the AG.  There are a few more details that are worth describing.

Penalties

The settlement agreement was effective 9/27/18. It was announced the next day.

FFP denies their appeals were misleading and denies any violation of state law. They also deny doing anything wrong.  The charity does recognize

“…that modifying its solicitations would better emphasize its impact, as well as achieve greater transparency. Food For The Poor worked with the Department to modify its solicitation materials and resolve the Department’s concerns.”

FFP agreed to pay $250,000 to two charities in Michigan which feed poor people. The charity also agreed to pay the AG $50,000 as reimbursement for their litigation costs.

Issues and resolutions

Efficiency claims 

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