Mar 28, 2018, 3:58 PM
(from Nonprofit Quarterly) Nonprofit staff and boards will do themselves right to implement new FASB standards in creative ways that tell their mission story effectively.
A New Standard Regarding Donor Restrictions: ... The most useful way to tell an organization's story with the two new categories is to have separate columns for each on the Statement of Activities (Income Statement) and the Statement of Financial Position (Balance Sheet). Using columns allows all readers of the statements to see clearly what revenue, cash, investments and other line items carry restrictions or not.
A New Standard Regarding Liquidity: ... Even though FASB requires that the liquidity disclosure show what is available within the next 12 months, it might make more sense for an organization to focus on just the next 90 days. It all depends on the nonprofit’s normal cycle of payments and receipts. For example, if an organization receives a large portion of its revenue from a government agency that takes an average of 90 days to process reimbursement requests, then establishing liquidity measures based on a 90-day cycle would make sense.
A New Standard on Functional Expenses: ... When reporting functional expenses, try putting the administrative and fundraising costs at the center of the nonprofit structure. These expenses that used to be vilified as diminishing program effectiveness are actually core mission support. Having good organizational infrastructure in the form of solid financial accounting, strong board governance, innovative fundraising staff and state of the art technology is a boost to mission effectiveness and impact — not a drag on a nonprofit’s success.
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