Ch12 Not For Profit Orgs'

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Ch12 Not For Profit Orgs.
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Ch12 Overview

• Know what F/Stmt used how they work
• Special Issues
• Contributions
• Collections
• Investments
• SPECIAL ISSUES FOR HOSPITALS
• Fundraising Costs
• Tax status of NFP

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Review from last time

• 3 main statements?
• Categories each stmt?
• Plus what for VWHOs?
• Contributions recorded when
• U____ P_____, L______ E_____, I____ to E__
• May reduce revenue recorded for what?
• PV, Uncollectibles.
• Accrue services if
• Need Special S_____, has them, would have paid
• How is it recorded?

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Supp. Page 49

• What is support?
• Nonreciprocal exchange .. GIFT
• Revenue reciprocal exchange
• Like purchase of service
• FYI Largest source of revenue for NFP?
• On AVG 1/3 Gifts, 1/3 Revenue, 1/3 govt grants
• Program vs. Support
• Watchdog organizations recommend at least 65
  should go to programs

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Supporting Expense issues

• What if administrator does program and mgmt work?
  
• Fund raising letter is cost FRaising?
• Auditing guidelines PAC
• Purpose .. What is mission
• Audience .. General vs. prior donors only
• Content .. What of pages program vs. FR
• Fundraising Banquets
• Cost of food netted from Direct Revenue,
  adver/printing cost is FRaising

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Tax Status of NFPs Supp. P. 50

• Sometimes have choice of Business vs. NFP status
• Exempt from Fed Income tax not social security
  w/holding etc file Form 990 990T if they
  have Unrelated Bus Income
• Most common status 501(c)3
• Only status for which individuals can take
  charitable donation deduction
• May write off contributions to others as business
  expense

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Common myth of NFPs .. No Income

• CAN have income CANT distribute as dividend
• TAX on Unrelated Business UBIT due if
• Carried on regularly
• Not related to exempt purpose
• Not EXEMPT
• Sales by volunteers, For convenience of members,
  sales of donated items,
• Sale of member lists, dividend or interest
  revenue, most RENTs

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Hospitals which guidelinesBusiness, SLG,
Private NFP?

• Revenue Classes
• NET Patient Service Revenue
• Full Billing Less CONTRACTUAL ALLOWANCES
• IF known to be full charity case not recorded
• Bad Debt Expense NOT listed here, but in expenses
• Also includes CAPITATION revenue
• Accrue as service rendered not just on
  discharge
• Other Operating Revenue
• Donated Supplies here
• Nonoperating Revenue
• Donated Service here

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Other Hospital Issues

• PPS DRGs managed care
• Prospective Payment Systems
• Diagnostic Related Groups
• Hospital Makes Profit only if EFFICIENT

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Questions?