Nonprofit Management Certificate Course

1
Nonprofit Management Certificate Course

• Financial analysis and reporting

2
Overall Objectives

• Differences between commercial and nonprofit
• Accounting and reporting concepts for nonprofits
• Unique accounting matters
• Basic reporting requirements
• Basic tax considerations

3
Fiduciary Responsibility

• Recipients of service
• Contributors
• Revenue sources (i.e. Grantors)

4
Fiduciary Responsibility
Efficiency
Effectiveness
5
Benefits to Nonprofits

• Federal income tax exemption
• Other tax benefits
• Ability to attract contributions
• Employment and excise tax benefits
• Preferred postal rates
• Special annuity provisions

6
Business Vs. Nonprofit

• Profit motive
• Cost or traditional accounting
• Sales of goods and services
• Financial statement users

• Managerial responsibility
• Fund accounting
• Donated assets
• Financial statement users

7
Types of Nonprofits

• Voluntary health and welfare
• Nongovernmental
• Colleges and universities

8
Financial Statement Users

• Funding sources
• Regulatory agencies
• Beneficiaries
• Trustees/ directors
  

• Governmental units
• Creditors
• Constituent organizations
• Employees

9
Service Efforts and Accomplishments

• What is the organizations purpose?
• Who does the organization serve?
• What services are offered?
• How are the services provided?
• How well are the services delivered?

10
Financial Statement Purpose

• Report nature and amount of available resources
• Identify principal programs and costs
• Disclose degree of control by donors over
  resource use

11
Accrual Basis Reporting

• Goods/services purchased are recorded when title
  passes or services are received
• Revenues reported when earned
• Support recognized upon legal enforceable right
  to assets

12
Basic Financial Statements

• Statement of financial position
• Statement of activities
• Statement of cash flows
• Notes to financial statements
• Statement of functional expenses(vhw)

13
Philosophy of Reporting

• Where business enterprises and not-for-profits
  are alike, the financial statements should be
  similar because certain information is useful to
  resource providers regardless of the type of
  entity. However, when transactions and
  objectives are different, financial reporting
  should be different.

14
Key Differences

• Contributions, where resources are received
  without return of value in exchange
• Donor-imposed restrictions
• Multiple performance indicators necessary

15
Basic Resources

• Unrestricted net assets
• Designated net assets
• Temporarily restricted net assets
• Permanently restricted net assets

16
Combined Financial Statements

• Look for elements of control
• Solicitation
• Resource use
• Assigned functions

17
Contributions - FASB No. 116

• Transfers that are
• Nonreciprocal
• Made or received voluntarily
• To or from entities acting other than as owners
• Unconditional

18
Rules for Recognizing Contributions

• Revenue recognition upon the occurrence of the
  underlying event
• Donor-imposed restrictions do not change timing
  of recognition

19
Rules for Recognizing Contributions

• Donor-imposed conditions affect the timing of the
  recognition
• Contributions are measured at fair value of the
  assets received

20
Footnotes to Statements

• Basis of accounting
• Key definitions
• Use of estimates
• Additional analysis of financial statement numbers

21
Statement of Financial Position

• Total assets
• Total liabilities
• Total net assets
• Unrestricted net assets
• Temporarily restricted net assets
• Permanently restricted net assets

22
Donor Imposed Restrictions

• Support of particular programs
• Investment for a specified term
• Use in a specified future period
• Acquisition of long-lived assets

23
Format of Statement
Flexibility
Liquidity
24
Statement of Activities - Purpose

• Effects of transactions changing net assets
• Relationship of those changes to each other
• How resources are used in providing various
  programs and services

25
Statement of Activities - Purpose

• Evaluate performance
• Assess service efforts and ability to provide
  service
• Assess how managers have discharged their
  stewardship

26
Statement of Activities

• Change in net assets
• Change in permanently restricted net assets
• Change in temporarily restricted net assets
• Change in unrestricted net assets

27
Statement of Activities

• Revenues - inflows of resources that result from
  an organizations ongoing major and central
  activities
• Gains
• Contributed services

28
Contributed Services

• Must create or enhance nonfinancial assets
• Require specialized skills, are provided by
  individuals possessing those skills and would
  typically need to be purchased if not donated

29
Expenses

• Always reported as decreases in unrestricted net
  assets
• Functional classification
• Programs
• Fund raising
• Management and general
• Natural classification
• Salaries, utilities, etc.

30
Program Services

• Activities that result in goods and services
  being distributed to beneficiaries, customers or
  members that fulfill the purposes or mission for
  which the organization exists.

31
Management and General

• Business management
• General recordkeeping
• Budgeting
• Financing and related administrative activities

32
Fund Raising

• Publicizing and conducting fund-raising campaigns
• Maintaining donor mailing lists
• Conducting special fund-raising events

33
Functional Reporting
34
Cost Allocation

• Indirect
• Direct
• Allocation

• Cost study
• By transaction
• Time study
• Space utilization

35
Reporting Options

• Investment revenues and expenses
• Contributions whose restrictions are met in same
  period
• Contributions of long-lived assets

36
Cash Flow Statement-purpose

• Ability to generate positive future cash flows
• Ability to meet obligations
• Reasons for differences between changes in net
  assets
• Effects of cash and noncash investing and
  financing activities