NonprofitEye

I attended a conference on non-profit policy. It was a conference, like a dozen others I’ve attended over the years. At the breakfast talk I was half asleep, but the keynote was so electrifying that I woke right up. After the talk, as I stood in line to talk to the keynote speaker, I said hello to Flo Green the Executive Director of the organization sponsoring the conference. We started talking about how ironic it is that nonprofits have come under attack for being too much “like a business”. We've all been working so hard for the past twenty years to have the work done by non-profits taken seriously. The approach being to emphasize that we were no different than any other business: professional, hard working, corporate, etc. And now we find the entire non-profit sector under attack, because if you can’t tell the difference between us and a business then maybe we don’t qualify for the much sought after IRS tax-exemption. How ironic to achieve SO much success that we could lose it...

Disclaimer: this is a "from the trenches" opinion piece written by a nonprofit finance director who lived through the transition from pre to post FASB Statements 116 & 117. Please click the "summary" and "status" links to read the full text of the statements and consult your independent auditor for final interpretation. Both Statements were effective December 15, 1994 for nonprofits with over $1 million in annual expenses and over $5 million in total assets. Statement No. 116 Accounting for Contributions Received and Contributions Made (Issue Date 6/93) [Summary] [Status] This Statement radically changed (and standardized) the way nonprofits reflect income. Generally, Statement 116 requires that contributions are recognized in the period received. Why was the change radical? Pre-116, nonprofits received multi-year funding and reflected only the portion for the current fiscal year. The remainder was held in a balance sheet account known as ...