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Posted by: V.Weber
In previous articles we have discussed how to account for fiscal sponsorship agreements under model A and B, (if you would like to read the article – you can do it here for model A and here for model B). Today, I would like to dive into specifics of accounting for fiscal sponsorship agreements under Model C.
Posted by: V.Weber
In previous article we have discussed how to account for fiscal sponsorship agreements, specifically Model A fiscal sponsorship (if you would like to read the article – you can do it here). Today, I would like to dive into how to account for fiscal sponsorship agreements under Model B
Posted by: V.Weber
In recent years fiscal sponsorship relationships have soared exponentially. Ever since the pandemic when so many nonprofit organizations have been struggling to obtain funding and so many had to close their doors – a new type of financial and legal relationship has emerged. Well, it is not new per se. The first known fiscal sponsorship dates back to 1959, when a Boston based nonprofit organization (today known as TSNE MissionWorks) started sharing support to semi-autonomous missions.
Posted by: V.Weber
Recently one of my clients approached me with a question what is a cost allocation plan and how a nonprofit organization can benefit from having one? As a nonprofit accountant (nonprofit CPA), I’d like to dive into what a cost allocation plan is and why it is needed for a nonprofit organization.
Posted by: V.Weber
Programmatic investments exist to further not-for-profit mission as opposed to return on investment. Not-for-profit organizations can invest in a startup to support the mission of the startup or provide guarantee of the funds to an entity that won’t be able to pay it back. There are various types of programmatic investments with the most common being:
Posted by: V.Weber
An endowment is an established fund of cash, securities, or other assets to provide income for the maintenance of a not-for-profit organization. The use of assets of the fund may be with or without donor-imposed restrictions. Endowment funds generally are established by donor-restricted gifts and bequests to provide a source of income in perpetuity or for a specified period. Alternatively, a nonprofit governing board may earmark a portion of its net assets as a board-designated endowment fund.
Posted by: V.Weber
Agency transaction is a type of exchange transaction in which the organization acts as an agent trustee or intermediary for another party who may be either a donor or a donee. In an agency transaction there are typically three parties involved: 1) donor – who makes the contribution; 2) recipient entity – entity that accepts assets from the donor; 3) beneficiary – unaffiliated entity specified by the donor.
Posted by: V.Weber
Net assets are unique to the nonprofit world of accounting. In this article I would like to dive into what net assets are and what they are used for and how to account for net assets.
According to FASB master glossary net assets are – the excess or deficiency of assets over liabilities of a not-for-profit entity, which is divided into two mutually exclusive classes according to the existence or absence of donor-imposed restrictions.
Posted by: V.Weber
There can be two different types of non-cash contributions: contributed services and contributed nonfinancial assets. Let’s dive into contributed services first.A not-for-profit organization can receive contributed services from a nonaffiliated third-party donor or from affiliated party.
Posted by: V.Weber
Nonprofit organizations are unique in the way that they receive pledges (promises to give) and gifts from donors. In this article we will dive into some of the important definitions of pledges and the unique accounting for promises to give that is required for not-for-profit organizations.
Posted by: V.Weber
To learn how to account for contribution revenue, we first need to understand the definition of contribution – an unconditional transfer of cash or other assets, as well as unconditional promises to give, to an entity or a reduction, settlement, or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner.
Posted by: V.Weber
In this article we will describe a step-by-step process for reconciliation of bank accounts for non-accountants. While we work mostly with not-for-profit organizations, bank reconciliation process is the same as for a for-profit entity. In this example I will be describing a reconciliation of a year-end balance (December 31st), but the process is the same for month-end or week-long, whatever period is necessary to reconcile.
Posted by: V.Weber
In June 2018 Financial Accounting Standards Board issued accounting standards update (ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The purpose of this update was twofold: 1) to evaluate whether a transaction is reciprocal (exchange transaction – when something is given and something is gotten in return) or nonreciprocal (contribution – something is given and nothing is expected to be received in return, i.e. a gift); 2) distinguish between conditional and nonconditional contributions. I wanted to note that this ASU update is applicable not only to not-for-profit organizations, but also to all entities that make or receive contributions of cash and other assets (it doesn’t apply to transfer of assets from government to business entities).
Posted by: V.Weber
On April 4, 2024 The White House announced a landmark revision to The Office of Management and Budget (OMB) Guidance. It comes ten years after the original Uniform Guidance (Section 2 C.F.R. 200) was introduced. Among the most significant changes are increased threshold that required a single audit from $750,000 to $1,000,000 and increased threshold for items that are considered supplies or equipment from $5,000 to $10,000, simplified funding application, as well as terminological standardization.
Posted by: V.Weber
Stepping into the world of mission driven organizations presents some challenges as well as unique opportunities when it comes to financial accounting and decision making. As a fractional CFO serving not-for-profit industry, I have a deep insight into the intricacies of not-for-profit accounting that are very distinct to the industry. In this article, we will delve into the specific areas of not-for-profit accounting an explore how financial leaders can successfully navigate these challenging ensuring organizational sustainability and health of the mission-driven establishments.
Posted by: V.Weber
Recently one of my clients asked me a question why it is important to perform bank reconciliations on a regular basis as opposed to once a year. This is a common question among smaller organizations and entrepreneurs that do not have an internal accounting department to help them manage their books. Especially not-for-profit organizations that are very often are strapped for resources in the beginning of their journey.
Posted by: V.Weber
As a nonprofit organization, your focus is on making a positive impact in the world. However, managing finances is a crucial aspect of running a successful nonprofit. Without proper financial tracking, it can be challenging to make informed decisions and ensure the sustainability of your organization.
Posted by: V.Weber
The statement of financial activities (SoFA), also commonly known as the Income statement or statement of operations, is a crucial financial document for nonprofit organizations. It provides a comprehensive overview of an organization's revenue, expenses, gains, and losses over a specific period. As a Certified Public Accountant (CPA), this article aims to demystify the complexities of the statement of financial activities, offering insights into its components and highlighting its importance in the financial management of nonprofit entities.
Posted by: V.Weber
As a nonprofit organization, managing your finances is crucial to your success. Not only do you need to ensure that your organization is financially stable, but you also need to maintain transparency and accountability to your donors and stakeholders.
Posted by: V.Weber
Nonprofit organizations play a crucial role in society by addressing social, cultural, and environmental issues. However, like any other organization, nonprofits need to manage their finances effectively to achieve their mission and sustain their operations.
