Financial Analysis Can Boost Your Nonprofit’s Success

Beth Huffman, Foster Results

2014 is well underway and already ushering in an array of new trends, from the latest fashions to cutting edge technology. A growing trend in the nonprofit world, however, has resulted from the not-so-new negative economic climate, which has brought along tighter resources for nonprofits – forcing organizations and funders alike to become more bottom-line-oriented.

“Funders are having fewer resources and greater demands,” explains Althea Gonzalez, North Carolina program manager for Hispanics in Philanthropy. Gonzalez tells The Nonprofit Times, “There’s going to be an increasing need to be able to demonstrate that the investment was effective. We want to make sure we’re making good investments, and strategic investments.”

While increasing demands for proof of a positive return on investment may seem like a hurdle for nonprofits, in actuality this trend creates new opportunities for organizations.
Nonprofits should take the time to analyze their data. The benefits to looking at trends within your financial performance are two-fold: Read the full article here.

Let Foster Results highly trained and experienced professionals focus on your financials — while your organization focuses on its mission. www.FosterResults.com.

PGGI Wraps a Great Education Year

In early 2013, the leadership of the Planned Giving Group of Indiana (PGGI) charted a course to provide a new level of excellence in programming and education to its members and the central Indiana fund development community. More than a routine luncheon, they determined to bring a diverse array of many of the best speakers available.

- September 2013 - Chris Hoyt opened with an informative and humorous presentation on current trends in gift planning.
- October - Ron Brown’s history of gift annuities provided a new and interesting perspective.
- November - Indiana Philanthropy Day
- December - Frank Minton discussed new developments and trends with charitable gift annuities.
- February 2014 - Angela White discussed increasing planned gifts from women.
- March - Bryan Clontz’s “tales from the trenches” gave us laughs and useful “takeaways.”
- April – Dr. Adrian Sargeant underscored the importance of on bequests as a great fundraising opportunity.
- May - Gina Giacone concluded the program year with an excellent presentation (and CLE credit!) on the unauthorized practice of law.

Accounting for Your Volunteers, Literally!

by Alerding CPA Group - Tyler Kleinschmidt

Not-for-profit entities rely heavily on volunteers and a variety of contributed goods and services to fulfill their mission. The Financial Accounting Standards Board (“FASB”), which sets the rules regarding accounting and financial reporting, outlines criteria that govern whether or not a contributed service should be recognized in the financial statements. However, there is still debate as to whether these guidelines allow for the most accurate reflection of the activities within the financial reporting framework.

The first criteria for recognition states that if the services create or enhance a nonfinancial asset the contributed services would be recognized in the financial statements.

The second criteria for recognition is that the service contributed must be one that requires a specialized skill. This in itself is subjective based on what an Organization considers a specialized skill. The FASB suggests that services requiring specialized skills are provided by individuals with a certain level of expertise (teachers, attorney’s, lawyers, etc) and the services would have to be purchased if not donated. Even though this narrows the range, issues arise due to the volume of contributed services that can fall outside these standards.

Continue Reading.

Peer-to-Peer Fundraising Study

by Blackbaud

Blackbaud has released its 2013 Peer-to-Peer Fundraising Study that explores giving trends across 39 organizations and 44,000 events from 2011 to 2013 that raised more than $1 billion online, in total. The study addresses four categories – Cycle, Endurance, 5K and Walk.

Key Findings:

- Endurance events generate the most revenue; 5K events generate the least
- Cycle events get the most participants in online fundraising
- The percentage of people raising money has remained flat across all four event types, but donors gave more each year
- The average online gift for Endurance events was the highest at $80.05; the lowest was 5K events at $54.96.
- Returning participants significantly outperform new participants across all events when it comes to fundraising.

To view the study in its entirety, please visit: www.blackbaud.com/fundraising-study.

Investment Practice: Safety

Dave Voris, Horizon Bank

Following is the third in a four-part series of articles that Dave Voris of Horizon Bank is writing to provide insights on making wise investment decision in this low interest rate environment.

This third article focuses upon the Risk, or Safety, and the Reward relationships of various investment instruments. To discuss Safety, let’s consider two balance sheets: the balance sheet of the Investor; a.k.a. a Not-for-Profit organization, and the balance sheet of the Borrower; a.k.a. the obligor of the debt instrument.

I use these two, side-by-side examples to highlight the investor’s need to understand any default risk potential from the ultimate borrower, or called Safety of the investment within the context of this discussion. As one considers the risk-reward relationship, remember there is no free lunch. Thus, higher rates of return correlate with higher degrees of risk. This is not necessarily bad as long as the board-approved investment policy defines that higher risk as acceptable. If the debt obligor would default and not repay the funds to the Investors; i.e., the Not-for-Profit organizations which are holding investments, could face a loss of principal.

Since few Not-for-Profit finance staff, CEO’s or Board treasurers have the required time to clearly and intimately study the risk of default, they typically either: a) default to some widely discussed, safe, best practices, such as adhering to the $250,000 limit on deposits in any one bank or investing in U. S. Treasury obligations defined as the risk free investment, or b) follow the suggestions of an implicitly trusted advisor to help guide them through the balance of safety vs. rate of return.

Read the two previous posts at:
• Article 1: Summary of Practices from the 2013 AFP Liquidity Study
• Article 2: The Importance of an Investment Policy

Questions? Contact Dave Voris at 317-608-2085 or another Horizon Bank - Indianapolis advisor at (317) 608-2128 or 117 East Washington Street.

Scorecard Shows Nearly Half of Hoosiers in Persistent Financial Insecurity

In February, Anne Guthrie of the Center for Working Families and LISC published a guest blog on the Indiana Community Action Association (INCAA) website exploring some key issues around employment, the way government benefits can create problems for individuals trying to get ahead, and the general financial well-being of Indiana families. Take a few minutes to scan the article.

Just as interesting for me was the way the Center for Economic Development (CFED)has created a scorecard for each state and worked to present a great deal of information in an accessible way. More

Make Your Audit Count

Natalie Hopkins, Alerding CPA

Governance, Fraud, Conflicts of Interest and 990 Reviews are among the hot topics that have circled the not–for-profit world the last couple years. Finance committees, tax preparers, and boards of directors can all provide critical information related to these areas and help an Organization achieve the many goals surrounding fiscal responsibility. However, the annual independent audit process can also be a crucial benchmark that organizations use to measure how they stack up on current issues.

The annual audit process should include, but not be limited to, evaluation of the fraud and control risks present in the organization, assessment of policies and procedures to determine compliance with the organization’s stated policies, testing of internal controls, review of credit card expenditures and expense reimbursements for fraudulent or inappropriate charges, and other substantive testing and fraud procedures. In many instances, a complete audit process will evaluate the laundry list of critical matters our profession has highlighted for not-for-profit organizations to consider and will result in recommendations being made to management on notable items. The audit process should further facilitate a smooth Federal and state 990 preparation process as a great deal of information gathered for the audit is also applicable to the Form 990.

Be sure your annual audit process is adding value by keeping you apprised of the ever changing issues related to fiscal responsibility. In turn, you can keep your focus on your mission and serving the cause. To find out more, contact Natalie Hopkins, Audit Manager at Alerding CPA Group, 317 ­-569­-4181 ext. 244, nhopkins@alerdingcpagroup.com or visit our website atwww.alerdingcpagroup.com.