This week I attended the Colorado Society of CPA’s Annual Conference. The one-day event primarily serves the continuing professionals education needs of CPA practitioners and others serving in CFO and controller roles with nonprofit organizations; but is of interest to nonprofit accountants, regardless of whether they are CPAs. Here are some of the takeaways by subject area.
Accounting and Financial Reporting Update
- The FASB revised rules for revenue recognition apply to most nonprofits except for donor contributions. They will apply for all contracts with customers (e.g., grants) for fiscal years beginning after December 15, 2017. This standard has already been delayed one year from its original implementation date. Nothing new was presented on the FASB 117 recognition of revenue conundrum.
- Auditors will be required to disclose when there is substantial doubt that the nonprofit entity will continue as a going concern for a period of one year from the financial statement issuance date. Effective date is for fiscal years beginning after December 15, 2016.
- The Net Asset section of the Statement of Financial Position will contain two classifications: “with donor restrictions” and “without donor restrictions” with additional disclosures in the footnotes regarding their nature and amount. The proposed effective date is for fiscal years beginning after December 15, 2017. Other proposed financial reporting revisions concerning liquidity, cash flow, and reporting of functional expenses are on hold.
My take: There is really nothing requiring immediate action. We try to keep our newsletter readers abreast of accounting, auditing and financial reporting rules in our Articles of Interest section.
Multi-State Fundraising Regulations
This section, presented by attorney Greg Lam, showed nothing new but served as a reminder that NPOs in Colorado, by state law, are required to register with the Secretary of State and renew annually. Specific information is required, especially in regards to using professional fund raisers and fundraising consultants. Other states have their own filing requirements that would apply if the NPO is soliciting donors in those jurisdictions. There is an ongoing initiative to create a multistate, one-stop registration and filing portal. Pilot implementation is scheduled in 2016 for 12 states, including Colorado. As a resource I suggest signing up for the newsletter published by the law firm, Copilevitz & Cantor.
The Legalization of Marijuana and Its Impact on Nonprofit Fund Raising
It’s legal for an NPO to accept donations from an individual or company in the marijuana industry; however, there may be some reputational risk. Make sure the donor is licensed and before accepting donations greater than $500 have a lawyer in the room.
Crowdfunding for Nonprofits
Carl Dakin of Dakin Capital Services LLC explained what crowdfunding is all about and how it may be applicable to nonprofits. The main impediment for nonprofits using the mechanism for fundraising is that investors expect to be paid back. However, there are some innovative models where the nonprofit owns a for-profit subsidiary that benefits the nonprofit’s mission but also provides eventual payback and earnings to the investors. Carl has a white paper explaining the ins-and-outs. Contact him at email@example.com.
Other presentations included business risk in nonprofits, tax issues for nonprofits, and a panel that related three successful nonprofit collaboration ventures; one included is the Colorado Collaborative for Nonprofits spearheaded by Renny Fegan, CEO of the Colorado Nonprofit Association.
If you have further interest in any of these topics please contact me and I can direct you to the applicable sources for more information.
Lee Bengston, CPA