A key fiduciary duty of your not-for-profit’s board of directors is to oversee and monitor the organization’s financial health. Some financial red flags and warning signs, such as the loss of a major funder, may jump out immediately.

a red flag waving in the air, image used for a blog post about financial red flags for not-for-profit boards

But other red flags can be more subtle. Here are some of them.

Continue Reading Watch for These Financial Red Flags for Your NFP Board

On Monday, February 10, 2020, the Financial Accounting Standards Board (FASB) issued a Proposed Accounting Standards Update (ASU) – “Not-for-Profit Entities (Topic 958).” The update aims to improve transparency of contributed nonfinancial assets — or more commonly referred to as in-kind donations — for not-for-profits by enhancing presentation and disclosure.

a box wrapped in pink paper with a gold ribbon tied into a bow, sprinkled with heart-shaped gold confetti; image used for blog post about proposed amendments for NFP nonfinancial assets from FASB

According to the draft of the Proposed ASU for Topic 958, the provisions would require a not-for-profit to:

  1. “Present contributed nonfinancial assets as a separate line item in the statement of activities, apart from contributions of cash or other financial assets
  2. Disclose:
    • a) Contributed nonfinancial assets received disaggregated by category that depicts the type of contributed nonfinancial assets
    • b) For each category of contributed nonfinancial assets received (as identified in (a)):
      • Qualitative information about whether the contributed nonfinancial assets were or are intended to be either monetized or utilized during the reporting period and future periods. If utilized, an NFP would disclose a description of the programs or other activities in which those assets were or are intended to be used.
      • A description of any donor restrictions associated with the contributed nonfinancial assets.
      • The valuation techniques and inputs used to arrive at a fair value measure, including the principal market (or most advantageous market) if significant, in accordance with the requirements in Topic 820, Fair Value Measurement.”

Comments are due April 10, 2020, and after the Board considers stakeholders’ feedback on the amendments, an effective date will be decided. If accepted, the amendments will be applied retrospectively to the first set of financial statements following the effective date.

For the full proposed amendments, visit www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1176174168241

To learn more about how PKF Texas serves the not-for-profit sector, visit www.PKFTexas.com/NotForProfit.

Russ: This is the PKF Texas Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host, and I’m here once again with Kristin Ryan, Audit Senior Manager and one of the faces of the PKF Texas employee benefit plan team. Kristin, great to see you again.

Kristin: Thank you.

Russ: Last time you were on we got into the SECURE Act and the impact on defined contribution plans, which was fascinating. I like doing this, because I get to learn stuff, too. But there’s a lot more about what actually the impact is on defined contributions; that’s why I want to talk about it again.

Kristin: Yeah, absolutely. So, we focused on defined contributions, the 401(k) plans last time. We want to focus on pension plans this time. So, one of the big things that I’m hearing about a lot with the pension plans is their relief for nondiscrimination testing for frozen plans. So, now a plan that’s frozen, participation frozen contributions, doesn’t have to do as much testing.

Russ: And why would they do that?

Continue Reading How the SECURE Act Affects Pension Plans

There was a full house for our first employee benefit plan seminar of the year, “Engaging and Communicating with Your Employees,” on Thursday, February 6, 2020, featuring speaker, Monirah Bacnik, founder and CEO of brand28. Employee engagement is a universal topic companies and organizations want to address and improve, and Bacnik delivered an energetic and colorful presentation.

Bacnik focused on introducing and providing examples of effective communication strategies to engage a multi-generational workforce. She also provided an interactive workbook for attendees to follow along with her presentation, where they can fill in their personal thoughts and goals for employee engagement.

Continue Reading Recap: Employee Engagement and Communication Strategies Seminar

The deductibility of most charitable gifts hasn’t changed since passage of the Tax Cuts and Jobs Act, but some recordkeeping requirements have. Helping your donors who itemize deductions understand the rules and benefits of their gifts can strengthen your not-for-profit’s ties with them — and may help increase contributions.

woman holding three knit sweaters; image used for blog post about tax implications on not-for-profit donors

Continue Reading The Tax Implications on Your Not-for-Profit’s Donors

On January 30, 2020, Chairman of the Securities and Exchange Commission (SEC), Jay Clayton, released a public statement, “Proposed Amendments to Modernize and Enhance Financial Disclosures; Other Ongoing Disclosure Modernization Initiatives; Impact of the Coronavirus; Environmental and Climate-Related Disclosure.”

frontal view of a stone building with pillars and American flags; image used for blog post about SEC Chairman Public Statement

Clayton’s statement discusses these four topics:

Continue Reading Public Statement from SEC Chairman: Amendments, Initiatives, more

If you’re getting ready to file your 2019 tax return, and your tax bill is higher than you’d like, there may still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA right up until the Wednesday, April 15, 2020, filing date and benefit from the resulting tax savings on your 2019 return.

black pen sitting on top of a 2019 tax return form; image used for a blog post about IRA deductible contributions

Continue Reading How an IRA Can Benefit Your 2019 Tax Return

Russ: This is the PKF Texas Entrepreneur’s Playbook. I’m Russ Capper, this week’s guest host, and I’m here once again with Kristin Ryan, Audit Senior Manager and one of the faces of PKF Texas’ employee benefit plan team. Kristin, welcome back to the Playbook.

Kristin: Thank you. Glad to be here.

Russ: Okay, so, I understand we’re going to talk today about the SECURE Act?

Kristin: That’s right. So, the SECURE Act has been a big buzz lately. It was signed on December 20th by the President, and the over-arching goal is to encourage participation in plans and retirement savings.

Russ: Well, I always think the way to encourage participation is have company matching funds. Is that right?

Continue Reading The SECURE Act – What You Need to Know

Internal Revenue Code (IRC) Section 512(a)(7) was recently retroactively repealed by the Taxpayer Certainty and Disaster Tax Relief Act of 2019. Section 512(a)(7) increased unrelated business taxable income by amounts paid or incurred for qualified transportation fringes, and Congress originally enacted this provision for amounts paid or incurred after December 31, 2017.

A person typing on an Apple Mac laptop; image used for blog post about claiming a refund for UBIT or adjusting Form 990-T

As a result of the retroactive repeal, you may wish to claim a refund or credit for taxes previously paid on qualified transportation fringe amounts on your 2017 or 2018 Form 990-T.  On January 21, 2020, the IRS posted how to claim a refund or credit, which includes filing an amended Form 990-T as well as the following steps:

  1. Write “Amended Return” at the top of Form 990-T.
  2. Complete the Form 990-T as it was originally done but adjusting the original entry for the disallowed fringes. See the different specifications for a 2017 versus a 2018 Form 990-T on the IRS website.
  3. Attach a statement indicating the line numbers on the original return that were changed and the reason for each change.

For the full details on the instructions, visit www.irs.gov.

To learn about how PKF Texas serves the not-for-profit sector, visit our website at: www.PKFTexas.com/NotForProfit.

Do you associate enterprise risk management (ERM) with for-profit businesses? This systemic approach to risk reduction can be just as effective when adopted by not-for-profit organizations.

a person holding a magnifying glass to closely look at mechanical wedges; image used for a blog post about ERM systems reducing risk for not-for-profits

Even organizations with limited resources can — and should — use an ERM process to combat threats.

Continue Reading How ERM Can Reduce Risk for Your Not-for-Profit