Changes to NFP reporting of gifts-in-kind

There is a new emphasis and an upcoming required change in how your NFP financials will present and disclose gifts-in-kind. Accounting Standard ASU No. 2020-07 has mandated this change. It will be effective for annual periods beginning after June 15, 2021. This Accounting Standard improves transparency for gift-in-kind transactions by requiring the following:

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Mastering Nonprofit Budgeting and Cash Flow: Strategies for Financial Sustainability

Effective financial management is crucial for the success and sustainability of nonprofit organizations. Unlike for-profit entities, nonprofits face unique financial challenges, including reliance on donations, grants, and other variable funding sources. This makes budgeting and cash flow management essential to maintaining operational stability and achieving long-term goals. Key concepts such as budgeting, cash flow management, and financial sustainability are not just financial jargon; they are the backbone of a nonprofit's ability to fulfill its mission and serve its community.

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Decoding the Essentials: Key Components of Nonprofit Financial Statements

In this article, we will delve into the key components of nonprofit financial statements, exploring their purpose, structure, and how to interpret the information they convey.

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The Corporate Transparency Act (CTA) and Its Impact on Nonprofits in 2024

The Corporate Transparency Act (CTA), which came into effect on January 1, 2024, represents a significant shift in the regulatory landscape for U.S. businesses, including any non-exempt nonprofit organizations such as churches and charitable organizations. The implementation of the Corporate Transparency Act marks a pivotal moment in the fight against financial crimes, signaling a concerted effort to strengthen accountability and integrity within the business and nonprofit sectors.  This legislation aims to enhance financial transparency and combat illicit activities by requiring certain entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). By mandating the disclosure of beneficial ownership details, the CTA seeks to create a more transparent environment that deters illicit activities and promotes a culture of compliance across diverse entities operating within the United States. What Nonprofits Need to Know Exemptions for Nonprofits If your nonprofit has applied for 501(c) status but has not yet received it, you could potentially be subject to reporting requirements under the Corporate Transparency Act (CTA). Nonprofits with an active 501(c) status, political organizations under Section 527(e)(1), or charitable or split-interest trusts are exempt from the CTA's reporting requirements. This broad exemption covers a wide range of nonprofit organizations, including most charities, schools, religious organizations, private foundations, social welfare organizations, labor organizations, trade associations, chambers of commerce, and social clubs. It's important to note that the exemption applies without regard to whether the organization has filed an application for recognition of tax-exempt status pursuant to IRC 508(a) Implications for Noncompliant Nonprofits Nonprofits that do not meet the exemption criteria must comply with the CTA's reporting requirements.  Examples of Noncompliant Nonprofits Defective Drafting: Nonprofit organizations with defective drafting of their Articles of…

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