Not-for-Profit

By Christine Slade, CPA | A Rehmann Exclusive   Introduction Initially released in May 2014, Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which is codified in FASB Accounting Standards Codification (ASC) 606 with the same title, is now effective beginning with the 2019 calendar year-end financial statements of non-public companies, including not-for-profit organizations, that follow U.S. generally accepted accounting principles (GAAP). While previous GAAP required recognition of revenue based upon it being realized or realizable and earned, the new GAAP standard (ASC 606)’s core principle is that an entity would recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to receive in exchange for those goods or services when (or as) it transfers control to the customer...

On December 20, 2019, H.R. 1865, “Further Consolidated Appropriations Act, 2020,” (the Act) was signed into law by President Trump. The Act retroactively amends Internal Revenue Code (IRC) Section 512(a) by striking paragraph (7) which required nonprofit organizations to include expenses paid or accrued related to leased, third-party, or self-owned employee parking facilities, bicycle reimbursements, or commuter transportation as unrelated business income and pay 21 percent unrelated business income tax (UBIT)...

On December 10, 2018, interim guidance (Notice 2018-99) was issued by the IRS amid rumblings of a technical corrections bill in the House to possibly eliminate unrelated business income tax on parking and other transportation benefits provided to nonprofit organization employees. Before the notice, many nonprofit organizations were evaluating their exposure to IRC Code Section 512(a)(7). An organization's unrelated business income will increase by any amount that does not qualify as a deduction under IRC Code Section 274. This also applies to expenses paid or incurred by the organization after December 31, 2017 for qualified parking fringe, parking facilities used in connection with qualified parking or any on-premise athletic facility...

Since the passage of the Tax Cuts and Jobs Act (TCJA) in late 2017, many taxpayers have focused on how it can impact their charitable giving. According to the Association of Fundraising Professionals, donations to charity decreased overall in the first three months of 2018 compared with the same quarter of 2017 – and cites tax reform as a possible cause. Though charitable giving is generally motivated by compassion, the TCJA includes several provisions that have left individuals and charitable organizations contemplating how charitable giving will be impacted. Here are a few areas to help you in maximizing your donations due to reform changes...

Answered and Unanswered Questions Social club dues deductibility – The 2017 Tax Bill amended IRC Section 274 to disallow expenses paid on behalf of employees for membership dues for any club organized for business, recreation, pleasure or social purposes. The amount paid by the non-profit on behalf of an employee should either be added to their W-2 as taxable compensation or picked up as unrelated business income (UBI) on Form 990T. Meals and Entertainment deductibility – there is no change for tax-exempt organizations and the deductibility of meals. However, IRC Section 274 has been amended to say that entertainment expenses are completely non-deductible, whether they relate to taxpayer’s business with certain exceptions...

Download a copy of this article Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, implements various changes in financial reporting requirements for not-for-profit entities. The objective of the standard is to provide more useful information to donors, grantors and other users of not-for-profit financial statements. This article is the fourth in a series about this new standard  and focuses on the requirements for reporting and classifying net assets. Net Asset Classification The ASU modifies current guidance, which requires three net asset classes: unrestricted, temporarily restricted, and permanently restricted, to requiring just two net asset classes: with donor restrictions and without donor restrictions...

On December 22, 2017 President Trump signed the largest tax overhaul of the U.S. tax system in 30 years. We have summarized highlights of this legislation that affect the nonprofit sector...

Download a copy of this article Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, implements various changes in financial reporting requirements for not-for-profit entities. The objective of the standard is to provide more useful information to donors, grantors and other users of not-for-profit financial statements. This article is the third in a series regarding this new standard, and focuses on the requirements regarding the reporting of expenses. Investment Expenses The ASU modifies previous guidance regarding the reporting of investment expenses...

One of the primary objectives of Accounting Standards Update (ASU) 2016-14, “Not-for-Profit Entities: Presentation of Financial Statements of Not-for-Profit Entities” is to provide more useful information to donors, grantors and other users of not-for-profit financial statements. An organization’s financial sustainability is not always transparent with the current financial statement presentation. Historically, there has been confusion on the limits imposed by donors, grantors or governing boards on the liquidity and availability of an organization’s assets. The nearness of an asset to cash (liquidity) and the constraints on the use of the asset (availability) need to be illustrated in the financial statements...

You may have heard the terms social investment, mission-related investment, program-related investment or impact investments over the last twenty years. When making an investment, a not-for-profit (NFP), tax-exempt organization (TEO) or private foundation is typically seeking a financial return over time, providing for more reserves to help deliver the program purpose or mission. However, many TEOs and private and community foundations are seeking to make a social impact as well. Socially responsible investments (SRIs), sometimes referred to as ethical or green investments, recognize corporate responsibility and societal and environmental concerns as important parts of decision making...