Not-for-Profit Section Celebrates One Year Anniversary

On May 2, the AICPA’s Not-for-Profit Section marked its one-year anniversary. Today, as I write this article, our community is more than 3,600 members strong and counting. As I reflect on my team’s work and that of all the tireless staff and teams of volunteers throughout the Institute who helped us nurture and grow this initiative, I am deeply grateful. I am also inspired by their commitment to providing high-quality specialized resources and learning opportunities for not-for-profit professionals.

About 52 percent of our current members are business advisers to not-for-profits, such as consultants, auditors and tax professionals. The remaining 48 percent are leaders working within the not-for-profit sector, including charities, human service agencies, faith-based organizations, associations, educational institutions and a whole host of other causes that are united by one common focus: achieving a mission to make a difference.

In the last decade, the growth rate of the not-for-profit sector surpassed both the private and government sectors. However, they face unprecedented challenges– economic, regulatory and financial. Among fundraising organizations, competition for contributions is fierce. At the same time, the donating public wants accountability from not-for-profits. From a regulatory standpoint, state attorney generals are acting aggressively, prosecuting – and making an example out of organizations associated with or involved in wrongdoing. The resulting negative publicity does not just affect the entities involved, but can affect entire communities. It can trigger a ripple effect that becomes an impediment to attracting financial support for not only that specific entity but also related causes. Strong governance oversight and risk management are important for all businesses, especially not-for-profits because they live in the public eye.

From a tax standpoint, we expect the IRS to cast a wider net with its audits, as the IRS Exempt Organizations Division recently announced that it is migrating from a project-oriented examination selection process to a more data-driven process. Additionally, not-for-profits face challenging new reporting requirements. In particular, we are closely monitoring the FASB’s proposed standard that, if adopted, would represent the biggest change in accounting standards for not-for-profits in over two decades and significantly alter the financial reporting model for not-for-profit entities.

Successful management of a not-for-profit organization goes beyond tax compliance and adherence to standards. Our members want to set themselves and their organizations apart to stay ahead of these challenges, demonstrate their success and measure their double bottom line, that is, their financial and mission accomplishments. To that end, the Section’s mission is to deliver information, tools and resources that facilitate timely compliance with standards and regulations, promote the excellence of our members as leaders in the not-for-profit sector and serve as a connector for peer-to-peer learning and information sharing.

Successful work in this industry requires specialized expertise. Because we recognize the unique challenges faced by not-for-profits and their business advisers, we are working to increase member communications and are expanding our resource library. Some of the items on our 2016-17 work plan include:

Disseminating timely information through our eNews Alerts to keep our members updated on IRS and FASB activities as well as emerging trends affecting not-for-profits

Publishing a new series of frequently asked questions on industry-specific accounting, financial reporting, tax compliance and governance topics for not-for-profits

Releasing the first edition of the Not-for-Profit Controller’s Toolkit this summer, a new e-publication that will be complimentary and made exclusively available to Section members

Continuing our popular webcast series, offering up to 8 hours of complimentary CPE for our community members

Updating our illustrative financial statements and Form 990 preparation checklists

Publishing background papers on data analytics, benchmarking, considerations for expanding to international locations, reporting of executive compensation and more

Thank you for this opportunity to let us serve you. To learn more about the Not-for-Profit Section, please visit our website. If you have a specific question, please contact my team by emailing NFPSection@aicpa.org.

Chris Cole, CPA, CFE, CFF, CGMA, Senior Technical Manager- Not-for-Profit Section, American Institute of CPAs.

Not-for-Profit Section Celebrates One Year Anniversary

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