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Monthly Archives

June 2015

Proposed changes to nonprofit financial reporting

By Finance, Governance, Sponsor Insight

By Chris Mennel, audit manager, Alerding CPA Group | 

A new proposed accounting standard could dramatically impact the current financial reporting methods for the more than 1.5 million nonprofits in the United States. Financial reporting in nonprofits was largely affected in 1993 by the issuance of Financial Accounting Standard No. 116 and Standard No. 117 – two standards that accountants and bookkeepers have come to know very well.

These standards created the three classes of net assets that are used today (unrestricted, temporarily restricted and permanently restricted) as well as many other financial statement components that small to large nonprofit organizations deal with on a regular basis.

Although these changes have been in place for over 20 years, many non-accountant board members and others continue to struggle with the concepts behind nonprofit financial statements. In an effort to improve the usability of these documents, the newly proposed accounting standard would:

  • Create two classes of net assets (unrestricted and restricted) instead of the current three;
  • Require the Statement of Cash Flows to be prepared under the direct method of cash flows instead of the indirect method;
  • Require all nonprofits to report expenses by nature and function. Currently, only voluntary health and welfare organizations are required to present a statement of functional expenses;
  • Require certain reclassifications within the Statement of Activities in order to present new operating measures; and
  • Provide additional changes to the current presentation of financial statements.
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Giving circles and the classroom

By Feature, Fundraising, Programming

Compiled by Lynn Sygiel, editor, Charitable Advisors |

Emily Denton is a teacher, an original Giving Sum member and board member. What she values most about her experience with the giving circle is the exposure to many exemplary nonprofits in Indianapolis. Those connections have made a different in her classroom.

After meeting with VSA Indiana staff on a site visit, she continued the connection. That connection led to her St. Thomas students volunteering for the Arts-for-All event that was held on the lawn of the governor’s residence, a short walk from school. Her students worked side-by-side with VAS teaching artists to support children with disabilities, and met the state’s first lady Karen Pence.

Based on her experiences, she saw the value in replicating what young professionals were doing with her eighth-grade English students. Four years ago, she used the activity as a motivating end-of-the-year project.  

Application in the classroom

“As a writing teacher, I wanted to create an end-of-year project that would engage students in a meaningful way — but also still require writing.

I told my students a little about Giving Sum and my involvement. The students were especially interested in the philanthropic aspect and were surprised that a relatively small group was able to give a $50,000 grant to an organization each year.

The students bought into this project right away, and I think that was in part due to me opening up about my involvement in Giving Sum and the projects that Giving Sum members had made possible.  They were especially interested in the playground we’d built for the children at Coburn Place.

Organizations did not apply; I gave the students a list of nonprofits in our city, explained the request for proposal process that many nonprofits use to fund their programs, and told them they were going to get to create an RFP for the organization of their choice.

Students selected an organization. They did some research individually, and then worked in groups to devise a plan for convincing the class that their nonprofit was most deserving of the grant money. Students spent a week of class time creating presentations with slides to address each requirement of the proposal request. I used a rubric that included all the elements required in the Giving Sum RPF form.

They presented to the class and each student was allowed to vote for one organization, but not his or her own, to receive the grant money.  To add to the real-world element of this project, the students were told that one group’s organization would be chosen to receive an actual $100 grant. I actually provided the $100 grant, not the students and made a one-time donation to our class winner — the American Red Cross of Greater Indianapolis.

Volunteering was not involved, although my hope was that through exposure to these organizations, the students would be inspired to get involved in some of the great services these organizations provide in our city.

Junior high is a great age to be exposed to philanthropic and service organizations. St. Thomas students are required to complete service hours throughout the school year. My hope was that the Giving Sum grant proposal model would expose my students to nonprofits in our city, create a little competition through the request process and provide a real-world writing situation.

It is also a great age to introduce service learning and giving circles.  Students this age have so much to gain by looking beyond themselves and learning about how many people in our own city are in need.  When my students reflect on their time serving others, they often mention how positive and capable the experience made them feel.”

The impact they have on others leaves an impression on them, and they learn more about their own passions through their service. So often teenagers feel that, even if they have great visions, they can’t create real change on their own. Introducing the giving circle model empowers students and demonstrates the larger impact individuals can when they pull their resources for a common goal.”

Engaging a city, building a community

By Feature, Leadership

By Efrem Bycer for The Greater Indianapolis Progress Committee |

Indianapolis has the potential to become one of the most civically engaged cities in America. Currently, Indianapolis ranks 16th, placing it behind many of its peer metros, including Charlotte, Kansas City, Milwaukee, Minneapolis, Nashville and St. Louis. To break into the top 10, Indianapolis may seek to apply successful practices in these cities.

This report aims to identify those replicable practices and provide recommendations for short-term and long-term strategies to improve volunteerism, especially among young professionals.

Young professionals, or Millennials, are a focus of this report because of the key role this generation plays in supplying talent to the region’s leading companies. The youngest generation of the workforce, Millennials are staying single longer and waiting until later in life to have children. On one hand, they have time early in their careers to get engaged in the community. On the other, they are an increasingly mobile generation able to move from one city to another

for professional opportunities or a change of pace. Civic engagement and volunteering play key roles in helping this generation develop an attachment to place, a key indicator of an individual’s likelihood to move. This makes volunteerism an important component of any comprehensive talent attraction and retention strategy.

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The impact of giving together

By Feature, Fundraising

By IU Lilly Family School of Philanthropy, research study report |

Giving circles are made up of individuals who pool their resources and then decide together where these resources should be distributed. They also include social, educational, and engagement aspects that seem to engage participants in their communities and increase their understanding of philanthropy and community issues.

This research report presents data from a study to understand the impacts of participating in giving circles on members’ philanthropic and civic behavior, knowledge, and attitudes. Philanthropy is defined here as giving money and other resources, including time, to aid individuals, causes, and organizations. Civic describes areas related to government’s roles and responsibilities, political and social values, and engagement in the community and political process. Beyond exploratory research to understand the overall giving circle landscape and motivations of members, and a number of case studies on specific types of giving circles, insufficient research has been done to understand giving circles’ impacts on members.

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Giving circles’ influence

By Feature, Fundraising

By Dr. Angela Eikenberry and Jessica Bearman, the Center of Philanthropy, University of Nebraska |

Ever since giving circles — groups of individual donors who pool their money and other resources and decide together where these should be distributed — emerged as a philanthropic trend, we have speculated about their impact. Do donors give more or give differently because they are involved in a giving circle? Do they become more engaged and active in their communities? Are they more politically active? Until now, the evidence of giving circles’ impact on donors was mainly qualitative. This study examines, in a more comprehensive and quantitative manner, the impact of giving circles on their members’ giving and civic engagement.

Members of giving circles give more, on average, than donors who are not in giving circles. Although this finding is tempered when income is taken into consideration, giving circle member self-reports and interviews suggest that giving circles cause members to increase their giving. Different activities within the circle also influence giving. For example, donors involved in a circle’s grantmaking decision process give the most overall. When donors are more engaged in a giving circle, are in a giving circle longer, or are in multiple giving circles, their giving is higher.

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Nonprofits need knowledge of law

By Governance, Sponsor Insight

By Rebecca Trimpe, writer and editor, Office of External Affairs and Alumni Relations at Indiana University Robert H. McKinney School of Law |

The Indiana University Robert H. McKinney School of Law educates most of the state’s lawyers, and many of our alumni are in positions of leadership in the public and private sectors throughout Indiana and across the nation. McKinney alumni hold leadership positions in a variety of nonprofit organizations, including the Center for Leadership Development, USA Funds, Lilly Endowment, Inc., the NAACP, the Central Indiana Community Foundation and Outrun the Sun.

It makes sense that lawyers are in leadership positions in these organizations, according to IU McKinney Professor Robert Katz.

“The legal system informs almost every aspect of the nonprofit sector,” Katz said. He serves as the school’s expert on nonprofit organization law.

“It defines what it means to be a nonprofit organization, sets their parameters and restricts how they engage with for-profit entities, spells out their governance structures, prescribes how its officials must behave, lays out what they must do to obtain and retain tax exemption and other legal advantages and how these various requirements are implemented and enforced.”

According to Katz, IU McKinney’s Master of Jurisprudence degree could provide those who work in the nonprofit sector with a deeper understanding of how the legal system operates, how to ascertain what the law expects them to do, what they must do to stay on the safe side of the law, recognize when they ought to seek legal guidance and converse more fluently with lawyers.

As the law surrounding nonprofits changes, and the way nonprofits conduct their work evolves, knowledge of the law becomes critical for staff and board members alike.

“Nonprofit and tax-exempt law is constantly developing as a result of new legal requirements by legislatures and agencies, rising expectations of the public, and increased scrutiny from state attorneys general, elected officials, and the media,” Katz said. “In recent years, for example, the Internal Revenue Service has revamped the annual report forms that nonprofits must submit to retain tax exempt status and issued new rules restricting the commercial and political activities of nonprofits and the ability of a nonprofit’s insiders to benefit from its operations.”

Those interested in learning more about the M.J. program, and how it can be tailored to fit individual needs, may contact IU McKinney directly.

rebecca-trimpeRebecca Trimpe is the writer and editor of the Office of External Affairs and Alumni Relations at Indiana University Robert H. McKinney School of Law.  She has 26 years of experience as a professional writer.

IU McKinney is located on the Indiana University Purdue University Indianapolis campus. The law school is named for Robert H. McKinney, a distinguished lawyer, businessman and civic leader who received his law degree from IU in 1952. A founding partner at Bose McKinney & Evans LLP, McKinney also served as chairman and CEO of First Indiana Corporation, parent company of First Indiana Bank (now BMO Harris Bank), until his retirement in 2005.