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In This Edition:
News Update:
Tips of the
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Harvard Kennedy School Executive Education is
thrilled to announce the new Online Leadership
Series. This suite of programs provides the range of
skills and training nonprofit leaders need to advance their
organizations and overcome challenges. The programs are
designed for nonprofit and NGO managers from around the world,
who, given the costs and distances, are not able to attend
residential Executive Education programs. www.hks.harvard.edu/ee/online
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Planned Giving: Don’t Let Donors
Drown
By Mark Hrywna
Volatility in the stock market might make
individuals looking for security more open to charitable gift
annuities (CGA). But, at the same time the market might be
wreaking havoc on a charity’s annuity reserves, a portion
of which are usually invested in equities.
The American Council on Gift Annuities
(ACGA) recommends a portfolio be invested 40 percent in equities
and 55 percent in bonds, with 5 percent cash.
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Regulation
...
Disclosure requirements for the revised Form
990
Nonprofits have plenty of work to do, saving the world,
feeding the hungry and sheltering the homeless. Who’s got
time to fill out Internal Revenue Service (IRS) forms, much less
provide them to the public? Well, you’ll have to make time
because it’s the law.
G. Bliss Jones, of Atlanta-based Jones and Kolb,
presented a session on policies and procedures within the
revised Form 990 during the American Institute of Certified
Public Accountants (AICPA) annual conference in Washington,
D.C.
The revised 990 has a renewed focus on governance
policies, asking nonprofits to specify how they make Forms 990,
990-T, and 1023 or 1024 (conflict of interest policy) available
for public inspection as well as how they make governing
documents, conflict of interest policies and financial
statements available to the public.
The specific tax forms are required to be made available,
but the manner in which that is done is optional. He said
finding Form 1023/1024 can be challenging, but there is no
federal tax law requirement to make governing documents,
conflict of interest policies or financial statements
available.
Jones recommends tax forms be made available upon request
and otherwise generally available on Web sites. He also
suggested considering requests on a case-by-case basis for
information beyond what’s available in Form 1023 and the
three most recent 990s. |
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Nonprofit Organizations Compensation & Benefits
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Accounting ...
6 key concepts of fair
value measurements
Nonprofits looking for fair
value measurements when it comes to assets and liabilities
should become familiar with Statement of Financial Accounting
Standards (SFAS) 157.
Issued in September 2006, SFAS
157 applies broadly to financial and non-financial assets and
liabilities measured at fair value. It was designed to improve
financial reporting by providing a common definition of fair
value; establishing a framework for measuring faire value;
expanding disclosures on use of fair value measurements, and
creating a principles-based standard.
Kristofer Anderson, valuation
fellow with the Financial Accounting Standards Board in Norwalk,
Conn., and Nancy Shelmon, senior partner in not-for-profit and
higher education services group at PriceWaterhouseCoopers,
presented a primer on SFAS 157 during a session at the recent
American Institute of Certified Public Accountants (AICPA)
annual conference in Washington, D.C.
Anderson and Shelmon offered
six key concepts of SFAS 157:
-
Orderly transaction:
Hypothetical transaction at measurement date; not a forced
sale.
-
Market participants: Buyer
or sellers in principal (or most advantageous) market for an
asset or liability.
-
Principal/most advantageous
market: Market with greatest volume/level of activity in which
an entity could sell asset/transfer liability.
-
Highest and best use: Fair
value should reflect highest and best use from a market
participant perspective, regardless of management’s
intended use.
-
Fair-value hierarchy: Fair
value hierarchy prioritizes inputs used in valuation techniques.
Techniques should maximize use of observable inputs/minimize use
of unobservable inputs.
-
Valuation techniques:
Consistent with market approach, income approach or cost
approach is required to be
used. |
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Human Resources ...
7 ways of valuing
human capital
Organizations that value their employees
have dedicated employees who do a better job.
This truism is widespread. But many managers
who espouse the concept of valuing employees get it done. Or,
they have good intentions but no idea about how to put those
intentions into practice.
In his essay “Walking the Talk with
Talent,” which appears in the book Capturing the
People Advantage, Edward E. Lawler III argues that in an
organization where people are supposedly treated as a valuable
asset, the board, human resources and information systems must
be involved.
- The board should have at least one member
with a sophisticated understanding of the research related to
human resources management, organizational effectiveness,
succession planning and learning and development.
- Board members should receive regular
information about the condition of an organization’s
talent and the way it develops and deploys that
talent.
- The board should spend at least as much
time on human-capital issues as it does on the allocation of
financial and physical capital.
- Human Resources (HR) should contain some of
the top talent in the organization, along with the best
information technology resources.
- HR should be seen as an important
stepping-stone for anyone aspiring to senior
management.
- HR leaders should be involved in business
strategy discussions.
- Organizations should adhere to the saying
that what gets measure gets attended. HR measures must be as
relevant, rigorous and comprehensive as measures for financial
and physical capital.
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