April 2013

Nonprofit organizations receive many different types of revenue. Some nonprofits are government funded, while others receive funds from donors and foundations. Most nonprofit organizations conduct fundraising events to raise money for operations or for certain programs. Often nonprofits have annual fundraising events such as mailing campaigns,marathons, golf events, dinners, galas, and other events to raise funds for general use. Proceeds and expenses associated with these types of events are booked in the unrestricted/general fund. If the fundraising event is for a specific program or for something to happen in the following year, then money from the event is restricted.

Usually big fundraising events raise money for unrestricted use. This money raised is reported separately in the Statement of Activities in the unrestricted fund column. It’s also reported separate on the 990. Many times donors get something for their donation. This is known as a “quid pro quo” and may be a dinner or auctioned items. Someone makes a donation and gets something in return, such as the value of food, entertainment, or items bought at an auction, etc. This is also called “exchange value.”

Donors’ receipts must specify how much of a donation is a “real” donation, and how much is not. Donors may be able to deduct only the donation part of the gift. If a person gives $200 for a dinner fundraiser, and the ticket says “Value of the meal: $50,” then donor can deduct only $150 in his taxes, not the entire amount. In an auction, if something is valued at $1,000 and a donor gives $1,500 for it, the difference of $500 is the real donation.

When a donor makes a donation of $1,000 (or other amount) for a dinner fundraiser and doesn’t show up for whatever reason, he or she can deduct the entire amount. Beware that organizations are not supposed to determine the real deductibility of an item, which can change by person and circumstances.The IRS offers workshops to nonprofits about this topic. It also has a site just for nonprofit organizations at http://www.irs.gov/charities/index.html

Many times organizations combine fundraising activities with programs or with management and general administration. When that happens, a reasonable allocation of expenses may be used. Why? Because GAAP and an additional financial report, Schedule of Functional Expenses, require this allocation. (All expenses need to be allocated to the three major areas– general/management, programs, and fundraising.) Special events are shown separately in the Statement of Activities (Income Statement of nonprofits). If the event is not that important, revenues and “Direct donor benefit costs” can be shown as net. “Direct donor benefits costs” are direct expenses associated with the event.

The line for direct donor costs could also be reported as part of expenses. Another option for reporting major events is to use the exchange value and to divide the income between contributions and special event revenues (see quid-pro-quo discussion earlier). The fair market value is shown as special event revenue; the rest is shown as regular contribution.

This article is an excerpt from Sheila Shanker’s course Non-Profits Operations and Accounting.


Anyone who has been hired into the controller position for the first time may feel overwhelmed, since the job description involves an enormous range of responsibilities. Where to begin? The answer is simpler than you may think. Always focus on the ability of the business to survive. Thus, if there is not enough cash on hand to pay the short-term obligations of the business, all other controller responsibilities are insignificant, because the company will no longer be in business. Thus, you should address the following issues first, and in the order presented:

1. Create a short-term cash forecast.
Develop a simple cash forecasting model on an electronic spreadsheet that tells you the expected cash balance at the end of each week for the next month. The initial results may not be that accurate, so compare actual to forecasted results, and adjust the forecast model to increase its accuracy over time.

2. Understand receivables.
Review the accounts receivable aging report with the collections staff, to understand which customers pay on time (or not), and which receivables are likely to be delayed or uncollectible. Also, review all non-trade receivables to determine which ones are collectible, and when they are likely to be collected. Adjust the cash forecast based on this information.

3. Understand payables.
Review the accounts payable aging report with the accounts payable staff, to learn about the payment terms associated with each supplier, the relations with each one, and which supplier invoices are likely to arrive during the cash forecasting period. Adjust the cash forecast based on this information. Refer to the Accounts Payable Management chapter for more information.

4. Understand debt payments. Review the schedule of debt payments. These payments are sometimes taken out of the company’s bank account automatically by the bank (if it is the lender), so you can reliably estimate in the cash forecast when these cash deductions will occur.

5. Reconcile accounts. If no bank account reconciliations have been completed recently, do so now. This adjusts the company’s recorded cash balance for any bank fees and other adjustments imposed by the bank. Adjust the cash forecast based on the revised current cash balance.

The preceding steps allow you to generate a preliminary cash forecast almost immediately, and one that should rapidly increase in accuracy. Over the longer term, you might also consider reviewing any supplier contracts to see if there will be scheduled payments that should be included in the cash forecast. Also, talk to other departments to determine when they may want to purchase fixed assets, so that you can build these expenditures into the budget. Irrespective of these improvements, please note that the cash forecast will never be entirely accurate, even over a period of just a month, because cash inflows are subject to the whims of customers.

This excerpt was pulled from CPE Link’s instructor Steven Bragg’s course The New Controller Guidebook.

By CPE Link instructor Mary S. Schaeffer

The accounts payable policy and procedures manual is more than a static document with little value. Truth be told many organizations either don’t have one or have one that hasn’t been updated in years. This is a real shame. For if the right approach is taken towards the accounts payable policy and procedures manual, it can have many uses and can help ensure best practices are used throughout the accounts payable organization.

Many problems that arise from the accounts payable process occur because there is a lack of uniformity among processors in the way they handle invoices. If the exact same process is not used by every single processor, duplicate payments and other errors are likely to creep in. The only way to ensure that the same processes are used across the board is to have them written down with detailed instructions on how each task is to be accomplished.

This is the primary goal of the accounts payable policy and procedures manual. For it to be a true guide, it must be reviewed and updated on a very regular basis. Otherwise, it will quickly be come out of date and not serve the goal it is intended. What’s more, a detailed manual can serve as a reference guide to your processors. So, when they come across an issue that does not come up every day, they won’t have to guess on the right way to handle the problem. They can simply pull out the policy and procedures manual and verify.

A good policy and procedures manual can also serve as a training guide for new employees. Each one should be given a copy when they are hired and the manual should be referenced throughout the training process.

A few managers think it is a good idea to keep the manual short. This is a terrible idea because without a detailed manual, errors will creep in. You just can’t have too much detail in the manual. Sometimes a manager will think, “oh, we don’t have to put that in. Everyone knows the right way to do the task at hand.” Unfortunately not everyone thinks the same way and this is a sure fire way to guarantee that errors will creep in.

When it comes to accounts payable policies and procedures, there is no room for creativity. This is one time when everyone has to perform tasks exactly like their colleagues. Should someone come up with a better way, they should bring their suggestion to the supervisor. If the approach is better, everyone can start using the new approach and there will be no concern for variances. Unfortunately, sometimes what looks like a good process improvement for the accounts payable department, is something that is not good for another unit within the organization. Thus, it is imperative that the employee share the new idea with the manager who can evaluate the idea and if it is workable, adjust procedures for everyone as well as updating the department’s policy and procedures manual.

This article is an excerpt from Mary S. Schaeffer’s An Effective Accounts Payable Policy & Procedures Manual.

By its very nature as a spreadsheet, it’s easy to create a series of numbers in Excel. For instance, you can enter the number 1 in cell A1, hold down the Ctrl key, and drag the fill handle in cell A1 down to create an instant series of numbers. For the uninitiated, the Fill Handle is the little black notch in the right-hand corner of the active worksheet cell. Regardless, most users don’t realize that you can configure Excel to create a series of letters in a similar fashion. Continue reading at AccountingWEB.

This article is written by one of our esteemed Instructors, David Ringstrom. David is a CPA and owner of Accounting Advisors, Inc., an Atlanta-based spreadsheet consulting firm that he started in 1991. Throughout his career David has spoken at conferences on Excel, and written dozens of freelance articles about spreadsheets. He presently writes for AccountingWEB.com, and offers Excel training and consulting services nationwide.