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BusinessWest Anniversary

Increasingly, They Operate as an Ecosystem

The Community Foundation of Western Massachusetts has been funding the work of charities and nonprofits across the region since 1991. And its overriding mission hasn’t changed.

What has changed, at least recently, is how CFWM accomplishes that mission — specifically, moving away from specifically targeted grants into a more trust-based model. Instead of seeking to put some dollars toward a specific goal, the foundation gives to organizations in a way that puts them at the center of it and allows them to dictate how they want to spend their money.

“It’s a recognition that funders don’t necessarily know what’s best for nonprofits,” said Megan Burke, the organization’s president and CEO. “It’s the people on the front lines who are dealing with constant change in the community who know the best places to use those funds.”

The Community Foundation was moving in that direction before the pandemic, but COVID, and the urgent needs it exposed, really accelerated the process, she explained.

“If we know you have a strong mission, a strong organization, we’ll put the money in your hands and say, ‘use it well.’ We’ll ask afterward how that went, but in the moment, you know what you need to achieve and how to get there.”

Meanwhile, the mission of Square One, which began life in 1883 as Springfield Day Nursery, has in many ways remained consistent for more than 140 years.

“We’re still doing the same type of work, although the world has changed enormously,” president and CEO Dawn DiStefano said. “Children still require care for their parents to go to work. And we’re a company that cares for children and instills confidence in our community that we are a safe, healthy, and high-quality place for young children to learn and be cared for.”

At the same time, she added, much has changed.

“Probably around the time BusinessWest started,” DiStefano said, “we realized something that today is quite obvious — that you can do a lot of work with children all day, but if you’re not in partnership with families and caretakers, you can hinder permanent growth and change. After all, learning happens 24/7.”

Specifically, Square One — it took that name in 2008 to reflect its role as more than just a day nursery, but as a key foundational element in the lives of preschoolers — has made a point over the past few decades to communicate more thoroughly with parents at the start and end of each day about the child’s lessons, experiences, and mood. That way, parents can continue the conversations at home — and, in many cases, start their own, which builds trust between the parents and Square One’s providers.

The organization has gone beyond that level of communication as well, opening a Family Support Services division about 15 years ago, which includes a home visitation program for parents who request it, including specific programs for young, first-time parents and parents in recovery.

Megan Burke

Megan Burke

“If we know you have a strong mission, a strong organization, we’ll put the money in your hands and say, ‘use it well.’ We’ll ask afterward how that went, but in the moment, you know what you need to achieve and how to get there.”

“We see ourselves as partners with families,” DiStefano said. “If we can bring out the best in the child and families, they become productive members of our community, and we all benefit from that. We all do better when folks are able to engage in our world.”

Megan Moynihan, CEO of the United Way of Pioneer Valley, said her organization’s goal since its founding 103 years ago as Springfield Community Chest has been to meet the greatest needs of the region, from early education to food insecurity to financial literacy.

“Post-COVID, we did a community assessment to really understand where the needs in the community are, if they had changed or not,” she said, noting that the greatest needs right now run the gamut from basic services, like food, to financial wellness, housing access, and mental-health support.

It meets those needs through its community service centers, where people can access emergency food supplies but also mental-health resources, including a suicide-prevention hotline. There’s also a financial-wellness program called Thrive, a partnership with Holyoke Community College on career training — in fields like culinary arts and medical assisting — and a host of other outreaches.

“Understanding the pulse of the community is the number-one issue that needs to be addressed,” Moynihan said. “It can be mental health tomorrow, but in 10 years, it might solar power and how to transition to that. We know what today’s needs are, but we have to be responsive to those needs, and when community needs change, we have to change, too.”

 

Come Together

One thing the United Way has done well over time, Moynihan noted, is connecting many resources in the community.

“If someone comes in and they are are housing-insecure, we’ll call one of the outreach workers at Health Care for the Homeless and see what kind of services are out there for them,” she said as one example. “We’ve always been a connector in the community, finding where the needs are and connecting individuals to the services they need. We can’t do the work alone.”

Megan Moynihan

Megan Moynihan

“We’ve always been a connector in the community, finding where the needs are and connecting individuals to the services they need. We can’t do the work alone.”

It’s a philosophy many nonprofits were already moving toward even before COVID — and the way it isolated people and organizations — really laid bare the need to connect and work together as a nonprofit ecosystem.

For example, Burke said, someone might seek job training, but they might also face other barriers to employment, from unreliable transportation to unaddressed health issues, and nonprofits can refer clients to each other to address multiple needs at once.

“A healthy nonprofit ecosystem, made up of nonprofits of all different sizes, is the best way to meet folks’ needs. No single nonprofit can do everything; there are so many different needs,” she told BusinessWest. “So coordination and collaboration with each other is really important.”

DiStefano used the example of connecting a parent of a child at Square One with Way Finders if they’re in need of housing support.

“We serve 1,200 families a year. Most are working one or two jobs, working eight to 12 hours a day, maybe even riding the bus, going to appointments,” she said. “I’m not in the housing business, but I’m not going to say to families, ‘I can’t talk to you about housing.’ That’s a big part of our evolution.

“Society 140 years ago was harsher in its opinion that your family was your business; it really wasn’t the business of social-service agencies or the government to help your family. But as a society, we noted over time that you can ignore problems, but that only costs more money down the line,” DiStefano went on. “The more you can invest in the child, especially between age zero and three, when the brain is doing the most developing, the better off they’ll be. Why not sink every resource we have into making sure the child has the healthiest opportunities in those years?”

The Center for EcoTechnology, which predates BusinessWest by eight years, has certainly been a connector of resources, in its case programs focused on energy efficiency, sustainability, and the environment.

In the years leading up to CET’s founding in 1976, the creation of the Environmental Protection Agency and the establishment of Earth Day saw Americans more focused on environmental concerns, and CET began its work largely in the realm of energy efficiency and home-energy audits. Today, the initial vision is largely intact, but the work has expanded into commercial waste, decarbonization, and recycled building materials.

dawn DiStefano

Dawn DiStefano

“As a society, we noted over time that you can ignore problems, but that only costs more money down the line.”

“We’re still doing energy conservation and energy efficiency. In some ways, we’ve remained true to our origins,” said Ashley Muspratt, the nonprofit’s president and CEO. “But we’ve modernized some of the language and approaches to evolve with the times — for example, shifting the conversation to electrification, which is no longer about just saving energy, but shifting away from fossil fuels to electricity and renewable sources of electricity.”

CET got involved in waste reduction in the 1980s, and that remains a core area of its work today. In addition, it’s more focused now on the question of environmental justice, aiming to ensure that no communities or customer segments are left behind or harmed by the transition to a lower-carbon or no-carbon economy.

“We offer our services in dozens of languages and have made an effort to recruit multilingual staff. We also work with a translation company, so we can provide real-time interpretation on the phone or in the field,” Muspratt added. “We want to make sure we have a staff that reflects and looks like and understands the different communities that we’re trying to serve.”

That hits home for Burke, who noted that the Community Foundation adopted a new strategy a few years ago around diversity and increasing opportunity and equity in the community. To her, that means nonprofits should have staff members that share the lived experiences of clients — not just ethnic background, but, to cite one example, serving people in Franklin County who are living with limited means trying to address all the challenges rural families have.

“Having people on their staff and on their board who may have lived those experiences allows them to develop programs to be more successful,” she noted. “We’ve stressed the importance of organizations really thinking about what perspectives they need on their staff and board.

“And it’s not just so they can feel good or have a great photo that shows diversity; it’s to be more successful in delivering the services they were founded to provide,” Burke went on. “Nonprofits recognize there really is value in incorporating a lot of different perspectives in the work they do.”

 

Thoughtful Evolution

While focusing their work in a more connected way and dealing with, in many cases, greater levels of need, some the region’s most venerable nonprofits have expanded in other ways.

Square One, for instance, has grown its family childcare program, where children are cared for and learn in home settings instead of one of the organization’s centers.

“I predict, in the next 10 years, we’ll see an explosion of interest in family childcare,” DiStefano said. “Some people, post-COVID, found comfort working from home. It’s a great business opportunity; they can make money, and Square One can help coordinate these services, so we’re supporting businesses.”

At CET, Muspratt said the organization has launched a strategic plan to grow its impact by five times by 2030, because, she noted, that’s what the climate needs, and there is plenty of money at the state and federal level to do the work, as well as private funders.

“More and more philanthropic donors want to support climate work, so that pace of growth is possible,” she said. “This region has always had an environmental bent.”

The organization has grown by 20% each of the past two years, with a staff of 100 that could double if the 2030 goals are hit, she added. “We became a more remote organization during the pandemic, and that has helped us cast a wider net. It’s good to have been able to expand our pool of candidates outside the Western Mass. region, though the majority of our staff are still based in Massachusetts.”

Nonprofits also thrive off volunteers; the United Way’s Volunteer Connect program has been successful at, well, connecting area agencies that need help with people who have time and talent to offer. It’s just one more way, Moynihan said, that nonprofits are operating in tandem.

“Everyone is working hard and chasing the same dollars,” she added, “but if we do it together, do it as a community, the outcome is always better.”

Giving Guide Special Coverage Special Publications

Regional Philanthropic Opportunities

When importance of giving to those in need — and to the organizations who help others secure their basic needs — doesn’t take a holiday, and there’s no season of the year when their work is not critical, especially at a time when the pandemic is barely in the rear-view mirror and an uncertain economy continues to pose challenges to so many individuals and nonprofits.

Still, there’s no doubt that people think about giving more around the year-end holidays, and that’s why BusinessWest and the Healthcare News publishes its annual Giving Guide around this time: to shine a spotlight on specific community needs and show you not only how to support them, but exactly what your money and time can accomplish.

The 18 profiles below of area nonprofit organizations, are just a sampling of the region’s thousands of nonprofits. These profiles are intended to educate readers about what these groups are doing to improve quality of life for the people living and working in the 413, but also to inspire them to provide the critical support (which comes in many different forms) that these organizations and so many others so desperately need.

These profiles within the Giving Guide list not only giving opportunities — everything from online donations to corporate sponsorships — but also volunteer opportunities. And it is through volunteering, as much as with a cash donation, that individuals can help a nonprofit carry out its important mission within our community.

BusinessWest and HCN launched the Giving Guide to 2011 to harness this region’s incredibly strong track record of philanthropy and support of the organizations dedicated to helping those in need. The publication is designed to inform, but also to encourage individuals and organizations to find new and imaginative ways to give back. We are confident it will succeed with both of those assignments.

Joseph Bednar, Editor
John Gormally, Publisher
Kate Campiti, Sales Manager and Associate Publisher

Accounting and Tax Planning

The Goal Is Efficiency

 

Financial reporting isn’t all about profits. Not-for-profit entities can also benefit from implementing formal accounting processes. From preparing budgets and monitoring financial results to paying invoices and handling payroll tax, there’s a lot that falls under the accounting umbrella. Are these tasks, and others, being managed as efficiently at your organization as they could be?

 

Start with Invoicing

A good first step toward accounting-function improvement is creating policies and procedures for the monthly cutoff of recording vendor invoices and expenses. For instance, you could require all invoices to be submitted to the accounting department within one week after the end of each month. Too many adjustments — or waiting for employees or departments to weigh in — can waste time and delay the completion of your financial statements.

Another tip about invoices: it’s generally best not to enter only one invoice or cut only one check at a time. Set aside a block of time to do the job when you have multiple items to process.

You also may be able to save time at the end of the year by reconciling your balance-sheet accounts each month. It’s a lot easier to correct errors when you catch them early. Also, reconcile accounts payable and accounts receivable subsidiary ledgers to your statements of financial position.

 

Think Through Data Collection

Designing a coding cover sheet or stamp is another way to boost efficiency. An accounting clerk or bookkeeper needs a variety of information to enter vendor bills and donor gifts into your accounting system. You can speed up the process by collecting all the information on the invoice or donor check copy using a stamp. Route invoices for approval in a folder that lists your not-for-profit’s general-ledger account numbers so that the employee entering data doesn’t have to look them up each time.

The cover sheet or stamp also should provide a place for the appropriate person to approve the invoice for payment. Use multiple-choice boxes to indicate which cost centers the amounts should be allocated to. Documentation of the invoice’s payment should also be recorded for reference. And your development staff should provide the details for any donor gifts prior to your staff recording them in the accounting system.

 

Optimize Accounting Software

Many organizations underuse the accounting software package they’ve purchased because they haven’t invested enough time to learn its full functionality. If needed, hire a trainer to review the software’s basic functions with staff and teach time-saving tricks and shortcuts.

Standardize the financial reports coming from your accounting software to meet your needs with no modification. This not only will reduce input errors, but also will provide helpful financial information at any point, not just at month’s end.

Consider performing standard journal entries and payroll allocations automatically within your accounting software. Many systems have the ability to automate, for example, payroll allocations to various programs or vacation-accrual reports. But review any estimates against actual figures periodically, and always adjust to the actual amount before closing your books at year end.

 

Ongoing Review

Accounting processes can become inefficient over time if they aren’t monitored. Look for labor-intensive steps that could be automated or steps that don’t add value and could be eliminated. Also, make sure that the individual or group that’s responsible for the organization’s financial oversight (for example, your CFO, treasurer, or finance committee) promptly reviews monthly bank statements and financial statements for obvious errors or unexpected amounts.

 

This article was prepared by Whittlesey, one of the largest regional accounting firms in New England, specializing in the areas of accounting, audit, advisory, and technology.

Business Talk Podcast Special Coverage

We are excited to announce that BusinessWest has launched a new podcast series, BusinessTalk. Each episode will feature in-depth interviews and discussions with local industry leaders, providing thoughtful perspectives on the Western Massachuetts economy and the many business ventures that keep it running during these challenging times.

Go HERE to view all episodes

Episode 129: September 19, 2022

George Interviews Square One President and CEO Dawn DiStefano

The challenges facing this region’s nonprofits — and cookies. Those are two of the many subjects that BusinessWest editor George O’Brien and Square One President and CEO Dawn DiStefano discuss on the next installment of the BusinessTalk podcast. There are many challenges confronting nonprofits, obviously, from finding talented help to fundraising. Which brings us to … cookies — the focal point of the agency’s new fundraiser, set for this fall. It’s all must listening, so join us for BusinessTalk, a podcast presented by BusinessWest  and sponsored by PeoplesBank.

Sponsored by:

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Banking and Financial Services Special Coverage

More Than Writing Checks

Kevin Day

Kevin Day says banks — including Florence — responded strongly to rising food-insecurity needs during the pandemic.

Banks and credit unions have long touted their role in supporting local nonprofits through philanthropic efforts, but those efforts took on more urgency over the past two years, especially in areas such as food insecurity and other basic human needs. But even before the pandemic, these institutions were giving back in ways that went well beyond writing checks, from participating in fundraising events in the community to promoting a culture of volunteerism among officers and employees. In other words, the needs remain numerous, but so do the ways to address them.

 

 

When it comes to philanthropy, Kevin Day, says, Florence Bank’s overall goal never changes.

“We just try to be resilient and strengthen our communities and nonprofit sector,” said Day, the bank’s president and CEO. “We don’t necessarily go out year after year and do the same things; we tend to respond to the needs that arise, and needs in the community ebb and flow each year. Certainly, the last two years with COVID, we’ve responded to what the needs are and basically evaluated requests as they come in and tried to find the ones that have the broadest impact.”

The most obvious such need — one that many banks made a point of focus over the last two years — is food insecurity. Since the start of the pandemic, Florence Bank has donated at least $140,000 to organizations addressing that issue.

“We supported many local pantries and survival centers because the pandemic ramped up that need,” Day said. Meanwhile, “other organizations couldn’t run their normal events or even run the services they normally do. The way we managed our donations was responding to needs as they grew, and we were able to respond in a bigger way than normal.”

Craig Boivin, vice president of Marketing at UMassFive College Federal Credit Union, said it’s “in the DNA” of credit unions to invest money back into their local communities, and his institution does so in four main ways: writing checks to nonprofits, running donation drives, encouraging volunteerism among employees to help out community organizations, and financial-education programs that empower members in their financial lives.

“We had new requests coming in that we never had before because of agencies that were feeling an impact from a surge of families and individuals needing support because of the pandemic.”

Some of the events UMassFive typically supports, such as Will Bike 4 Food and Monte’s March, which both support the Food Bank of Western Massachusetts, took on new importance during the pandemic, while the credit union also raised $16,000 last year for the UMass Cancer Walk and Run, bringing its total support of cancer detection and prevention through that event to around $160,000. It has also made a 10-year, $100,000 commitment to CISA to help people access healthy food through farm shares.

Meanwhile, members can use their ‘Buzz Points’ from a debit-card reward program, typically redeemable for gift cards at local establishments, to donate to area nonprofits instead, Boivin said.

“We’ve really tried to play that up over the past couple years because there’s so much need in those local organizations, and not everyone has the means to support them by writing checks, so, just by doing normal shopping, they can donate points earned from the program.”

On what Boivin calls the “roll up your sleeves” side of the bank’s efforts, members and employees provided 350 pounds of personal items to food pantries and the Amherst and Northampton Survival Centers last year, collected hundreds of winter coats for people in need, while continuing to participate in events like the Connecticut River Conservancy’s Source to Sea Cleanup.

“During the pandemic, we were thinking creatively about what else can we do that’s different than what we’ve done in the past to support different folks,” Boivin said. “In some cases, it was really kind of doubling down on our efforts because the needs jumped more than expected.”

Kevin O’Connor, executive vice president and chief banking officer at Westfield Bank, agreed. He said that, during the pandemic, the bank has received requests for help for many new organizations, as well as different kinds of requests from nonprofits it has assisted in the past.

“We had new requests coming in that we never had before because of agencies that were feeling an impact from a surge of families and individuals needing support because of the pandemic,” he noted. “We looked at every agency we didn’t know and looked at how they were doing things to support people. It might have been people we already gave to before, like the Boys and Girls Club of Westfield, that was doing something new and different.”

The bank was able to support many of these new requests through what he called a ‘reallocation’ of resources, especially when it came to events — and there were many of them — that were canceled because of the pandemic.

Moving forward, he said the bank has increased its budget for giving in 2022 to support events and organizations it has backed for years, if not decades, and also support some of those new, pandemic-related requests that won’t be going away any time soon.

 

Expanding Needs

Dan Moriarty, president and CEO of Monson Savings Bank (MSB), said the bank has long supported the basic needs of people in the community, whether that’s food, shelter, clothing, or education, to name a few. “We look at the basic needs first, and then we look at community development and youth. We try to spread money around to as many organizations as we can. And need plays a major role in those decisions.”

The nature of the pandemic, and how it isolated people and disrupted the economic well-being of families and forced them into challenging situations, certainly changed the calculus of those efforts, Moriarty noted. “I think it exacerbated the need to help people with their basic needs, even more than during a normal cycle, outside of a pandemic. Again, with so much need out there, we strive to eliminate it.”

PeoplesBank recently announced a record level of charitable contributions in 2021, with donations reaching $1,315,000 over the past year with a total of close to $11 million donated since 2011. The bank has doubled its donations in the last five years.

“During the pandemic, we were thinking creatively about what else can we do that’s different than what we’ve done in the past to support different folks. In some cases, it was really kind of doubling down on our efforts because the needs jumped more than expected.”

“We do have funding focus areas, as we call them, that are probably similar to other banks,” said Matt Bannister, the bank’s senior vice president of Marketing and Corporate Responsibility, listing among them economic development, food insecurity, housing, social services, sustainability and the environment, and literacy (both early-childhood and financial).

“I would say 90% of our grant requests fit into one of those categories,” he said. “The other category is community, which is anything that doesn’t fit another category. For instance, fireworks or First Night Northampton — things that are good for community spirit.”

The bank has donated meals to frontline responders during the pandemic (as has UMassFive and other institutions) and PPE, actions which are unique to the current environment, but most people negatively impacted by COVID tend to fall into one of PeoplesBank’s traditional philanthropic focus areas, like housing needs, food insecurity, or social services.

“We’ve given to specific COVID causes as they’ve come up over the past couple of years,” Bannister said. “We’ve done that over and above the normal giving we do anyway.”

He noted that, “even giving what we give, we’re still not able to give to everyone who asks; the needs out there are pressing.” To further address those needs, the bank’s employees donate 10,000 volunteer hours per year, and 74 of them have served on 54 different nonprofit boards.

Florence Bank takes pride in similar efforts, Day said. “We encourage all our officers to be part of the nonprofit community in some way. And our employees are involved in roughly 125 organizations in the area, as board members, volunteering at events, and so on.”

Monson Savings Bank recently announced that its employees donated $8,880 to various local nonprofits in 2021 through the bank’s Team Giving Initiative Friday (TGIF) program.

“Western Massachusetts is not only the bank’s home, but home for many of our team members,” Moriarty said. “We work here, live here, and raise our families here. We are invested in the well-being of the local landscape and ensuring that our neighbors’ needs are met.”

Through the TGIF program, bank employees elect to donate $5 out of each of their paychecks to employee-selected nonprofit organizations that support the bank’s local communities. Since the program was launched seven years ago, MSB employees have donated a total of $45,170 to various charitable organizations.

“The TGIF program is just one example of our employees holding up the bank’s value of helping our neighbors in need,” Moriarty went on. “I often refer to us as a team here at Monson Savings. The TGIF program is a true team effort. Participants of this program donate just $5 out of their pay, and each donation comes together to create a large impact.”

 

Mission Driven

O’Connor said Westfield Bank, like other institutions, looked at new and different ways to support the community as a result of COVID, with many of them being public-health-related.

As one example, he cited the bank’s support of vaccination efforts in Springfield in a partnership effort with the Basketball Hall of Fame and other entities.

“We offered some support to help draw some bands and other kinds of entertainment to the Hall of Fame so that people would then hopefully go in and learn about vaccination, and hopefully get vaccinated, if that was their choosing,” he noted, adding that there were other initiatives with the Food Bank of Western Massachusetts and other agencies working to meet growing needs during the pandemic.

Boivin stressed that part of UMassFive’s community support stems from its financial-empowerment workshops, which have traditionally been offered at branches during the evening and sometimes during lunch hours.

“One silver lining of this pandemic is that it really forced us to get into the virtual world, opening those workshops up to a greater pool of people who might not get into our branches,” he said. “We had people from a much wider range of locations because we put content online and they could log in from home and don’t have to trek over to a branch.”

The workshop topics range from budgeting essentials to understanding credit to the basics of homebuying 101 — “quite a range of topics that all directly support our mission,” Boivin added, noting that these efforts and those directly supporting nonprofits all stem from the same philosophy.

“Even by giving out loans to people buying their first car or their first home, all those big life events, we play a role in the community,” he told BusinessWest. “Part of playing a role in the community is keeping more dollars local, investing in local organizations, and at the same time amplifying the mission of the credit union to better the financial lives of the people we serve. It takes many forms.”

Day agreed. “Community banks are in the same boat. Our employees are here, we all live and work in the community, and we all have a vested interest in making sure our community thrives.”

Unlike larger institutions whose management or directors don’t necessarily have a personal stake in the community, “for us, it’s a very important connection,” he added. “The decision makers are all here in the community. We’re not giving to places we don’t know. We see people impacted every single day, so there’s a tight connection between a bank like ours, where all our customers come from the local community, and our local organizations.”

Moriarty said Monson Savings Bank turns 150 this year, and he’s been looking at documents from the institution’s founding, which drove home MSB’s place in the community and why philanthropy is important, whether in a pandemic year or … well, a more normal one.

“Community banks were established to help people. They’ve always followed that mission,” he said. “We’re here to help the community; our mission is to help people save and prosper, but also to help the community wherever there’s a need, and we take that to heart.”

 

Joseph Bednar can be reached at [email protected]

Giving Guide Special Coverage Special Publications

Regional Philanthropic Opportunities

While philanthropy is a year-round activity, this is a time when many of us think about those who are most in need, and how, in general, they can help make Western Mass. a better community for all who call this region home.

To help individuals, groups, and businesses make effective decisions when it comes to philanthropy, BusinessWest and the Healthcare News present the annual Giving Guide, which is especially relevant during this time of a global pandemic, when so many people are in need, and when so many of the nonprofits that work to meet those needs are struggling.

Open the PDF flipbook to view profiles of several area nonprofit organizations, a sampling of the thousands of agencies that provide needed services. These profiles are intended to educate readers about what these groups are doing, and also to inspire them to provide the critical support (which comes in many different forms) that these organizations and so many others desperately need.

Indeed, these profiles list not only giving opportunities — everything from online donations to corporate sponsorships — but also volunteer opportunities. And it is through volunteering, as much as with a cash donation, that individuals can help a nonprofit carry out its important mission within our community.

BusinessWest and HCN launched the Giving Guide in 2011 to essentially harness this region’s incredibly strong track record of philanthropy and support the organizations dedicated to helping those in need. The publication is designed to inform, but also to encourage individuals and organizations to find new and imaginative ways to give back. We are confident that it will succeed with both of these assignments.

George O’Brien, Editor and Associate Publisher

John Gormally, Publisher

Kate Campiti, Sales Manager and Associate Publisher

 


 

 

The Giving Guide is Presented by:

 

 

 

 


 

Daily News

SPRINGFIELD — The Community Foundation of Western Mass. (CFWM) has announced that it has distributed $4.3 million in grants from the Massachusetts COVID-19 Relief Fund. These grants are a part of the $6.4 million overall awarded through the CFWM COVID-19 Response Fund to support Western Mass. nonprofits serving the most vulnerable populations in the midst of the pandemic.

In addition to the resources from the Massachusetts COVID-19 Relief Fund, more than 700 donors, including individuals, foundations, and businesses have contributed to CFWM’s COVID-19 Response Fund. To date, $8.2 million has been contributed to the CFWM Fund.

 

The Massachusetts COVID-19 Relief Fund supports those across the state most impacted by the COVID-19 health crisis, focusing on essential frontline workers and vulnerable populations, including the homeless, immigrant populations, people with disabilities and those facing food insecurity. The Fund works in concert with regional community foundations and nonprofit leaders who partner with local leaders to understand the response and relief landscape, strategically filling in where gaps are pronounced.

CFWM has also announced a new round of grants from the COVID-19 Response Fund to 37 local nonprofit organizations totaling $925K, addressing immediate needs during the pandemic: They are:

Arise, Bayanihan Association of America, Bethlehem House, Caring Health Center, Cutchins Programs for Children & Families, Dakin Valley Humane Society, Ellie Fund, Enlace de Familias de Holyoke/Holyoke Family Network, Family Outreach of Amherst, a program of CHD, Friends of Chicopee Senior Citizens, Greater Springfield Habitat for Humanity, and Greenfield Community College Foundation.

Also, Hilltown Community Health Centers, Holyoke Community College Foundation, Home City Development, Lovin’ Spoonfuls, Make-It Springfield, Manna Soup Kitchen, New England Farm Workers’ Council, a program of Partners for Community, New England Learning Center for Women in Transition, New North Citizens’ Council, Nuestras Raices, People’s Medicine Project, a program of Western MA Training Consortium, Revitalize Community Development Corporation, South End Community Center, Springfield Rescue Mission, and Springfield Technical Community College Foundation.

Also, Stone Soup Café, a program of All Souls Church Unitarian Universalist, The Performance Project, the Salvation Army – Holyoke Corps, the Salvation Army – Springfield Corps, Treehouse Foundation, United Way of Pioneer Valley, Urban League of Springfield, Way Finders, Valley Radio Reading Service dba Valley Eye Radio, and YWCA of Western Massachusetts.

 

“We are grateful for the Massachusetts COVID-19 Relief Fund, the statewide collaboration established to help our most vulnerable fellow citizens and the front-line nonprofit organizations that are responding to their needs in this time of crisis,” said Katie Allan Zobel, president and CEO of the Community Foundation of Western Massachusetts. “Thanks to this funding, we have reached many more individuals and families in our region.”

 

The COVID-19 Response Fund for the Pioneer Valley was established to provide grants to community nonprofit organizations serving the needs of the most vulnerable populations affected by the pandemic in Western Massachusetts.

 

The Community Foundation welcomes additional donations to the COVID-19 Response Fund for the Pioneer Valley. 100% of donations go to community needs. Gifts can be made online at: www.communityfoundation.org/covid19.

Senior Planning

These regional and statewide nonprofits can help families make decisions and access resources related to elder-care planning.

AARP Massachusetts
1 Beacon St., #2301, Boston, MA 02108
(866) 448-3621
states.aarp.org/region/massachusetts
Administrator: Mike Festa
Services: AARP is a nonprofit, nonpartisan, social-welfare organization with a membership of nearly 38 million that advocates for the issues that matter to families, such as healthcare, employment and income security, and protection from financial abuse

The Conversation Project and the Institute for Healthcare Improvement
53 State St., 19th Floor
Boston, MA 02109
(617) 301-4800
www.theconversationproject.org
Administrator: Kate DeBartolo
Services: The Conversation Project is dedicated to helping people talk about their wishes for end-of-life care; its team includes five seasoned law, journalism, and media professionals who are working pro bono alongside professional staff from the Instititute for Healthcare Improvement

Elder Services of Berkshire County Inc.
877 South St., Suite 4E, Pittsfield, MA 01201
(413) 499-0524
www.esbci.org
Administrator: Christopher McLaughlin
Services: Identifies and addresses priority needs of Berkshire County seniors; services include information and referral, care management, respite care, homemaker and home health assistance, healthy-aging programs, and MassHealth nursing home pre-screening; agency also offers housing options, adult family care, group adult foster care, long-term-care ombudsman, and money management, and oversees the Senior Community Service Aide Employment Program

Greater Springfield Senior Services Inc.
66 Industry Ave., Suite 9
Springfield, MA 01104
(413) 781-8800
www.gsssi.org
Administrator: Jill Keough
Services: Private, nonprofit organization dedicated to maintaining quality of life for older adults, caregivers, and people with disabilities, through programs and services that foster independence, dignity, safety, and peace of mind; services include case management, home care, home-delivered meals, senior community dining, money management, congregate housing, and adult day care

Highland Valley Elder Services
320 Riverside Dr., Florence, MA 01062
(413) 586-2000
www.highlandvalley.org
Administrator: Allan Ouimet
Services: Services include care management, information/referral services, family caregiver program, personal emergency-response service, protective services, home-health services, chore services, nursing-home ombudsman services, adult day programs, elder-care advice, bill-payer services, options counseling, respite services, representative payee services, local dining centers, personal-care and homemaker services, and home-delivered meals

LifePath
101 Munson St., Suite 201
Greenfield, MA 01301
(413) 773-5555
www.lifepathma.org
Administrator: Barbara Bodzin
Services: LifePath, formerly Franklin County Home Care Corp., an area agency on aging, is a private, nonprofit corporation that develops, provides, and coordinates a range of services to support the independent living of elders and people with disabilities with a goal of independence; it also supports caregivers, including grandparents raising grandchildren

Massachusetts Assoc. of Older Americans
19 Temple Place, Boston, MA 02111
(617) 426-0804
www.maoamass.org
Administrator: Chet Jakubiak
Services: Aims to improve the economic security of older Massachusetts residents through research and advocacy on policies that may reduce risk and hardship; fights against the dual stigma of being old and mentally ill, to preserve Medicare and Social Security, to ensure access to community-based long-term care, and to obtain mental healthcare for elders suffering from depression and other brain disorders; organizes regular conferences on important issues throughout the state and collaborates with councils on aging to hold training sessions for senior advocates

Massachusetts Executive Office of Elder Affairs
1 Ashburton Place, Unit 517
Boston, MA 02108
(617) 727-7750
www.mass.gov/elders
Administrator: Elizabeth Chen
Services: Connects seniors and families with a range of services, including senior centers, councils on aging, nutrition programs such as Meals on Wheels, exercise, health coaching, and more; supports older adults who may be somewhat frail through programs in nursing homes, such as the ombudsman program, volunteers who visit residents, and quality-improvement initiatives in nursing homes and assisted-living facilities; caregiver programs offer support to people with mild Alzheimer’s disease or those caring for someone with more advanced Alzheimer’s

Massachusetts Senior Legal Helpline
99 Chauncy St., Unit 400, Boston, MA 02111
(800) 342-5297
www.vlpnet.org
Administrator: Joanna Allison
Services: The Helpline is a project of the Volunteer Lawyers Project of Boston that provides free legal information and referral services to Massachusetts residents age 60 and older; the Helpline is open Monday through Friday, 9 a.m. to noon

MassOptions
(844) 422-6277
www.massoptions.org
Administrator: Marylou Sudders
Services: A service of the Massachusetts Executive Office of Health and Human Services, MassOptions connects elders, individuals with disabilities, and their caregivers with agencies and organizations that can best meet their needs; staff can also assist with determining eligibility for and applying to MassHealth

VA Central and Western Massachusetts Healthcare System
421 North Main St., Leeds, MA 01053
(413) 584-4040
www.centralwesternmass.va.gov.
Administrator: Andrew McMahon (interim)
Services: Provides primary, specialty, and mental-health care, including psychiatric, substance-abuse, and PTSD services, to a veteran population in Central and Western Massachusetts of more than 120,000 men and women

WestMass ElderCare Inc.
4 Valley Mill Road, Holyoke, MA 01040
(413) 538-9020
www.wmeldercare.org
Administrator: Roseann Martoccia
Services: Provides an array of in-home and community services to support independent living; interdisciplinary team approach to person-centered care; information, referrals, and options counseling as well as volunteer opportunities available; primary service area includes Holyoke, Chicopee, Granby, South Hadley, Belchertown, Ludlow, and Ware, as well as other surrounding communities

The Women’s Fund of Western Massachusetts (WFWM) surveyed women and girl-serving organizations across all of Western MA to identify their capacity-building needs. The WFWM is collaborating with expert trainers to offer capacity-building workshops focused on the needs of organizations serving women and girls.
Join The Connecticut Data Collaborative for a Data Storytelling Workshop. Data stories can be a powerful tool to communicate data in a clear and compelling way that can lead to action. Yet too often the data we convey leaves our audience wondering what they should do or with more questions than answers. In this workshop you will learn what a data story is, a process to create clear and compelling stories, and how to combine your insights with a visualization that will guide your audience to action.

Senior Planning

These regional and statewide nonprofits can help families make decisions and access resources related to elder-care planning.

AARP MASSACHUSETTS

1 Beacon St., #2301, Boston, MA 02108

(866) 448-3621; states.aarp.org/region/massachusetts

Administrator: Mike Festa

Services: A nonprofit, nonpartisan, social-welfare organization with a membership of nearly 38 million that advocates for the issues that matter to families, such as healthcare, employment and income security, and protection from financial abuse.

THE CONVERSATION PROJECT

20 University Road, 7th Floor, Cambridge, MA 02138

(617) 301-4868; www.theconversationproject.org

Administrator: Kate DeBartolo

Services: Helps people talk about their wishes for end-of-life care; its team includes five seasoned law, journalism, and media professionals working pro bono alongside professional staff from the Institute for Healthcare Improvement.

ELDER SERVICES OF BERKSHIRE COUNTY INC.

877 South St., Suite 4E, Pittsfield, MA 01201

(413) 499-0524; www.esbci.org

Administrator: Christopher McLaughlin

Services: Information and referral, care management, respite care, homemaker and home health assistance, healthy-aging programs, and MassHealth nursing home pre-screening; also offers housing options, adult family care, group adult foster care, long-term-care ombudsman, and money management, and oversees Senior Community Service Aide Employment Program.

GREATER SPRINGFIELD SENIOR SERVICES INC.

66 Industry Ave., Suite 9, Springfield, MA 01104

(413) 781-8800; www.gsssi.org

Administrator: Jill Keough

Services: Dedicated to maintaining quality of life for older adults, caregivers, and people with disabilities, through programs and services that foster independence, dignity, safety, and peace of mind; services include case management, home care, home-delivered meals, senior community dining, money management, congregate housing, and adult day care.

HIGHLAND VALLEY ELDER SERVICES

320 Riverside Dr., Florence, MA 01062

(413) 586-2000; www.highlandvalley.org

Administrator: Allan Ouimet

Services: Care management, information/referral services, family caregiver program, personal emergency-response service, protective services, home-health services, chore services, nursing-home ombudsman services, adult day programs, elder-care advice, bill-payer services, options counseling, respite services, representative payee services, local dining centers, personal-care and homemaker services, and home-delivered meals.

LIFEPATH

101 Munson St., Suite 201, Greenfield, MA 01301

(413) 773-5555; www.lifepathma.org

Administrator: Barbara Bodzin

Services: Private, nonprofit corporation that develops, provides, and coordinates a range of services to support the independent living of elders and people with disabilities; also supports caregivers, including grandparents raising grandchildren.

MASSACHUSETTS ASSOC. OF OLDER AMERICANS

19 Temple Place, Boston, MA 02111

(617) 426-0804; www.maoamass.org

Administrator: Chet Jakubiak

Services: Aims to improve the economic security of older Massachusetts residents through research and advocacy on policies that may reduce risk and hardship; fights against the dual stigma of being old and mentally ill, to preserve Medicare and Social Security, to ensure access to community-based long-term care, and to obtain mental healthcare for elders suffering from depression and other brain disorders.

MASSACHUSETTS EXECUTIVE OFFICE OF ELDER AFFAIRS

1 Ashburton Place, Unit 517, Boston, MA 02108

(617) 727-7750; www.mass.gov/elders

Administrator: Elizabeth Chen

Services: Connects seniors and families with services like senior centers, councils on aging, nutrition programs such as Meals on Wheels, exercise, health coaching, and more; supports frail adults through programs and quality-improvement initiatives in nursing homes and assisted-living facilities; caregiver support programs.

MASSACHUSETTS SENIOR LEGAL HELPLINE

99 Chauncy St., Unit 400, Boston, MA 02111

(800) 342-5297 ; www.vlpnet.org

Administrator: Joanne Allison

Services: The Helpline is a project of the Volunteer Lawyers Project of Boston that provides free legal information and referral services to Massachusetts residents age 60 and older; the Helpline is open Monday through Friday, 9 a.m. to noon.

MASSOPTIONS

(844) 422-6277

www.massoptions.org

Administrator: Marylou Sudders

Services: Connects elders, individuals with disabilities, and their caregivers with agencies and organizations that can best meet their needs; staff can also assist with determining eligibility for and applying to MassHealth.

VA CENTRAL AND WESTERN MASSACHUSETTS HEALTHCARE SYSTEM

421 North Main St., Leeds, MA 01053

(413) 584-4040; www.centralwesternmass.va.gov

Administrator: John Collins

Services: Provides primary, specialty, and mental-health care, including psychiatric, substance-abuse, and PTSD services, to a veteran population in Central and Western Mass. of more than 120,000 men and women.

WESTMASS ELDERCARE INC.

4 Valley Mill Road, Holyoke, MA 01040

(413) 538-9020; www.wmeldercare.org

Administrator: Roseann Martoccia

Services: Provides an array of in-home and community services to support independent living; interdisciplinary team approach to person-centered care; information, referrals, and options counseling as well as volunteer opportunities available.

Cover Story

A Strained Safety Net

Joan Kagan, president and CEO of Square One

Joan Kagan, president and CEO of Square One

Managing a nonprofit agency has never been easy, but a number of factors, from low unemployment rates and rising employment costs to new labor regulations and immense competition for donor dollars, are making it much more difficult for organizations to carry out their missions.

Joan Kagan compares the effects that unfunded mandates and rising costs have on a nonprofit to a bad tomato season. Well, sort of.

To make that point, she told a story. On a summer day a few years ago, she was informed by the waitress at the restaurant she was patronizing that, if she wanted tomatoes on her sandwich, she would have to pay a surcharge.

“There was a lack of good tomatoes around, so that restaurant owner had to pay a higher price for his tomatoes, and he was passing that cost onto the customer,” said Kagan, president and CEO of early-education provider Square One, adding quickly that the analogy doesn’t exactly work.

That’s because nonprofits are not like restaurants offering tomatoes. They provide vital services, the rates for which are set by the state or federal government, and they can’t simply be raised because the cost of paying employees, providing health insurance, or simply paying the rent, continues to escalate.

And this is the situation that nonprofits, a large and important cog in the regional economy, are facing right now.

Indeed, in June 2018, Massachusetts Gov. Charlie Baker signed a bill that is set to increase the minimum wage gradually every year, until it reaches $15 an hour in 2023. In addition, a payroll tax increase was issued for the new paid family and medical leave program, upping the rate from 0.63% to 0.75%. The state originally planned to begin collecting these taxes on July 1, but due to many companies and organizations expressing confusion on the specifics, the start of the required contributions has been delayed by three months.

“If there is a 5% increase in our health insurance in a year, we have to figure out where that comes from. We can’t just turn around and raise our rates by 5%.”

But the tax hike is coming, and it is one of myriad factors contributing to what are becoming ultra-challenging times for nonprofits, said Kagan.

Katherine Wilson, president and CEO of Behavioral Health Network Inc., which provides a variety of services to individuals with mental health issues, concurred.

“What’s more challenging now for my type of business is that so much of our revenue is established as a rate by somebody else,” said Wilson, who speaks from decades of experience when she says that while running a nonprofit has never been easy, it has perhaps never been more difficult than it is now. “If there is a 5%  increase in our health insurance in a year, we have to figure out where that comes from. We can’t just turn around and raise our rates by 5%.”

Gina Kos, executive director of Sunshine Village in Chicopee, a provider of day services for adults with disabilities, agreed. She told BusinessWest that while demand for the services provided by her agency is increasing, a point she would stress many times, the funding awarded to it for those services has either remained stagnant or decreased, at the same as costs, especially labor costs, are skyrocketing.

And, as noted, matters are about to get a whole lot worse.

“The state tells us how much they’re going to give us for a service, and we figure out how we can create a high-quality, desirable service with the money that they’re giving us,” said Kos, adding that Sunshine Village, along with many other nonprofit organizations, have been able to do this successfully in the past. “Unfortunately, now, it’s getting harder and harder… the regulations are becoming too burdensome.”

Gina Kos

Gina Kos says the measures contained in the so-called ‘grand bargain’ will present a stern test for all nonprofits.

She was referring, of course, to measures contained in the so-called Grand Bargain, the compromise struck between elected officials and the state’s business leaders. They include the minimum-wage increases and paid family leave, the latter of which will bring its own challenges to nonprofits used to running lean.

And these additional expenses come at a time when nonprofits are locked into rates that they can charge for services, with some of these rates badly out of date, said Wilson.

“When the state looks at an organization to come up with its rate, they look at the cost it took to fulfill the service two years ago,” she explained. “They don’t look at the market rate, they look at data that’s two years old … so the rates that they establish are extremely low and keep us as employers of individuals with low hourly rates.

“That makes it very difficult to find a quality staff person to fill our jobs and do good work that we need to be doing for the people that we serve,” she went on, adding that, in this climate, she and all nonprofit managers must be imaginative and persistent as they seek ways to bring more revenue and donations to their organizations.

For this issue and its focus on nonprofits, BusinessWest talked with area industry leaders about the forces contributing to these challenging times and the ways they’re responding to them.

Making Ends Meet

Kos, like other business and nonprofit leaders, said she has real doubts about whether the pending minimum-wage increases will significantly improve quality of life for the employees who receive them.

She believes many businesses and nonprofits will respond to the increases by cutting staffers’ hours, thus keeping payroll levels stagnant. Meanwhile, the minimum-wage hikes may actually hurt some employees because their higher annual salaries will push them over the so-called benefit cliff, meaning they will lose forms of assistance — for housing, food, and other items — previously provided by state and federal agencies because they no longer qualify, income-wise.

“Unfortunately, now, it’s getting harder and harder… the regulations are becoming too burdensome.”

“The goodness of what people want to do to give people a better quality of life through income is not going to be achieved,” said Kos. “And, quite honestly, it might even be reversed.”

Meanwhile, she doesn’t have any doubts that these measures will make it much more difficult for agencies like Sunshine Village, where 75% of the budget goes to wages, to carry out their missions, because they will make it more difficult to properly fund and staff their programs and also attract and retain talent.

Indeed, Kos said Sunshine Village, which has 280 employees, likes to tout itself as an employer of choice, paying employees $2 to $4 over the minimum wage in the past, a practice it will find considerably more challenging in the years to come.

That’s due in part to the compression effect that minimum-wage hikes have on salaries across the board. If an employer raises wages at entry-level positions from $13 to $15, it needs to then move its second-tier employees higher in order to differentiate the positions, and so on, up the ladder.

In short, minimum-wage hikes impact wages throughout an organization, said those we spoke with — and, again, unlike businesses selling sandwiches with tomatoes on them, they can’t simply raise rates to cover them.

Katherine Wilson says nonprofits are being challenged by set rates for services that are often out of step with the cost of providing those services.

Katherine Wilson says nonprofits are being challenged by set rates for services that are often out of step with the cost of providing those services.

Meanwhile, the paid-family-leave measure brings challenges of its own, said Kos. In addition to the tax burden, agencies must be able to provide services and run the organization if people are on leave, a real burden for smaller agencies, especially with programs that require minimum staffing ratios.

“We’ve always been able to find ways that we can do more with less,” said Kos. “And we’ve done that through innovation, through increasing efficiencies, through cost-cutting initiatives, but today, it’s just getting harder.”

Kagan agreed, and noted that, with historically low unemployment rates nationally and even in this region, simply finding staff is difficult, especially when nonprofits are competing with a host of industry sectors, including retail and hospitality, for individuals earning entry-level wages.

Kos concurred, and said payroll is just one of the line items on the budget where the numbers are growing.

“Other costs are rising at a level that our funding levels are not keeping up with,” she said. “And because of that, we’re losing really good staff.”

Mission Control

These new challenges for nonprofits are compounded by growing need within the community for many of the services they provide and demand for greater services, said those we spoke with, making this an even more difficult time for this sector.

“Not only are we dealing with the same type of funding level as we have had five or 10 years ago,” said Kos, “the expectation for the service from the customers that we’re seeing is that they want a better service, and we’re not getting better funding for that service.”

She noted that her agency, like Square One and BHN, is one of the many organizations in what’s known as the ‘safety net’ for Western Mass., and if they are not getting the necessary funding to provide their services to members of the community, the entire business community will be negatively affected.

“If Sunshine Village can’t serve more people coming out of the school system, if Square One isn’t able to serve more kids who need daycare, if Behavioral Health Network isn’t able to provide services for people with substance-abuse issues, their family members aren’t going to be able to go to work, and the business community is going to be hurt,” said Kos. “If their employees don’t have the safety net, their employees aren’t going to be able to go to work.”

In response to these many challenges, nonprofit managers are forced to be more creative with ways to raise additional revenues and become leaner, more efficient organizations, both of which are necessary if they are to continue to carry out their respective missions.

“The vast majority of folks, certainly in the business community, don’t understand that we’re businesses too.”

But most don’t have much flexibility when it comes to their budgets. At BHN, for example, 80% to 83% of the organization’s revenue is related to compensation.

“That doesn’t leave a lot of room to find money when there is something that represents an increase in the cost of paying our employees or supporting them,” Wilson told BusinessWest, adding, as others did, that agencies must think outside the box when it comes to bringing in more revenue in order to keep up with rising regulation costs.

This includes advocating with state representatives, looking for grants, and cutting costs within the organization.

This isn’t easy, said Kagan, adding that another challenge facing nonprofits is that people don’t understand that the same problems facing businesses today — finding and retaining talent, paying for ever-rising health insurance, coping with new state labor and employment laws, and many others — apply to them as well.

“The vast majority of folks, certainly in the business community, don’t understand that we’re businesses too,” said Kagan, adding that this makes it more difficult to generate more donations or other forms of support.

Kos agreed, but noted that, as businesses struggle with the same cost issues, there might be growing awareness of what nonprofits are confronting.

“I think what’s interesting today is that the for-profit business community is starting to struggle with the same things that we as the nonprofit community have been struggling with for decades,” she said.

Kagan agreed, and noted that it’s important for nonprofits to educate the business community — and all their supporters — about just how challenging the current climate is, and will be for years to come.

“You’re not advocating just to bring money into your own organization,” she explained. “You need it so that you can pay fair equitable salaries to your staff and provide a high-quality service to the people that you’re serving.”

Climate Change

All those we spoke with stressed that managing a nonprofit has never been as easy as it might look.

But over the years, said Kos, organizations like Sunshine Village have “managed.”

Indeed, they’ve managed to continuously raise funds vital to their organizations, cope with rising costs and changes in labor and employment laws, and, yes, carry out their important missions.

But it’s a fact that simply ‘managing’ is becoming ever-more difficult.

These new regulations are making it increasingly difficult for nonprofits to keep their heads above water, but that doesn’t stop them from trying.

Kayla Ebner can be reached at [email protected]

Accounting and Tax Planning

New Rules of the Road

By Julie Quink, CPA

Tax-IncentivesIn 2018, nonprofit organizations face implementation of the first major overhaul of accounting standards in two decades. The goal of the overhaul is to improve the communication of financial results for donors and other outside stakeholders and to emphasize transparency in financial reporting.

With these changes, nonprofit organizations can expect significant changes in financial reporting practices. Donors and outside stakeholders can expect enhanced information on liquidity, access to cash and endowments.

What are the significant financial reporting changes for nonprofits?

Some of the major changes in the new standards encompass net asset classification, liquidity and availability, investment returns, reporting of functional expenses, and presentation of statement of cash flows.

Net Assets

The new accounting standards focus on the existence or absence of donor restrictions as opposed to the type of restriction. The new rules provide for two classes of ‘net assets’ — with donor restrictions and without donor restrictions. Previously, nonprofits have reported three required classes of net assets — unrestricted, temporarily restricted, and permanently restricted.

Julie Quink, CPA

Julie Quink, CPA

For underwater endowments, in which the fair value of the endowment at the reporting date is less than the original gift or the amount required to be maintained by the donor or by law, the cumulative amount of losses is netted in assets with donor restrictions under the new classifications. Previously, the accumulated losses were included in unrestricted net assets.

Disclosures relative to underwater endowments now encompass the aggregate amount of original gifts required to be maintained, endowment spending policies, and discussion of actions taken or strategy relative to the underwater status of the endowment. For the nonprofit, a concern may be that the status of and strategy of managing underwater endowments is highlighted in the new financial-statement disclosures.

The goal of the change is to simplify tracking and reporting of donor restrictions and also to enhance disclosures on the nature, amounts, and types of donor restrictions.

Liquidity and Availability

Quantitative and qualitative information is required under the new standards relative to liquidity and availability of liquid assets, which are typically cash and investments.

The qualitative disclosures require analysis of how the organization manages its liquid assets to meet cash needs for expenditures within one year of the statement of financial-position date. The quantitative information regarding the liquid assets and their availability to meet the current-year needs can be presented on the face of the financial statements or in the notes to the financial statements.

Donors, grantors, creditors, and other stakeholders want to understand that these nonprofit organizations that they are evaluating have adequate financial resources to meet obligations as they become due. For the nonprofit organization, a concern is that this liquidity information can highlight potential liquidity shortfalls, which may affect future donations and grants.

Investment Returns

Investment income is to be reported net of internal and external investment expenses. This has been an optional presentation under current standards. The requirement to disclose investment expenses net in investment income has been removed. The netting of fees against income does not suggest that nonprofits should not still manage and monitor investment fees, but assists in eliminating the burden of trying to identify embedded investment fees.

Functional Expenses

Currently, only health and welfare organizations are required to report expenses by function. Under the revised standards, all nonprofits must report expenses by function and must disclose the methodology used for the allocations to program and overhead expenses in the notes to the financial statements.

Nonprofit organizations should have been allocating expenses to programmatic and administrative expenses even though not required to detail the expenses by function. The requirement for functional reporting and disclosures may require nonprofits to review their allocation policies for consistency.

Statement of Cash Flows

The new rules continue to allow nonprofits to choose the method, direct or indirect, by which they present operating cash flows. The new guidance does eliminate the need to add an indirect reconciliation if using the direct method in presenting operating cash flows.

By streamlining the requirements, it is believed that the statement of cash flows will be a more useful statement and result in a reduction of costs to the nonprofit to prepare the financial statements.

Conclusion

The new accounting and reporting standards are intended to provide more transparency to donors and other stakeholders. These changes may, however, have a significant time and financial impact on nonprofit organizations as they implement the new requirements.

Julie Quink, CPA is the managing principal of Burkhart, Pizzanelli, P.C., specializing in the accounting and consulting aspects of the practice. She is also a certified fraud examiner.