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Giving Guide Special Coverage

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.
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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.