emerging trends in the nonprofit industry · proposed budget changes . in president trump’s first...

Emerging Trends in the Nonprofit Industry

Is Your Organization Prepared?

Robert W. Albrecht, CPA

Audit Partner

Jennifer Arminger, CPA

Audit Partner

Presented by:

GELMAN, ROSENBERG

& FREEDMAN Certified Public Accountants www.grfcpa.com |

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& FREEDMAN Certified Public Accountants www.grfcpa.com | 4

Housekeeping Webinar Objectives

Learning Objective To provide attendees with a better understanding of

emerging trends in the nonprofit industry.

Instructional Delivery Methods Group Live; Group Internet-based

Recommended CPE 3.0 CPE

Recommended Fields of Study Accounting

Prerequisites None required

Advance Preparation None

Program Level Intermediate

Course Registration Requirements None

Refund Policy No fee is required to participate in this session.

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effort to resolve complaints as quickly as possible. Please contact [email protected] with any concerns.

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Our Team Meet your instructors

Mr. Albrecht specializes in auditing and consulting for nonprofit

organizations that receive funding from agencies of the US

Government. Recognized as the firm’s leader with respect to

international non-governmental organizations, Mr. Albrecht has

traveled to over 100 countries on behalf of the firm’s international

clients.

Robert W. Albrecht, CPA

Nonprofit Audit Partner

Jennifer Arminger, CPA

Nonprofit Audit Partner

Ms. Arminger has spent her career specializing in financial

management, accounting and auditing for tax-exempt organizations

with a concentrated expertise in compliance with Uniform Guidance.

She is responsible for managing all phases of nonprofit audit and

consulting engagements in accordance with both generally accepted

and government auditing standards.


New Administration Changes

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Uncertainty for nonprofits

The new administration has brought a lot of uncertainty to Washington,

D.C. (and the nation), and nonprofits are not immune to the

unpredictability of the Trump presidency. The two most trending topics

that have potential impacts on the tax-exempt community include:

• Proposed budget changes

• Tax reform

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Proposed Budget Changes

In President Trump’s first proposed federal budget, we saw deep cuts in discretionary spending to many

departments that impact nonprofits, while financial resources were increased for defense, homeland security

and veteran’s affairs.

The budget proposes defunding 18 agencies including the National Endowment for the Arts, National

Endowment for the Humanities, Corporation for National and Community Service and Corporation for

Public Broadcasting.

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Other Agency Cuts/Changes • EPA: Geographic watershed programs, as well as 50 other EPA programs

• DHHS: Health professionals and Nurse training, Community Services Block

grants

• USDA: Water and Wastewater Disposal Program

• HUD: Community Development Block Grants

• DOS & USAID: Global Climate Change, Emergency Refugee & Migration

Assistance

• DOE: Effective Instruction Program, Community Learning Centers,

Educational Opportunity Grants

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Tax Reform

While the anticipated tax reforms will not directly address nonprofit organizations, there are

two main changes that could have a potential effect on the community:

• Increase in the standard deduction

• Caps on taxpayers write-offs

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Increase in the standard deduction

At face value, a higher standard deduction is a win for the majority

of taxpayers. However, the larger standard deduction (more

money available instead of itemizing) could potentially deter

people from making charitable contributions for the purpose of

increasing and gaining the benefits from itemizing.

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Caps on taxpayer write-offs

President Trump has suggested that his proposed tax plan would include a

cap on the amount taxpayers can write off (proposed: $100,000 for singles

and $200,000 for couples). Although this proposed change would only

affect the top 1% of Americans, the impact could potentially be significant

for those “big donors”.

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Foreign Government Funding

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U.S. nonprofits seeing more foreign government funding Over the past decade, U.S.-based nonprofit

organizations have seen an increased level of funding

provided by Foreign Governments (DFID, SIDA,

NORAD, and more).

This type of specific funding is provided to international

NGOs focused on combating international issues and

building capacities, globally.

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What we see

When accepting and implementing programs funded

under foreign government agencies, notable trends

include:

• Increased reporting requirements

• Separate audits

• Managing foreign currency exchange

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Millennial Donors and Social Media

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Donor behavior in the millennial generation

Having a mission and programs that appeal to the millennial

generation is a significant factor in any nonprofit’s success in

today’s environment.

More importantly, how can your organization capitalize on

the factors that really motivate millennials?

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What we see:

Access to Information – This generation has

unlimited resources for researching organizations

The “Experience” – The younger generation is more

apt to buy an experience

Accountability – Millennial donors want to know

their money is being used in the best way possible

Impact – One of the top reasons they become part of

or contribute to an organization

Impulse “buyers” – There is a certain level of

unpredictability to the generation

Social Collaboration – Being part of a social

network/group with exclusive access

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Engaging through social media

• Online giving

• Embracing various social media outlets

• The next big campaign

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Donor-Advised Funds

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Grant-making

• Grant-making from DAFs increased 16.9%

• 2015 fastest growing

• Five year average is 14.5%

Contributions

• 2016 reached an all-time high

• Five year average is 20%

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Donor-Advised Funds


Source : https://www.nptrust.org/daf-report/recent-growth.html

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The Appeal of Donor-Advised Funds

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Tax Deduction

Receive an immediate

tax deduction for full

gifted amount

Capital Gains

No capital gains tax on

the donated

shares/amount

Time

Allows additional time

for donor to choose a

charity to fund

Donor-Advised Funds


Phishing Scams

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“ IRS Notification on W-2 Phishing Scam

Targeting Nonprofits

On February 2, 2017, the IRS issued an urgent alert to all

employers that the Form W-2 email phishing scam has

evolved beyond the corporate world and is spreading to other

sectors, including nonprofits

This is one of the most dangerous email

phishing scams we’ve seen in a long time. It can

result in the large-scale theft of sensitive data…


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Phishing Scams

“

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How it works

Cybercriminals use spoofing techniques to disguise an email to make it appear as if it is from an

organization executive. The email is sent to an employee in the payroll or human resources

departments, requesting a list of all employees and their Forms W-2.

In the latest twist, the cybercriminal follows up with an “executive” email to the payroll or

comptroller and asks that a wire transfer be made to a certain account.

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Phishing Scams

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Actions to take

• Employee education and training

• Reporting suspect instances to the IRS

• Identity theft monitoring

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Phishing Scams


New Accounting Standards

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Nonprofit Financial Statements

FASB 2016-14

Effective fiscal years beginning after December

15, 2017, non-profit financial statements will

have several changes to include a change in net

asset categories (from 3 to 2), and enhanced

disclosures on liquidity, endowments, etc.

Revenue Recognition

FASB 2016-20

Effective fiscal years beginning after

December 15, 2018, revenue

recognition from contracts with

customers should depict the transfer of

goods/services in an amount it expects

to be entitled using a 5-step process.


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New Accounting Standards

Lease Accounting

FASB 2016-02

Effective fiscal years beginning after

December 15, 2019, operating

leases, greater than one year, will be

included on the Statement of

Financial Position as a “Right-of-use

asset” and corresponding liability.

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Robert W. Albrecht, CPA [email protected]

(301) 951-9090

Jennifer Arminger, CPA [email protected]

(301) 951-9090

Get In Touch

Join us again at our next webinar

“The Road to Audit Readiness: Best Practices for Closing the Books at Year-end”

May 24th, 2017, 11:00 a.m. to 12:00 p.m.

emerging trends in the nonprofit industry · proposed budget changes . in president trump’s first...

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