Don't lose sleep over the first change in nonprofit accounting rules since Sleepless In Seattle debuted in theaters in 1993. Last year, the Financial Accounting Standards Board (FASB) made the first changes since 1993 to the way that nonprofits must present their end-of-the-year financial statements. Starting December 31, 2018, all nonprofits must adhere to the new standards which will impact how your year-end nonprofit financial statements are presented to and viewed by the donor community. The new standards: Give donors, grant-makers, and creditors better information on nonprofits. Make nonprofit financial statements more useful. Allow nonprofits to better convey their financial story. Andrea Mills, CPA, CGMA, from FMA joins us on this webinar to explain the new accounting standards and the significance for your entire nonprofit organization from accounting to development. During this webinar we'll provide a background and summary of the changes to accounting standards. We'll also discuss the importance of good communication between finance and development leadership as you proactively address implications and opportunities for your nonprofit organization by: Taking a proactive approach to understanding the impact on your organization. Developing effective communication strategies for sharing your nonprofit organization's financial story with donors in terms of your efficiency and to address specific financial needs. Leveraging proactive fundraising and donor relationship management strategies that positively position your nonprofit amidst the changes.

1. Sum Things to Think About:
New Financial Reporting
Rules for Nonprofits
An Educational Webinar

2. Agenda
1. Introduction
2 Accounting Standards Update
3. Accounting Perspective
4. Net Asset Classification
5. Liquidity & Availability
6. Development Perspective
7. Understand Your Situation
8. Communicating to Stakeholders
9. What Needs to Be Communicated
10. What You Can Do
11. Q&A
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

3. Introduction
Ryan Erfer
Senior Director of Business Development, Arreva
Andrea Mills MBA, CPA, CCSA, CGMA
Principal, Fiscal Management Associates
David Jost
Chief Marketing Officer, Arreva
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

4. Accounting Standards Update (ASU)
Background:
• Issued in August 2016
• First major revision since 1993
• Effective Date: Calendar 2018 or Fiscal Year 2019
What does it impact?
• Financial Statement Presentation
• Disclosures
Why?
• Give donors, grantmakers, and creditors better
information on nonprofits.
• Reduce complexity of nonprofit financial statements.
• Make nonprofit financial statements more useful.
• Allow nonprofits to better convey their financial
story.
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

5. Accounting Perspective
An Accountant’s guide to the changes
Andrea Mills MBA, CPA, CCSA, CGMA
Principal, Fiscal Management Associates
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

6. ASU
2016-14
Liquidity &
Availability
Functional
Expenses
Investment
Return
Underwater
Endowments
Net Asset
Classification
Key Provisions
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

7. Net Asset Classification
Unrestricted Net Assets
Temporarily Restricted
Net Assets
Permanently Restricted
Net Assets
Old
Net Assets Without
Donor Restrictions
Net Assets With Donor
Restrictions
New
Reminder: GAAP still allows flexibility in
presentation. It’s okay to disaggregate net
assets further and show the following:
Without Donor Restrictions
• Undesignated
• Reserves
• Board Designated
With Donor Restrictions
• Time Restricted
• Purpose Restricted
• Endowment
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

8. Net Asset Classification
Old New
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

9. Net Asset Classification
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

10. Net Asset Classification
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

11. Net Asset Classification
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

12. To Help Stakeholders Assess:
Availability of resources
to meet cash needs
Liquidity and “financial
flexibility”
Liquidity & Availability of Resources
How a nonprofit
manages its
available liquid
resources.
Qualitative
Availability of
financial assets to
meet cash needs for
general
expenditures within
one year of balance
sheet date.
Quantitative
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

13. Other Illiquid Assets
Total Assets
Fixed Assets
Prepaid Expenses
Inventory
Financial Assets
“Available financial assets to
meet cash needs for general
expenditures within one year.”
Financial Assets
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

14. “Available financial assets to
meet cash needs for general
expenditures within one year.”
Financial Assets
Board Designated Funds
Endowment Principal
Temporary Restricted Net
Assets?
Available Financial Assets
Available Financial Assets
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

15. Available Financial Assets
Time Restricted TRNA
> 1 year
Receivables > 1 year
Financial Assets Available
within 1 year
Financial Assets Available within 1 Year
“Available financial assets to
meet cash needs for general
expenditures within one year.”
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

16. Liquidity Disclosure: Quantitative
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

17. Example: negative “available” financial
assets
* Need to disclose if organization has not maintained cash required to
comply with donor restrictions. Interpretation of this MAY BE varied.
Liquidity Disclosure: Quantitative
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

18. Liquidity Disclosure: Qualitative Example
Note X – Liquidity and Availability of Financial Assets
Organization ABC’s working capital and cash flows have seasonal variations during the year
attributable to the annual cash receipts for subscriptions and a concentration of contributions
received near calendar year end. To manage liquidity the Organization maintains a line of
credit of $100,000 with a bank that is drawn upon as needed during the year to manage cash
flow and is then repaid in full by the end of the fiscal year. See note Y for a description of this
line.
The Organization has $662,757 in financial assets as of the balance sheet date, reduced by
amounts not available for general use within one year because of donor-imposed restrictions
or internal designations. Amounts available include the Board-approved appropriation from
the endowment fund for the following year as well as donor-restricted amounts that are
available for general expenditure in the following year. Amounts not available include
amounts set aside for operating and other reserves that could be drawn upon if the Board of
Directors approves that action.
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

19. Development Perspective
A Development Director’s guide to the changes
Ryan Erfer
Senior Director of Business Development, Arreva
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

20. Development Perspective
• Greater transparency to donors and
key stakeholders.
• Guides development strategy.
• Guides communication.

21. Understand Your Situation
Analyze your financial report to identify
opportunities for:
• Better fund allocation.
• Fundraising initiatives to implement.
• Smoother, better cash flow.
• Increasing reserves and unrestricted funds.
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

22. Communicating to Stakeholders
• Leadership and staff
• Board members
• Major donors
• Volunteers
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

23. What Needs to Be Communicated
• Impact to your nonprofit.
• Adjustments to resource development efforts.
• Shifts of roles and responsibilities for staff and
board members.
• Strategic plan and initiatives.
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

24. What You Can Do
• Diversify revenue streams.
• Increase opportunities to
donate (e.g. pledges, monthly
giving, planned giving).
• Revise fundraising “ask.”
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

25. Asking for Unrestricted Funds
• It’s OK to ask.
• Define, don’t restrict.
• Explain the
donation’s impact.
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

26. Building Your Reserves
• Communicate the importance of
reserves to constituents.
• Peer-to-peer fundraising.
• Recurring giving campaigns.
Sum Things to Think About: New Financial Reporting Rules for Nonprofits

27. Summary
Sum Things to Think About: New Financial Reporting Rules for Nonprofits
• Understand the impact and implication of your statement to stakeholders.
• Tailor communication specific to each type of stakeholder, including staff, board members, donors, etc.
• Foster collaboration between Accounting and Development.
• Be proactive and holistic in your approach.

28. Q&A Ryan Erfer
Arreva
ryan.erfer@arreva.com
800.676.5831 ext. 314
Andrea Mills
FMA
amills@fmaonline.net
212.931.9163
David Jost
Arreva
david.jost@arreva.com
800.676.5831 ext. 317

29. About Arreva
Arreva, the trusted advisor and industry leader in cloud-based Donor Relationship
Management and Online Fundraising software has offices in Fort Lauderdale, FL and
Palo Alto, CA with a team that has served the nonprofit industry for over three decades.
Arreva’s fully integrated Online Fundraising and Exceed Beyond Donor Relationship
Management Software provide a nonprofit ecosystem that helps thousands of nonprofit
organizations focus on their mission while they build awareness, cultivate and engage
donors, and transform fundraising.
Learn more at: www.arreva.com
About Andrea Mills
Andrea has extensive experience working with nonprofits, individuals, and foundations
helping them make important strategic fiscal decisions. As a sought-after trainer and
speaker, Andrea travels the country presenting on a variety of nonprofit financial
management topics. She is a member of the American Institute of CPAs and The
Institute of Internal Auditors and served as an adjunct professor at Columbia
University’s School of Continuing Education, where she trained Development Directors
on nonprofit accounting issues.
Learn more at: fmaonline.net
Ryan Erfer
Arreva
ryan.erfer@arreva.com
800.676.5831 ext. 314
Andrea Mills
FMA
amills@fmaonline.net
212.931.9163
David Jost
Arreva
david.jost@arreva.com
800.676.5831 ext. 317