We would like to inform you of some important topics applicable to not-for-profit organizations.
First, we remind you of state registration requirements if your organization solicits donations:
Charitable Solicitation Registration and Compliance – Charitable solicitation is regulated at the state-level. Virginia requires charitable solicitation registration in order to solicit donations in Virginia. If your organization is asking for donations by phone, mail, in person, and/or online, you are subject to these registration requirements. In some cases the organization will be required to file annually with their 990 in order to be compliant with state requirements. You can check on the website if your organization is registered and whether registration must be renewed annually. Information can be found at the Virginia Office of Consumer Affairs found at http://www.vdacs.virginia.gov/food-charitable-solicitation.shtml.
Next, you should know about changes that are coming to how your financial information is presented. Accounting Standards Update (ASU) 2016-14, Presentation of Financial Statements of Not-for-Profit-Entities, is effective for 2018 financial reporting and includes the following changes:
- Classification of Net Assets -? The three existing classes of net assets (unrestricted, temporarily restricted, and permanently restricted) will now become two:
- New assets without donor restrictions
- New assets with donor restrictions
Additional mandatory disclosures regarding timing and the nature of the restrictions, underwater endowments, board-designated restrictions, and liquidity information will be reported on a classified balance sheet.
- Reporting of Expenses – All not-for-profits will be required to disclose an analysis of expenses by both functional and natural classification. In addition, the method used to allocate expenses to functional categories will be disclosed in the notes to the financial statements.
In addition, all not-for-profits will be required to disclose how they manage liquidity, and the availability of financial assets to meet cash needs for general expenditures.
Please let us know how we can assist you in complying with state registration requirements and the new financial reporting standards. We look forward to hearing from you!