Mark Koscinski NFP

Dear Santa…

December 21, 2021

Dear Santa:

It truly has been a tough year, but we were all good.  We worked hard to keep our organization going, often on a shoestring budget.  So, when you are making your rounds tonight and come to town, could you please bring us:

  • A Web designer.  We need to update our website so we can get our message out more effectively and to more people.  Oh yes, we have to  add a donation button to the website as well.  Could you see to that as well? 
  • A Cyber security expert.  Obviously, if we get a new website we need to make sure it is hacker resistant. Data security is so important these days.  We can’t afford to get our website hacked and held for ransom. 
  • A CPA.  Who can understand the PPP rules, not to mention that new lease accounting we have to figure out?  Maybe those guys at the FASB will leave us alone this year?  If they have any bright ideas about new accounting standards in 2022 we hope they keep them to themselves. 
  • A whole bunch of volunteers.  That includes the first four people on this list and a lot of others to help us carry out our mission this year.  
  • People willing to serve on our board.  We know these are far and few between. We also know this is a big time commitment for someone.   You have a pretty wide network of friends.  Perhaps you can convince some of them to donate their time and talent to help us out?  

Of course, you don’t have to drop them down the chimney.  They can knock on the front door and we will let them in. If you want though, could you leave us five gallons of hand sanitizer and wipes?  You can definitely leave those under the tree in the office. If that isn’t possible because of supply chain issues,  perhaps you can just leave a check to help us balance our budget this year? 

 Please kindly remember all of our volunteers,donors, employees,  clients, vendors and other stakeholders  this year as well.   We couldn’t have done it without them. A few of them might deserve coal in their stocking like the members of the FASB, but please overlook this. They have had a tough year too.  On second thought, perhaps the FASB board members do deserve coal in their stocking for that lease accounting decision they made last month. We’ll leave that up to you.  

 Santa, if it is not too much to ask, can you please bring an end to this Pandemic?  We keep hearing about the “new normal”.  However, the “old normal” was difficult enough for all of our clients and us.  This new world is really putting a strain on the delivery of services to those who are most in need of them. Perhaps you can put a vaccine that works on all mutations of the COVID virus in our stockings?  We know this sounds magical, but we also know you use magic to carry all of those presents in your sleigh.

Finally Santa, we are sad to tell you that there will be no milk and cookies for you tonight.  The Governor won’t let anyone eat or drink in the office.  Unfortunately, that includes you.  When you drop in tonight, you have to wear a mask in the office as well.  By the way, are you vaccinated? 

Have a wonderful and restful Christmas Santa.  We hope Mrs. Klaus, the elves, and you all have a great New Year as well.  

Very truly yours,

The Board and Management

Any NFP Organization

PS.  Don’t forget to get the elves vaccinated if there are more than 100 of them! We don’t want OSHA coming after you. 

Mark Koscinski NFP

And the Runner Up for Grinch Is….

NFP organizations, like other employers, had a rough spell the last two years. In recognition of that, Congress provided for a deferral of the employer portion of payroll taxes due from March 27, 2020 until December 31, 2020 in the CARES Act. This was a deferral, and not a a forgiveness of these taxes. The chicken has now come home to roost. This is a reminder that 50% of the deferred balances must be deposited by December 31, 2021, with the balance due by December 31, 2022. Employers who do not make this deposit by year end will be subject to interest and penalties.

Given the fact the pandemic is still impacting many organizations, shouldn’t the IRS consider providing a more lenient repayment schedule? I can understand that remission of payroll taxes is out of the question, but many businesses and NFPs may struggle to make these payments. So, the runner-up in the 2021 Grinch election has to be the IRS.

Mark Koscinski NFP, Uncategorized

Who is the New Grinch This Christmas?

The Financial Accounting Standards Board (FASB) recently delivered an unwelcome holiday season body blow to the NFP world (and privately owned companies as well). 
Working hard to earn the title of Grinch, the FASB  decided on November 10 not to defer the new lease accounting standard for a third time.  The previous justifiable deferrals of the original implementation date were caused by the Pandemic, as many organizations were shut down or forced to adapt to their new reality. 

The new lease accounting will take effect for fiscal years beginning after December 15, 2021, and for interim fiscal periods beginning one year later. This standard requires all lease obligations to be recognized on the balance sheet of the organization, with only minor exceptions. Management could be in for some surprises  as bank loan covenants might be impacted because of the new debt on the balance sheet.  Additionally, an NFP organization will need to not only implement the lease accounting for future years but also to retroactively recalculate the impact of the new accounting for prior  years. This is required even if the NFP decides to adopt a “cumulative change” approach to implementation.  In short, NFPs shouldn’t underestimate the amount of work involved in this effort. Many organizations have already found the implementation more difficult than they originally anticipated. 

To say I disagree with the Grinch’s action is to put it mildly.  Many NFP organizations have been operating on a shoestring budget for extended periods of time, not to mention the fact the job market for accountants is extremely tight.  This means just finding the bodies to do the work is a difficult proposition. Mercifully, many NFP organizations have fiscal years such as June 30, giving them some more time to complete the required work. Nevertheless, it is imperative to begin working on this project as soon as possible so the delivery of financial statements to donors and other stakeholders is not delayed.  

Perhaps the FASB should adopt green as its new official color? 

Mark Koscinski NFP

Meanwhile, Back in Rome…

Meanwhile, Back in Rome…

Vatican financial reform efforts are still underway, even this far into Pope Francis’ reign.  The current state of affairs is described by John L.  Allen in an excellent article published on the Crux website.  That article can be accessed here. It seems the Vatican sustained an eye popping loss of $130 million dollars disposing of an ill considered investment in the London real estate market.  To add insult to injury the original investment was made from  Peter’s Pence, the annual collection taken up in every Catholic Church in the world to help defray Vatican operating costs. 

The upshot of this mess is Peters’s Pence collections, a major source of income for the Vatican, has been much reduced.  There is no doubt the Pandemic was a major reason for the decline, but even the Vatican has been forced to admit the recent bad publicity has a lot to do with this.  (Please click here for an article from CNA about this). 

I have made similar comments such as these many times in this blog, but for those of you that are new and may be managing NFP organizations, they bear repeating:

  1. Changing the “corporate culture” often requires replacing the entire cast of characters and not just “the boss”.  Yes, the cardinal who foolishly invested in London real estate has been dismissed, but what about all of those that assisted him? The Catholic Church has been loath to do such things.  Time and time again we have seen the clergy rally to “protect itself” from “outsiders”.  Extreme clericalism is not a healthy culture by any stretch of the imagination. Deep cancer often requires extensive surgery to uproot it.  Has this happened at the Vatican?
  2. Has an investment policy been adopted? Any organization with any amount of money needs to have an investment policy. This will at least hinder miscreants from making such horrible investments as we have seen here. A proper investment policy could have prevented such speculative investments as we saw here. Is there one now in place?
  3. Will there ever be a real audit of Vatican finances?  If the Pope and the Curia really wanted to get to the bottom of the problem then it is time to bring back PriceWaterhouse or another respected international accounting firm to give the books a good once over. The Vatican seems to be reacting like a vampire afraid of sunlight. A little more transparency please. (Note:  this is good advice for bishops in their dioceses as well…)
  4. Does the Vatican understand the implications of prospect theory for its donors?  Prospect theory, the brainchild of Daniel Kahneman and Ivan Tversky, states people on average feel economic loss more than twice as much as they feel economic gain.  That is why publicly traded corporations try to get all bad news out at one shot. They do not want investors to continually keep hearing bad news and feeling pain over and over again.  Such conduct will get CEOs and CFOs fired.  Hopefully, the Vatican has been completely transparent about this affair and no more bad news will come out.  Hopefully. 

To be fair, it seems Pope Francis has taken some measures to correct the situation. He was late to the game though.  Only time will tell if he has done enough to restore the confidence of the laity in the pews

Mark Koscinski NFP

Giving Tuesday

The Tuesday after Thanksgiving has become known as Giving Tuesday, a day where we who have much share with those who may need much. Obviously, the past two years have been rough on many people given the Pandemic. Many organizations, particularly NFP organizations have not completely recovered from this. On this Giving Tuesday, remember to give generously to your favorite NFP organization. It doesn’t matter which one it is. Pick a worthy one and help those who help others.

Many employers will match contributions to specific organizations or will match donations made on this day. Please take advantage of this if you are employed by such a forward thinking organization. And remember, charitable contributions up to $600 can be deducted from taxable income in 2021 without itemizing deductions.

Mark Koscinski NFP

Last Round of Horseshoes for Summer 2021

Last Round of Horseshoes for Summer 2021

As Labor Day approaches many organizations are returning to the office and schools will be holding in person classes. We can only hope and  pray the pandemic will abate as we move through the rest of the year.   As summer fades away, it is now time for the last round of NFP horseshoes for the Summer of 2021. For the sake of brevity, I won’t repeat the scoring rules here as I have already done that earlier this Summer. 

A Ringer!–RSM LLP, a large accounting and consulting firm,  acquires C Systems, a technology services provider to the NFP world. To be sure, RSM is known for its presence in the NFP world, but this acquisition shows their confidence in the rebound of this sector. Perhaps it is a good sign for all those working in the NFP world!  PNC Bank also recently spoke about the increased potential of merger and acquisitions in the NFP sector. (Access the article here.) You can read the press release from RSM here. As an aside, RSM offers continuing education courses for NFP personnel that can be accessed here. 

A Ringer! Moceans CIL going strong! Moceans CIL is a center for independent living, serving Monmouth and Ocean counties NJ.  Despite the pandemic, the staff of Moceans continues to serve their client base. They  and  all the NFP organizations that have persevered through the pandemic are to be commended for their dedication to their mission. The MOCEANS website can be found here.  May they  and all NFP organizations continue to have good fortune in their future endeavors. 

Missed the Stake.  The Trial of Cardinal Becciu adjourned until October. The trial of the former papal chief of staff  (or, sostituto as the position is known) started in late July and was adjourned until early October.  Yes, Italy tends to shut down for the month of August so that explains some of the delay. However, it seems there has been a certain level of incompetence in the management of the trial.  For instance, the defense has not received all of the evidence against Angelo Cardinal Becciu yet.  One can only hope the Vatican has the wherewithal to deal with such a complicated trial.  That remains to be seen. Pope Francis has made some strides lately to clean up the corruption of the Vatican Curia (including this trial) , but it seems it is too little and way too late in his pontificate. I won’t even get into the petty corruption and graft that exists in all of the dioceses around the world. The Catholic Church is arguably the largest NFP entity in the world and should set the standard for Good Stewardship of the Faithful’s assets for not only the Vatican curia but for all dioceses throughout the world.  Sadly, this has not been the case. 

Missed the Stake.  FASB has not delayed the implementation of ASC 842.  For those of you who aren’t aware, ASC 842 is the new lease accounting standards issued by the Financial Accounting Standards Board (FASB).  Due to the pandemic, the previous effective date has been delayed for NFP entities that begin their fiscal year after December 21, 2021.  While one might think that this gives NFPs the whole year to get the lease accounting under control, that is not correct.  ASC 842 is effective for interim financial periods as well.  So, if the NFP has to provide financial information to lenders on a quarterly basis it needs to get cracking on this project now.  One has to wonder though.  Many NFP organizations are having a hard time operating in the pandemic as it is. This is just one more burden for them.   Will they be sacrificed on the altar of theoretically correct accounting? Would it have been so traumatic for the FASB to grant one more extension? 

Wel, that wraps up our horseshoe games for this summer!  The semester at Moravian University has is starting so I will be concentrating on that for a while.  I hope you had a great summer. Stay healthy!

Mark Koscinski NFP

Supreme Court Allows Larger NFP Donors to Remain Confidential

In a decision delivered on July 1, the United States Supreme Court struck down a California law requiring not for profit entities to disclose larger donors to the State Attorney General. Chief Justice Roberts delivered the opinion for the 6-3 majority, largely split along ideological lines. The more liberal leaning Justices Breyer, Sotomayor, and Kagan dissented. The intent of the California law was to assist in the policing of NFP fraud by requiring these organizations to report all donors of $5,000 or more. A broad coalition of NFP groups banded together to oppose the law.

In his majority opinion, Roberts said such laws had a chilling effect on right of association provided by the First Amendment. In a not so subtle swipe at the State of California, Roberts also wrote the promises of confidentiality the State provided were worthless. He noted donors to the particular charities had received serious threats. The long term implications to this decision are unclear. Many legal pundits are claiming this decision will be the wedge in the door to challenge future campaign finance disclosures. What is for certain now is larger donors to unpopular causes can breathe a sigh of relief as they maintain at least some semblance of anonymity.

The text of the decision can be found here.