Jackie McLaughlin, CPA Quality Control and Learning Manager at Chazin and Company, discusses the accounting and financial questions that nonprofit board members should be asking. Jackie elaborates on the importance of active board engagement and the need for board members to ask questions. She begins with a brief story about the Enron collapse to highlight the consequences of not asking important financial questions.

With questioning from Julia Patrick, Jackie discuss the concept of fiduciary responsibility, comparing it to being a parent and making decisions in the best interest of the organization. Jackie explains that board members should approach their role as stewards of the organization and ensure that their decisions are in the best interest of the nonprofit.

The conversation then shifts to budget-related questions. Jackie encourages board members to ask "who, what, when, where, why, and how" to gain a better understanding of the organization's financial activities and decision-making process. They also touch on the importance of budget assumptions and the need to question them to ensure realistic financial planning.

The topic of controls is addressed, with Jackie explaining that controls are in place to prevent and catch mistakes in financial processes. She highlights the importance of internal controls, such as bank reconciliations, and the role they play in detecting errors and deterring fraud. The external component of controls, such as bank statements and audits, is also discussed.

The conversation wraps up by mentioning the significance of policies, including conflict of interest and whistleblower policies, and the need for board members to be aware of these policies. Jackie emphasizes the importance of transparency and board involvement in matters related to executive directors' finances

Chazin and Company CPA, Jackie McLaughlin, provides insights into the importance of gift acceptance policies, the challenges of valuing non-cash donations, and the need for thoughtful decision-making in the nonprofit sector. 
The conversation begins with a look at whether nonprofits should accept all bequests and gifts. Jackie shares an example of a nonprofit that accepted all donations and what occurred over time.  She emphasizes that nonprofits should have a gift acceptance policy to determine what gifts they will accept and what they won't. This policy should consider the physical operating implications and the hard and soft costs associated with accepting certain types of gifts.

The challenges of valuing non-cash gifts, such as art collections or vintage cars also play a role in the gift acceptance decisions. Jackie highlights the importance of having policies in place and suggests that nonprofits should rely on appraisers to determine fair market value. She also mentions that non-cash donations need to be recorded and reported on the statement of activities. The conversation touches on the fluid nature of gift acceptance policies and the need for periodic reviews and policies should be adjusted based on the organization's experiences and lessons learned.

The emotional aspect of gifts and how nonprofits should handle situations where donors have emotional attachments or overvalue their donations is also important. Jackie suggests that nonprofits should rely on their gift acceptance policy to respectfully decline gifts that do not align with their guidelines, while emphasizing the sentimental value of the donation.

The segment concludes with a discussion on the potential pitfalls of non-cash donations, highlighting the costs involved in liquidating and managing these donations and the potential impact on staff time and resources.

In this episode of Counting On Chazin, Maria Injic, the US Director of Client Services at Chazin and Company, shares her expertise on basic accounting for nonprofits with Julia Patrick, from the American Nonprofit Academy.  The interview highlights the significance of financial management and accounting principles for nonprofits and emphasizes the role of board members in understanding and reviewing financial statements to make informed decisions and fulfill their fiduciary responsibilities.
They delve into the concept of GAAP (Generally Accepted Accounting Principles), which provides rules and regulations for accounting practices. While GAAP is not required for nonprofits, it is considered best practice to follow these principles for accurate and comparable financial statements. They also highlight the differences between nonprofit accounting and for-profit accounting, such as the presence of donor restrictions in nonprofits.

Maria explains various financial statements relevant to nonprofits, including the statement of financial position (balance sheet), statement of activities (income statement), and statement of functional expense. She emphasizes the importance of reviewing these statements regularly, with the balance sheet being reconciled monthly and reviewed by board members in financial packets. The statement of activities shows revenue and expenses, while the statement of functional expense breaks down expenses into programming, administrative, and fundraising categories.

They discuss the concept of restricted funds, including permanently restricted funds (such as endowments) and temporarily restricted funds. Maria mentions the recent shift towards trust philanthropy, where donors allow nonprofits more flexibility in how funds are used during crises like COVID-19. The statement of functional expense helps donors understand how nonprofits are allocating their funds.

Julia raises the question of board members' proficiency in accounting terms, and Maria encourages board members to ask questions and seek clarification from finance professionals within the organization. She emphasizes that board members play a vital role in reviewing financial statements and providing valuable insights from their unique perspectives.

The interview concludes with Julia expressing gratitude for the discussion and emphasizing the importance of financial knowledge for nonprofit board members. She encourages viewers to explore the free resources provided by Chazin and Company to further their understanding of nonprofit accounting.