Our Office will be closed Nov.21 – Nov.25 in observance of Thanksgiving. We will return to regular business hours on Monday, Nov. 28.
Our Office will be closed Nov.21 – Nov.25 in observance of Thanksgiving. We will return to regular business hours on Monday, Nov. 28.
Nonprofits nationwide are increasingly considering shared workspace arrangements to lower rising facility costs. These arrangements are particularly appealing in areas where nonprofits are being priced out of the real estate market and to those determined to cut operating costs. In the Pikes Peak region, the “health care” desert of services is in the 80916/10 area.
The term “shared space” refers to workspaces shared by small businesses, freelancers, consultants, start-ups and others. Depending on their needs, tenants can pay for short- or long-term access to private offices, conference rooms and common areas. Office equipment and services, such as high-speed Internet; photocopiers, printers and scanners; and coffee and office supplies, are shared among the tenants.
The shared space trend in recent years has led to the development of several options. For example, you could rent space in a dedicated shared workspace facility that also might provide “back-office” services such as HR. Many of these arrangements welcome a variety of businesses, but some cater primarily to nonprofits.
Similarly, some private foundations, with more space than they require, lease out the excess to nonprofits. As tax-exempt organizations, they avoid steep property taxes and pass the savings along to their tenants in the form of reduced rent.
When two or more nonprofits serve the same population, they may rent a shared facility and slice the cost in half. You may also rent out unused space to other organizations, generating revenue to offset your rent obligations.
The most obvious benefit of sharing space lies in potential cost savings. Why, for example, pay annual rent on space that includes a conference room you only use for semiannual board meetings? Organizations of all sizes benefit by efficient use of supplies and equipment, utilities and maintenance expenses.
Flexibility is especially valuable for nonprofits in the early stages of development or entry into a new market. Organizations usually do not want to commit to long-term leases before they have a handle on how much space they will need in the future.
Workspace is not the only expense you can share with other organizations to reap impressive savings. You also can cut your costs by:
Sharing staff. Your organization may, for instance, be too small to justify a full-time IT person — you might not have the need or the budget. But perhaps you and another organization together have sufficient need and funding for such support.
Sharing equipment. You probably have equipment that goes unused or is used below capacity. Think about sharing it with another organization whose needs for such equipment complement yours. (For example, a summer music program could share instruments with a program that operates during the school year.)
Sharing buying power. Consolidate your buying power with that of other nonprofits to obtain lower rates, discounts and possibly even improved service.
Shared space is not all rainbows and unicorns, though. Organizations need to take a variety of factors into consideration before taking the plunge. Some nonprofits, for example, may not want to share space with “competing” organizations that serve the same population or pursue similar funding sources.
You also should think about:
You can assess many of these issues by making site visits, both scheduled (to get the sales pitch) and unscheduled (to get a more realistic lay of the land).
As nonprofit budgets get tighter and come under more scrutiny, cutting your space-related costs may provide some peace of mind and pave the way to sustainability. Your CPA can help you determine whether moving your operations to shared space is a solid financial decision.
Nonprofits have pursued corporate sponsorships for years, with good reason. Effectively executed, sponsorships can benefit both sponsor and organization. But if your nonprofit is not careful, a sponsorship can be deemed paid advertising and your organization could end up liable for unrelated business income tax (UBIT). Although the Internal Revenue Code includes an exception from UBIT for certain sponsorship arrangements, navigating the rules can prove tricky.
Generally, “qualified sponsorship payments” received by a nonprofit aren’t income from an unrelated trade or business. A qualified sponsorship payment is a payment of money, transfer of property, or performance of services with no expectation that the sponsor will receive any “substantial return benefit.” Benefits returned to the sponsor can include advertising; goods, facilities, services or other privileges; rights to use an intangible asset such as a trademark, logo or designation; or an exclusive provider arrangement.
To be considered “substantial” by the IRS, the aggregate fair market value (FMV) of all benefits provided to the sponsor during the year must exceed 2% of the amount of the sponsor’s payment to the nonprofit. If the total benefit exceeds 2% of the payment, the entire FMV of the benefits (not just the excess amount) is a substantial return benefit.
The regulations specify for purposes of the exception that a nonprofit’s “use or acknowledgment” (as opposed to promotion, marketing or endorsement) of a sponsor’s name, logo or product lines won’t constitute a substantial return benefit to the sponsor. Your organization’s use or acknowledgment can include:
You can include a sponsor’s product at the sponsored activity as long as there’s no agreement to provide the sponsor’s product exclusively. Mere display or distribution of a sponsor’s product at an event, whether for free or remuneration, isn’t considered an inducement to purchase, sell or use the product (that is, advertising). It won’t affect the determination of whether the qualified sponsorship payment applies.
Say that a nonprofit is holding an annual 10K race and is providing participants with drinks and prizes supplied free of charge by a sponsor. If the organization lists the sponsor’s name in promotional materials or includes it in the event name, those activities constitute permissible acknowledgment of the sponsorship. Therefore, the drinks and prizes are an exempt qualified sponsorship payment.
Note that contingent payments aren’t qualified sponsorship payments. If a sponsor’s payment is contingent on event attendance, broadcast ratings or other measures of public exposure to the sponsored activity, the payment falls outside the exception.
When a sponsorship comes with a substantial return benefit, only the part of the sponsor’s payment that exceeds the substantial return benefit is considered a qualified sponsorship payment. The remainder is unrelated business income.
Consider, for instance, a not-for-profit that receives a large payment from a sponsor to help fund an event. The organization recognizes the support by using the sponsor’s name and logo in promotional materials. It also hosts a dinner for the sponsor’s executives, and the FMV of the dinner exceeds 2% of the sponsor’s payment.
The use of the sponsor’s name and logo constitutes permissible acknowledgment of the sponsorship, but the dinner is a substantial return benefit. As a result, only that portion of the sponsorship payment that exceeds the dinner’s FMV is an exempt qualified sponsorship payment.
Application of the qualified sponsorship payment exception and the rules for unrelated business income are complicated. Your financial advisor can help reduce the risk of incurring UBIT.
The Internal Revenue Code provisions about unrelated business income distinguish between “exclusive sponsor” and “exclusive provider” arrangements. An arrangement that acknowledges a corporation as the exclusive sponsor of a nonprofit’s activity generally doesn’t by itself result in a substantial return benefit that could incur the unrelated business income tax (UBIT) for a nonprofit. Similarly, an arrangement that acknowledges a company as the exclusive sponsor representing a particular trade, business or industry won’t constitute a substantial return benefit on its own.
On the other hand, an arrangement with a sponsor that limits the sale, distribution, availability or use of competing products, services or facilities in connection with the nonprofit’s activity generally does result in a substantial return benefit. For example, if the organization agrees in exchange for a payment to allow only the sponsor’s products to be sold in connection with an activity, the sponsor has received a substantial return benefit.
Whether an executive on staff or a member of the board, new to the organization or a long-time veteran, a nonprofit leader sometimes faces tough challenges that a formal development class will not address. But according to the nonprofit Community Resource Exchange (CRE), learning on the job itself can be a rich source of leadership and management development. The CRE advocates two self-coaching opportunities that lean on resources you can find in yourself, within the workplace and among your networks.
The CRE’s first technique is a method known as “reframing.” It refers to the ability to shift your perspective and unlock a fresh approach to problems.
The organization also urges leaders to follow what it calls the 1-2-3 steps, which target low-hanging fruit first. This approach calls for beginning with the first few, relatively easy actions you can take to address a specific challenge. The idea is that these initial steps will help move you from understanding the problem to taking action and accomplishing real change.
These strategies can work, for example, to reframe a problem familiar to many nonprofits — the lack of the strong accounting systems and staff needed to ensure the accurate and timely reporting required for continued funding of your organization.
You could reframe this situation by shifting staff from other areas of the organization to shared responsibilities in finance, thus encouraging managers to think beyond narrow roles. Would involvement of a board member or volunteer supply the manhours and controls you’re missing? You also can get past hiring the additional person you can’t afford by trying to improve the processes in place, and by inviting and seriously considering creative suggestions from your staff.
From here, you can identify the 1-2-3 steps to get the ball rolling. For instance, you might establish a team from various areas of the organization to outline what needs to be completed on a project and when. Are there tasks that should be prioritized to satisfy government and grantor requirements? Are there other nonessential recordkeeping tasks that could be minimized or eliminated? You also could obtain information and pricing from professional outside accounting firms that specialize in this type of work. Then compare those costs with providing accounting in-house.
The CRE also has applied its suggested strategies to the challenges of managing differences. Imagine you’re dealing with several diverse groups that use your library’s services. Reframing would shift from viewing the different groups as a hodgepodge to seeking common ground among the personalities, demographics and needs. Are these groups all from the local community? Do they all need access to the programs in person? Are they all readers? You also could move from trying to achieve uniformity of interest to mining their diversity.
Easy steps might include convening all of the relevant parties to develop an initial plan for priority activities in the coming year. How best can these groups interact? Possibly, you could bring the children from Story Hour to share an activity with the Writers’ Group.
You also could take time to learn more about strategies for managing differences by reading relevant books and articles, meeting to share what you’ve learned, and planning how to handle future interactions with the various groups that benefit from your services.
The most effective leaders always encourage their employees to seek more knowledge and then lead by example. Employing the methods above can help you continually hone your leadership and management skills, even when you don’t have the time or money for formal development.
Whistleblower policies encourage staff, volunteers and others to discreetly provide credible information on illegal practices or violations of organizational policies. They protect individuals who risk their careers or take other kinds of risks to report illegal or unethical practices. According to its Report to the Nations, the Association of Certified Fraud Examiners identified tips as the No. 1 method by which fraud is detected. Whistleblower policies (and the use of hotlines) are important to ensuring tips are received by the organization. IRS Form 990 asks nonprofits to report whether they’ve adopted a whistleblower policy. And although no federal law specifically requires organizations to have such policies in place, several state laws do.
Your whistleblower policy should be tailored to your not-for-profit’s unique circumstances. But here are some general tips to consider when forming, or refining, your policy’s provisions:
1. Be clear about whom the policy covers. Spell out who’s covered by your policy. In addition to employees, volunteers and board members, you might want to include clients and third parties that conduct business with your organization, such as vendors and independent contractors.
2. State which types of wrongdoing are covered. Financial misdeeds often get the most attention, but whistleblower policies can have a longer reach. For example, you might include violations of your organization’s client protection policies, conflicts of interest and unsafe work conditions.
3. Spell out reporting procedures. Explain the procedures for reporting concerns. Must claims be made to a compliance officer or can they be reported anonymously? Is a confidential hotline available? Whom can whistleblowers turn to if the designated individual is suspected of wrongdoing? Your procedures should be clear and simple enough to encourage individuals to come forward.
4. Describe investigative procedures. State that every concern raised by a whistleblower will be promptly and thoroughly investigated and that designated investigators will have adequate independence to conduct an objective query. Ideally, investigators should report directly to your nonprofit’s board of directors.
5. Describe postinvestigation steps. Let everyone know what will happen after the investigation is complete. For instance, will the reporting individual receive feedback? Will the individual responsible for the illegal or unethical behavior be punished? If your organization opts not to take corrective action, be sure to document your reasoning.
6. Promise confidentiality. A guarantee of confidentiality can make whistleblowing more appealing. But it may not be possible to make such promises if whistleblowers need to become witnesses in criminal or civil proceedings. However, your policy should assure confidentiality to the greatest extent possible.
7. Describe disciplinary action. Not every whistleblower is motivated by pure intentions. State that your organization will take disciplinary action against individuals who make unfounded allegations that are reckless, malicious or intentionally false.
8. Forbid retaliation. A critical component of a whistleblower policy is the prohibition against retaliation. Make clear that no retaliation — including harassment, termination or blacklisting — will be tolerated against anyone who raises concerns about potentially illegal or otherwise wrongful practices in good faith. “Good faith” means the individual has a reasonable belief that a problem exists. Specify the party to whom complaints of retaliation can be addressed. Violators should be disciplined promptly and appropriately.
Whistleblower policies send a strong message about your commitment to good governance and ethical behavior. Make sure that your policy echoes your adherence to an environment of accountability and employee empowerment.
Three “top jobs” that nonprofits will need to fulfill their missions in the future have been identified by business magazine, Fast Company: 1) chief culture officer (CCO), 2) data scientist and 3) user experience (UX) designer.
A CCO manages an organization’s relationship with the community, implements internal wellness and health initiatives and devises policies to combat employee burnout, according to the magazine. Data scientists help nonprofits identify trends and critical information that can guide their program and service decisions. And UX designers improve the on- and offline processes that clients use (or don’t use) to access a nonprofit’s programs and services.
Online nonprofit revenue in 2016 grew by 14%, and email marketing revenue grew by 15%, according to a new study by nonprofit consultants M+R. Based on input from 133 nonprofits, “Benchmarks 2017” found that web traffic, email list size, Facebook fans, and Twitter and Instagram followers were all on the rise in 2016, while most individual email metrics were down. For example, the emails opened per number delivered fell 7% overall, for an average just under 15%.
For fundraising messages, the response rate was only 0.05%, an 8% drop from 2015. In other words, a nonprofit had to deliver 2,000 fundraising emails to generate a single donation. For every 1,000 fundraising emails delivered, nonprofits raised $36.
The M+R study also found that respondents increased their spending — including paid search, display and social media advertising spending.
The bottom line is that email marketing can be an effective fundraising tool. Two components for success are targeting your audience and building your email list of prospective supporters.
Recognition, trust and support — both monetary and otherwise — are among the critical factors that make nonprofit employees happy and, thus, create a superior nonprofit employer, according to The NonProfit Times “2017 Best Nonprofits To Work For” report.
Among the eight categories considered, the largest disparity overall between organizations that made the “Best Nonprofits” list and those that didn’t was found within “pay and benefits” (an 18-point differential) and “leadership and planning” (a 16-point differential). Across the 50 nonprofits recognized, the key drivers for employees included confidence and trust in the organization’s leadership and overall satisfaction with the organization’s benefits package.
Another statement where the “Best Nonprofits” diverged from others was “This organization gives enough recognition for work that is well done.” About 84% of respondents at the recognized organizations responded positively to that statement, compared to only 66% for nonprofits that didn’t make the list.
Employ analytical analysis to get a better view of your organization’s revenue picture. Techniques such as pinpointing year-to-year trends and benchmarking to other nonprofits can be useful in planning your short- and long-term future.
To some degree, most nonprofits rely on contributions from supporters to balance their budgets. Compare the dollars raised to past years and see if you can pinpoint any trends. For example, have individual contributions reached a plateau in recent years? What fundraising campaigns have you launched during that period?
Go beyond the totals and determine, for instance, if the number of major donors — say, those who give $1,000 or more a year — has been rising. You get more bang for your fundraising buck when you’re able to add major donors to your roster of supporters.
Also estimate what portion of contributions is restricted by donors as to how or when the money can be used. If your organization has a large percentage of donations tied up in restricted funds, you might want to re-evaluate your gift acceptance policy. You also might want to review your fundraising materials to make sure you’re pursuing contributions that give your organization the most flexibility.
Grants include funding from corporate, foundation and government sources. They can vary dramatically in size and purpose, from grants that cover operational costs, to monies for launching a program, to payment for providing services to clients. For example, a state agency may pay you $500 for each low-income, unemployed individual who receives your job training.
Pay attention to trends here, too. For instance, did a particular funder supply 50% of total revenue in 2014, 75% in 2015, and 80% last year? A growing reliance on a single funding source — an example of a “concentration” that will increase your risk — is a red flag to auditors and it should be to you, too. In this case, if funding stopped, your organization might be forced to find a new funding source, curtail a program or even close its doors.
Fees from clients or other third parties can be similar to fees for-profit organizations earn. Fees are generally viewed as exchange transactions, because the client receives something of value in exchange for its payment. Some not-for-profits charge fees on a sliding scale based on income or ability to pay. In other cases, fees (such as rent paid by low-income individuals) are subject to legal limitations set by government funding agencies.
On an ongoing basis, your nonprofit will need to assess if providing certain services pays for itself. For instance, fees set four years ago for a medical procedure may no longer be sufficient to cover costs. A decision to raise fees or discontinue the services will probably need to be made.
If your nonprofit is a membership organization, you likely charge membership dues. Has membership grown or declined in recent years, and how do your dues compare with similar groups?
Make informed predictions about the future of membership dues, especially if you rely on them substantially for revenue. If you suspect that dues income will continue to decline, your organization might consider dropping dues altogether and restructuring. If so, examine other income sources for growth potential.
Once you’ve gained a deeper understanding of your revenue picture, apply that knowledge to various aspects of managing your organization. This will likely involve educating your management team and setting or revising goals.
Colorado Secretary of State Wayne Williams recently urged Coloradans to be mindful when making a donation to Hurricane Harvey relief efforts.
“It is important for Coloradans to research the charities they support and trust that their donations are being used prudently,” he said.
Williams shared 10 tips to avoid charity scams.
If you have tax questions about donating to the hurricane relief efforts, please call your tax professional.
Every organization, whether for-profit or nonprofit, is at risk of falling victim to costly acts of fraud. Nonprofits, though, have some common characteristics that make them particularly susceptible to such schemes. Fortunately, you can help combat the risks at your nonprofit by implementing some simple controls.
Nonprofits tend to operate in a culture of trust and rapport, and that is one reason that they are attractive targets for fraud perpetrators. Organizations are often founded by a handful of passionate and idealistic volunteers and develop over time into a team with tighter relationships than typically seen in many for-profit businesses. As a result, management may not feel the need for antifraud controls, or they find it hard to ask tough questions when confronted with possible signs of fraud.
Similarly, many nonprofits place significant control in the hands of a limited number of people. This is a risk even in an organization with some internal controls, because more powerful individuals within an organization can simply override the controls, with lower-level staff too intimidated to intervene.
Nonprofits that have a lot of cash on hand, either in the office or at remote events, also can run into fraud problems. Cash has a way of disappearing into people’s pockets, especially at events held without proper accounting procedures. Creating a paper trail, with numbered tickets or receipts and multiple people involved every time cash is handled, helps mitigate the risk.
These are not the only factors that make nonprofits so vulnerable to fraud. High turnover among staff, volunteers and board members, as well as limited resources, also may contribute.
Internal controls in the form of strong policies, procedures and governance are a must for every nonprofit, regardless of size. Controls can help deter and detect fraud.
Perhaps the most critical control is segregation of duties. A single employee should never be responsible for all the steps in any accounting process — for example, collecting, recording, reconciling and depositing cash receipts. Segregating duties can be a challenge for smaller nonprofits. But, at the very least, the duties of handling and reconciling funds should involve more than one individual. And a separate individual should receive and review bank statements. If your nonprofit lacks the manpower, consider including board members or outside advisors to segregate duties.
Nonprofits also should conduct background checks on board members, employees, volunteers and anyone else who might handle cash. The checks should encompass credit history, references and criminal history and be updated periodically.
Governance plays a role in deterring and detecting fraud, too. Your board of directors must perform proper oversight by, for example, naming qualified individuals to independent finance and audit committees. It also should set an antifraud tone by developing — and enforcing — policies on matters such as conflicts of interest and the treatment of whistleblowers.
The Association of Certified Fraud Examiners has consistently found that tips are the most common (and low-cost) detection method for occupational fraud. It is best if tips are reported to the board or one of its committees, rather than management. The organization should make an anonymous fraud hotline available to employees, volunteers, vendors and clients.
Finally, you will need to formally educate your employees about fraud. You should provide training on the organization’s antifraud policies, red flags that could signal fraud and how the hotline works. Board members and volunteers with financial responsibilities should receive training, as well.
You can not prevent all fraud — no organization can. But you can reduce the risk of substantial fraud losses by recognizing your vulnerabilities and taking appropriate steps to mitigate them and to investigate thoroughly when fraud is suspected. Choosing to ignore fraud and hope for the best may result in suffering both financial and reputational damage.
Donors from households with net assets of $1 million or more — or those that bring home at least $200,000 annually — on average made donations totaling $25,509 in 2015 compared to an average of $2,124 from the general population, according to the 2016 U.S. Trust® Study of High Net Worth Philanthropy. And, on average, these high net worth households gave to eight different nonprofits. Also, wealthy donors who volunteered gave 56% more, on average, than those who didn’t volunteer. And 83% of wealthy donors plan to give as much or more in the next three years.
Large organizations such as United Way and the American Red Cross are turning to online appeals to reach Millennial donors who are “rewriting the rules of fundraising,” Adweek reports. One of the biggest challenges is engaging these donors through new fundraising channels. The not-for-profits are responding by ramping up efforts in crowdfunding, mobile and other digital modes of giving. United Way, for example, raised $570,000 for its “Restore Baltimore” campaign via crowdfunding.
According to this year’s Nonprofit Employment Practices Survey™ from Nonprofit HR and GuideStar, the ability to pay competitive wages ranks as the top staffing challenge faced by nonprofits for the fifth consecutive year. Since 2014, the second largest challenge has been finding qualified staff.
Organizations have the most trouble retaining employees in direct services (positions that work directly with clients), followed by fundraising development. And these are areas where the most job growth is expected in the coming year, suggesting the possibility of more staffing problems going forward. The survey report asserts that the increasing number of “entities that are blending purpose and profit” (for example, Ben & Jerry’s and Patagonia) means job seekers have more opportunities to engage in mission-driven work than ever before.
When the Financial Accounting Standards Board’s (FASB’s) new revenue recognition standard was released in 2014, it caused quite a stir across industries. But the standard applies only to revenue from “exchange transactions,” also known as reciprocal transactions. Contributions to nonprofits are nonreciprocal, and your grants may be, too — meaning different rules apply.
In Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, the FASB defines a contribution as an unconditional transfer of cash or other assets to an entity in a voluntary nonreciprocal transfer. It specifically distinguishes contributions from exchange transactions, which it describes as reciprocal transactions where each party receives and sacrifices approximately equal value.
That means that contributions don’t fall within the rules in ASU 2014-09, including its voluminous disclosure requirements. Instead, you generally should report contributions in the period you receive the pledge or commitment to donate. Restrictions imposed — directions given by the donor — as to how or when the funds may be used do not change the timing of recognition.
However, when the donor’s gift is available only after certain requirements are met by your organization, the timing may be different. Specifically, you should not recognize a conditional promise to give as revenue until the conditions are substantially satisfied. For example, a promise to give, requiring a minimum matching contribution, can not be recognized until the match is received.Transfers of assets with donor-imposed conditions should be reported as refundable advances until the conditions are substantially met or explicitly waived by the donor.
But you can recognize a conditional promise to give upon receipt of the promise, if the possibility is “remote” that the condition will not be met. An example is a grant requiring you to submit an annual report to receive subsequent annual payments on a multiyear promise.
Determining whether a grant is an exchange transaction, where the grantor expects goods and services for its money, or a type of restricted or conditional contribution, where the grantor intends to make a gift to support the organization, can be more complicated. For example, a grant based on the number of meals or beds a nonprofit provides its client population could be considered an exchange transaction because it is essentially a contract to provide goods or services. Similarly, a research and development grant could be characterized as an exchange transaction, if the grantor retains intellectual property rights in the outcomes.
A grant that is an exchange transaction is subject to ASU 2014-09’s five-step framework:
1. Identify the contract (or contracts) with a customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price.
4. Allocate the transaction price to the performance obligations in the contract.
5. Recognize revenue when (or as) you satisfy a performance obligation.
Say you received a fixed-fee grant to perform specific research for a governmental agency, and the agency will own the outcome. The grant is a contract because each party receives something of equal value (grant funds and research) (step 1). The provision and delivery of the research is the performance obligation under the contract (step 2). The fixed fee is the transaction price (step 3). With only one performance obligation, the entire transaction price is allocated to it (step 4), and you will recognize the grant revenue when you deliver the research to the agency (step 5).
This is a simplified example. Nonprofits can find it challenging merely to determine whether a grant is an exchange transaction or a contribution — or a combination of the two, requiring bifurcation for proper accounting treatment. And, when a grant is an exchange transaction, it can be tough to identify the performance obligations, when they’re satisfied and the proper allocation of the transaction price to those obligations.
ASU 2014-09 will take effect for some nonprofits as soon as 2018. Now is the time to start analyzing all of your revenues to determine when and how you should report them.
Determining how and when to recognize grant and contribution revenue can be tricky for many nonprofits, particularly those receiving government funds. The good news is that the Financial Accounting Standards Board (FASB) is at work on an Accounting Standards Update that will provide more guidance. As part of its “Revenue Recognition of Grants and Contracts by Not-for-Profit Entities” project, the board is considering two main issues:
• How to distinguish between grants and similar contracts that are exchange transactions (subject to the FASB’s five-step revenue recognition framework) and those that are contributions (not subject to the framework), and
• How to distinguish between conditions and restrictions for contributions.
Although still in the early stages of the project, the FASB has tentatively decided that a donor-imposed condition will require: 1) a right of return (either a return of the assets transferred or a release of the donor from its obligation to transfer the assets), and 2) a barrier that must be overcome before the recipient is entitled to the assets transferred or promised. (For example, the recipient must raise a threshold amount of contributions from other donors.) A final ASU is expected in first quarter 2018.