NFF Responds to Proposed Accounting Standards Updates for Nonprofits

NFF submitted an open letter to the Financial Accounting Standards Board (FASB) commenting on the proposed changes to accounting standards for not-for-profits. Drawing on NFF’s extensive work in the sector over 35 years, NFF’s response articulates how the presentation of nonprofit financial statements can be improved to provide clear and valuable information. The response weighs in on proposed updates to net asset classification, liquidity, an operating measure, and the reporting of functional and natural expenses. The letter clarifies how the unique business model of nonprofits necessitates specific forms of classification. It also gives a voice to small- and mid-sized nonprofits that do not have the internal capacity to respond but would nonetheless be affected by FASB’s changes.

FASB is the organization designated to establish standards that govern the financial statements and accounting requirements of nongovernmental organizations. FASB released their proposed updates for nonprofits in April 2015 with an open invitation to comment, and hundreds of organizations participated in the public process of submitting commentary to ensure that accounting standards updates are beneficial and reflect the needs of the sector.