1. Atlanta, GA October 7-9, 2013 It Only Counts Once: Bridging theGAAP Financial Management and Human Resources Forum

2. Presenters 2 Kristen McCollum, Controller United Way of Greater Atlanta Atlanta, GA Brittany Burnett, Vice President of Workplace Campaign United Way of Greater Atlanta Atlanta, GA

3. Agenda Define the issue Discuss the potential problems Develop a decision tree Review examples of promises to give with potential GAAP between Finance and Resource Development Summary 3

4. 4 Define the issue

5. 5 Board of Directors meeting (Resource Developments portion of the meeting)

6. Board of Directors meeting (Finances portion of the meeting) 6

7. Define the issue 7 Resource Development is focused on raising money (and they are under a lot of pressure to do so, both internally and externally) Finance is focused on ensuring the pledge amounts recorded are in accordance with Generally Accepted Accounting Principles –The pledge is a promise to give (irrevocable) –Revenue is earned –The pledge is unconditional –The pledge is nonreciprocal The purpose of this session is to discuss the various differences between Resource Development and Finance when it comes to accounting for the various dollars raised.

8. Examples of various differences 8

9. Discuss the potential problems 9

10. 10 Pledges must meet all four criteria (irrevocable/promise to give, earned, unconditional, and nonreciprocal) and this is not necessarily at the top of their mind in Resource Development –Everyone gets excited about a campaign GOAL being met, but did the revenue meet the recognition criteria? Counting revenue two or three times (when pledged, when collected, etc.) Counting a multi-year gift in each year versus the entire gift being counted in the year of the gift Counting a planned gift in campaign dollars Counting the full value of a life insurance policy in campaign dollars Counting sponsorships in campaign dollars Defining what is in campaign versus non-campaign

11. Develop a decision tree 11

12. Develop a decision tree 12 See the enclosed document for a decision tree on contribution revenue. This document will help Resource Development as they pursue various types of gifts. –Does the revenue meet the four criteria? –Beyond that measure, is the revenue counted in UW1, UW2, UW3, UW4, UW5, UW6, or UW7 (per the NPC Total Resources Generated policy)

13. Examples 13

14. Examples 14 Example #1 – Contingent pledges and revocable gift expectancies John Smith is an executive at Coca Cola and he has stated that once Coca Cola stock is trading at $45 per share, he will give United Way a $1M gift. Question to ask? Does the pledge meet the four criteria? What does Finance record? What does Resource Development record?

15. Examples 15 Example #2 – Another United Way is doing the fundraising John Smith used to live in Atlanta but has now been transferred to Birmingham to work in commercial real estate. His new company runs a United Way campaign. He pledges through the local United Way campaign but designates his gift back to Atlanta. Question to ask? Which United Way is doing the fundraising? What does Finance record? What does Resource Development record?

16. Examples 16 Example #3 – A third party processing the pledge payments. XYZ Company runs a local United Way campaign and the local United Way does the fundraising for the campaign. The Company hires JK Group to process the payment of the pledges to the various non-profits. Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record?

17. Examples 17 Example #4 – Example of a multi-year pledge John Smith pledges $200,000 a year for five years. Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record?

18. Examples 18 Example #5 – Corporate sponsorship Bank of America agrees to sponsor the local United Way hosted fashion show by donating $25,000. The fashion show costs $15,000 to produce. Proceeds from the fashion show go to help the local homelessness population. Question to ask? Does this pledge meet the four criteria? Did Bank of America receive anything in exchange for their sponsorship? What does finance record? What does Resource Development record?

19. Examples 19 Example #6 – Jeans day example UPS hosts a jeans day event every Friday in September. Employees must contribute $3 each Friday to wear jeans. Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record?

20. Examples 20 Example #7 – Government grant example Local United Way was awarded a $200,000 grant from the Department of Education. The grant year runs from October 1 – September 30 (and the local United Ways year-end is June 30). Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record?

21. Examples 21 Example #8 – Endowment example John Smith loves United Way and he has decided to give United Way $1M to help build their endowment. He would like the annual investment earnings to be spent on education related programs. Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record?

22. Examples 22 Example #9 – Will example United Way receives a letter in the mail from a local law firm along with a $10,000 check. The letter states that we were one of the beneficiarys in Mary Smiths will and this $10,000 is our portion of her estate. Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record? What happens if United Way receives a letter stating we are the beneficiary in a will (but that person is not deceased yet?)

23. Examples 23 Example #10 – United Way is named the beneficiary of a $1M term life insurance policy. John Smith owns a $1M term life policy and he is paying the premiums on the policy. He has no family and has chosen United Way as the beneficiary of the policy. Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record?

24. Examples 24 Example #11 – A donor purchases a whole life policy, transfers ownership of the policy to United Way, and names United Way as the beneficiary. John Smith purchases a $1M whole life policy and names United Way as the owner and beneficiary. He pays United Way the premium amount annually and United Way pays the premiums on the policy. Question to ask? Does this pledge meet the four criteria? What does finance record? What does Resource Development record?

25. Summary 25 Align with the Resource Development folks at the beginning of the campaign cycle to ensure everyone is on the same page. We can bridge the GAAP!! –Issues and problems can be resolved! Review the decision tree with Resource Development and go over any questions they may have or specific examples. Review the revenue recognition criteria and ensure all revenue is recorded correctly. –Where the funds fall in accordance with the NPC Total Resources Generated policy is a second tier review.

26. Thank you