The Financial Accounting Standards Board headquartered in Norwalk is asking its staff to take a position on the management of endowments for not-for-profits.
The data would gauge responses on proposals intended to improve the quality of financial reporting of nonprofit-held endowments under the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosure.
The Financial Accounting Standards Board promotes open information for investors and accurate reporting of financial data.
The Uniform Prudent Management of Institutional Funds Act brings the laws governing charitable institutions in line with modern investment practice across a broad range.
Enhanced Disclosure is a requirement having to do with the Criminal Records Bureau and history checks. “The issues addressed by this (Financial Accounting Standards Board Staff Position) have widespread importance to the not-for-profit sector, especially organizations with sizeable endowments, and the users of their financial statements, such as donors, credit rating agencies, and regulators,” said Jeffrey Mechanick, FASB project manager.
“The adoption of the Uniform Prudent Management of Institutional Funds Act of 2006 has raised significant questions about the reporting of donor-restricted endowment funds,” said Mechanick.
“Organizations across the country now find themselves subject to increased public scrutiny on how they manage and use their endowments, which in many instances have seen tremendous growth over the past decade.”
According to the Financial Accounting Standards Board, the staff proposal would provide guidance on the classification of net assets associated with these endowment funds for the not-for-profits.
Ratification of the proposal would require additional disclosures about endowments to all organizations, including those that are not yet subject to the Funds Act.
The provisions of this FSP would be effective for fiscal years ending after June 15, 2008.
