Newsletter by Hawkins Ash CPAs
In this edition
May 2019

Assisting your Board in Becoming More Efficient and Effective

Client Feature and Executive Director Q&A: Bear Creek Services

QuickBooks Connect Event - Roundtable Series

Employee Feature: Rachel Burrow

Nonprofit Tax Tidbits: Form 990 Schedules I and J
Assisting Your Board in Becoming More Efficient and Effective
Being a member of a Board of Directors for a non-profit requires commitment and passion for the mission of the organization. Board members are often on multiple Boards at the same time, so providing useful information and clear objectives will enable Board members to be both efficient and effective. There are several ways you can assist your Board in fulfilling their duties, from a financial management perspective and from an organizational requirements perspective. 

Determining Meaningful Metrics

Although there are many standard metrics which you could provide your Board, seeking input from Board members for items specific to your organization will result in the most meaningful information. In addition, you may belong to industry groups from which you could solicit input for industry averages. For example, if days cash on hand compared to daily cash needs or personnel costs compared to total expense is important to your organization, it is probably also important to others in your industry as well. This information might be useful in determining how well your organization is operating compared to industry peers. Providing information in graphic format (pie charts, bar graphs or other visuals) can also make complex financial information easier to understand.

Key Financial Ratios

Depending on the wishes of the Board, financial ratios could also be a component of the monthly or quarterly reports. For example, the current ratio (current assets/current liabilities) is a liquidity ratio which is one indicator of the organization’s ability to pay its obligations on time. A ratio of 1:1 or more indicates that, at the measurement date, the organization has enough cash and other assets that can be converted to cash in the next 12 months to pay the obligations due in the next 12 months.

Activity ratios can be used to see how total expenses in various categories (program services, management and general, and fundraising) compare to total support and revenue for the period. Tracking these and other ratios over time can highlight potential problem areas which may need to be addressed.

Organizational Board Duties

Many times Boards are focused on current operations and longer range items are put “on the back burner.” While focusing on current operations is needed, neglecting other Board responsibilities could cause problems down the road. To assist your Organization in being proactive and help your Board become more effective, encourage the Board to regularly review policies and by-laws. To minimize valuable Board time for these activities, you might consider having a “policy committee” review a section of policies on a rotating basis, with the goal to review all policies over a 12-24 month period. This committee would then recommend policy changes to the entire Board as needed. Your Board could apply the same process to by-laws, with the additional step of having them periodically reviewed by legal counsel.

We Are Here to Help

Communicating financial information that is both accurate and understandable allows Board members to engage in meaningful discussions and make informed financial decisions. Please contact us if you need assistance in developing useful financial reports for your nonprofit organization.

Author: Chuck Krueger, CPA
Direct: 920.684.2547
Client Feature and Executive Director Q&A: Bear Creek Services
Located in Rochester, MN, Bear Creek Services has been providing support services for individuals with development disabilities since becoming established in the 1970’s. Its mission expanded to support individuals with traumatic brain injuries in 1998.

Prior to the 1970’s, people with development disabilities were typically placed in institutions to live. Since their disabilities weren’t life threatening and constant medical attention wasn’t required, living inside institutions didn’t serve them well. It created bad living conditions resulting in lower life spans and more health problems.

Parents with disabled children realized how unsuitable this situation was and needed to make a change. Together they formed an organization which is now known as Bear Creek Services. It was the first organization of its kind in southeastern Minnesota.
Bear Creek’s first home was established in 1976 to providing housing for six individuals with disabilities. Today the Organization has 12 group homes and six apartments, all of which are filled each year. The 12 group homes provide continuous 24-hour care and help 56 residents.

Four of the six apartments are a part of the Bear Creek Independent Living Services (BCILS) program. Through this program, 50 higher functioning individuals with disabilities receive training each week to learn how to live more independently. Depending on the individual’s learning and progress through the program, residents can become independent enough to only require limited support services.

To learn more about Bear Creek Services, visit their website:
Executive Director Q&A
L inda Driessen has served as the Executive Director for Bear Creek Services since 2013. Before joining Bear Creek Services, Linda spent 22 years in the nonprofit field, primarily with organizations whose missions support individuals with developmental disabilities. 

In addition to her role with Bear Creek Services, Linda is involved with many health and human service and nonprofit initiatives that include the following.

  • Region 10 Quality Council – A group that develops, implements, and monitors a continuous quality improvement system for individuals with disabilities so they can live the life that they choose in their community. 
  • Providers Network, Inc. – A nonprofit organization that promotes best practices for providers of residential services for individuals with disabilities in Southeast Minnesota. 
  • Rochester Community and Technical College Human Services Technician Advisory Board – Advises the Human Services Department at RCTC on the curriculum and class offerings appropriate to training Human Services Technicians and Pre-Social Work majors. 
  • Rochester Non-Profit Consortium – A group of nonprofit leaders who work together to create organizational efficiencies.

We had an opportunity to ask Linda a few questions to get her perspective of nonprofit leadership. Here’s what she had to say:
1.) What are some things you know now that you wish you knew when you first started as a nonprofit leader? 

I wish I had understood more about how the activities in the Government impact the work we do. Particularly in the field of disability support services. The legislature determines our reimbursement rates. If we are not continuously involved in the process, decisions can be made that can majorly impact how we do business. 

I wish I knew more about the various ways the Board of Directors can impact the work of a nonprofit and that the role of the board changes as a nonprofit changes. As with so many aspects of business, you have to repeatedly evaluate the role of the board as the nonprofit evolves.

2.) What has been your biggest source of pride as executive director? 

We work with individuals with developmental disabilities and brain injury. Our desire is to build independence and maximize the potential for those we support. My biggest source of pride is when individuals accomplish life goals by way of the support services we provide. Hearing about the success of someone moving into their own apartment is a great joy for me. Watching someone we support learn a skill they have been working on for a long time makes the challenges all worth it. 

I am also incredibly proud of the people who work for us. It is a tough job that doesn’t get the pay or recognition it deserves. Knowing that we have some long term, very dedicated staff keeps me motivated to help make Bear Creek Services the best provider of services to individuals with disabilities. 

3.) What are your three biggest accomplishments in your career as a nonprofit leader? 

  1. Working with other support providers in Rochester to create a collaborative to share training that is required by the Department of Human Services.
  2. Building a team of really great people who work with me. My leadership team are top notch and they are the reason our agency is a success.
  3. Building our Independent Living Program. We are the only agency in Southeast Minnesota that offers this model for independent living. 

4.) What are the dominant challenges that you see nonprofit organizations facing and what do you think would be viable solutions? 

I think that many businesses are struggling to find qualified employees, but more so in the nonprofit sector. There is a belief that nonprofit should mean “no profit.” However, we have to compete for the same employees that for-profit businesses are recruiting. Typically, we are not always able to offer the same benefits as many for-profit employers. I believe there are a couple of things that nonprofits need to do. One is to break the myth that overhead in a nonprofit should be much less than in a for-profit organization. Nonprofits need to have the same tools to make a successful business, and we need to send the message to funders that supporting a good business model in a nonprofit is giving to the success of individuals who receive the supports of that nonprofit organization. Also, I believe that collaboration is necessary for success across this sector. Rochester is a great community for collaboration and a lot is being done to by local nonprofits to work together to address the needs of the community. 

5.) How do you see the organization changing in the next two years, and how do you see yourself creating that change? 

There is a lot of emphasis in our field to be as person centered in the supports we provide as possible. That means that our focus needs to be on supporting people to achieve the goals they set out for themselves and not prescribing how their lives should be. We have been working at this for several years and will continue to work on it. 
Person centered support requires that we adjust our business to meet the ever changing needs of those we support. We will need to build more accessible homes (wheelchair accessible) and work with the community to create more affordable housing for those who wish to have their own apartment/house. I believe the role of the executive director is to set the vision and then give those who work for us the tools to accomplish the vision. I see myself as creating this by hiring and retaining employees who are excited about the vision and who believe they can create opportunities for people with disabilities to be full members of the Rochester Community.  
QuickBooks Connect Event - Roundtable Series
Join the month-end conversation! Register today to participate in our upcoming QuickBooks Connect Roundtable in June.

During this 1.5 hour call-in session, our conversation will center around month-end processing in QuickBooks. Debbie Denny will lead the dialogue, answering questions and providing tactical advice to topics you submit during registration.

Wednesday, June 5, 2019
12:00 p.m. - 1:30 p.m.
Employee Feature: Rachel Burrow, CPA
Rachel Burrow joined Hawkins Ash CPAs in 2018. As an audit manager and CPA in the firm’s La Crosse office, she provides audit services to nonprofit organizations, commercial entities, and employee benefit plans. 

Rachel is a member of the American Institute of Certified Public Accountants,
Wisconsin Institute of Certified Public Accountants, and Young Professionals of the Coulee Region.

She also serves as Treasurer for the La Crosse Area Crime Stoppers.
Contact Me
Master of Professional Accountancy
University of Wisconsin - Whitewater

Bachelor of Business Administration
University of Wisconsin - Whitewater

Certified Public Accountant
Nonprofit Tax Tidbits: Form 990 Schedules I and J
The next installment in our series on the schedules of the IRS Form 990 focuses on Schedule I – Grants and Other Assistance to Organizations, Governments, and Individuals in the United States and Schedule J – Compensation Information.

Schedule I

If the Organization reported more than $5,000 of grants or other assistance given to or for any domestic organization, government, or individuals, Schedule I of Form 990 must be completed. Under Part I, the Organization needs to indicate if it maintains records to substantiate the amount of grants or assistance, the grantees’ eligibility, and the selection criteria used. The Organization will also need to describe the procedures it uses for monitoring the use of grant funds. 

Under Part II, the Organization will complete information for any domestic organization or government that received more than $5,000 in assistance. Required information includes the name, address and EIN of the organization or government receiving assistance, as well as the amount of cash or non-cash assistance, and the purpose of the grant or assistance.

Part III is used to report information on grants and other assistance to domestic individuals. Unlike Part II, the Organization does not need to list the names of individuals receiving grants or assistance. Instead, the type of grant or assistance is listed along with the number of recipients and the amount of the cash or non-cash grant or assistance. The Organization should use specific descriptions such as scholarships (for students attending a particular school) or food, clothing, and other educational supplies when describing the types of assistance.

Schedule J

Schedule J is used to report compensation information for certain officers, directors, individual trustees, key employees, highest compensated employees, and information on certain compensation practices of the Organization. Schedule J will need to be completed if the Organization listed any individual on Part VII of Form 990 whose reportable compensation was greater than $150,000 or any individual who receives or accrues compensation from any unrelated organization or individual for services rendered to the Organization. If the Organization listed any former officer, director, trustee, key employee or highest compensated employee who received more than $100,000 in compensation on Part VII of Form 990, Schedule J will also need to be completed.

Part I of Schedule J will require the Organization to answer a series of questions regarding compensation. Several of the questions will refer to a listed person . This would be a person listed on Form 990, Part VII, Section A. Under Part II, information for each individual whose compensation must be reported on Schedule J (see previous paragraph) must be completed. Information to report includes the name and title of the individual, a breakdown of his/her compensation including base compensation, bonus & incentive compensation, and other compensation along with retirement, other deferred compensation, and nontaxable benefits. It is important to note that compensation should be reported for the calendar year ending with or within the organization’s tax year. Therefore, if the Organization has a fiscal year end of June 30, 2019, compensation for the calendar year ended December 31, 2018 should be reported.

If you have any questions regarding Schedule I or J of Form 990, please contact your Hawkins Ash CPAs representative.

Author: Briana Peters
Direct: 920.337.4549
More Resources from CPA-HQ
FAQs on the New Expense Reporting Requirements
This article provides some additional guidance and answers a few questions that might arise as nonprofit leaders are implementing these new changes.

Board-Designated Net Assets
With the upcoming FASB Accounting Standards Update 2016-14, there will be changes occurring with the disclosures regarding board-designated net assets. Learn more here.
Nonprofit Tax Tidbits: Form 990 Schedule G
Schedule G is one of the most challenging schedules for our clients to prepare. Here is some excellent support and items to keep in mind when tackling this form.
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