Article Archives: 2013

At the end of fiscal year 2008, Harvard University had an investment portfolio of over $36.9 billion. Yet one year later, they were in crisis, with not enough cash flow available for operations. The University had to borrow to continue operating. Why?

Not only had the recession hit and the portfolio lost $11 billion, but Harvard was facing a liquidity crisis of massive proportions. What caused it and how could it have been prevented? By answering these questions, you may gain some insights that will help you prevent your own liquidity challenges.

Here was the picture at the end of the fiscal 2008 year for Harvard:

  • They had a leveraged portfolio with an asset allocation model that called for the allocation to cash to be at minus 5%.

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By Sarah Huang, CPA and Jennifer Becker Harris, CPA

Charities that invest in alternative investments are not immune to the many income, excise, and foreign tax consequences related to the complex investments. A tax-exempt status for U.S. federal tax purposes does not equate to exemption from all taxes.

For instance, if the alternative investment creates ordinary income that is unrelated to the charity’s exempt purpose, the income may be considered unrelated business income. In addition, if the investment is operating in multiple states, the charity may have state filing obligations in those jurisdictions dNFP call-out box 2ue to the ordinary income.

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Posted by: Rick Cooley

By Rick Cooley, CPA

It wasn’t pretty. It was a tough, brutal battle. We’re not talking about the playoff game between Seattle and Atlanta. We’re talking about the battle on the Beltway – the one dealing with the fiscal cliff — the passing of the American Taxpayer Relief Act (ATRA.)

Now that legislation has been passed and signed to address the tax side of the fiscal cliff, here’s a play-by-play of what you can expect.

The Impact on Upper Income Taxpayers

The main impact of the ATRA is the permanent extension of the so-called Bush tax rates for individuals with income up to $400,000,

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Posted by: Deby MacLeod

By Deby MacLeod, CPA

Having a good working relationship and receiving great client service – these are consistently the two most important criteria we hear from organizations when they’re selecting an auditor, and we do our best to fill those criteria when conducting an engagement. An important aspect to keep in mind is balance – how the auditor, as an “independent third party,” develops a good working relationship and provides great client service while maintaining independence.

Audits are important for many reasons. They may be required by state regulation or grantors. They may be considered by rating organizations whose reports are widely available on the internet and used by many donors.

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Posted by: Sarah Huang

By Sarah Huang, CPA

It’s that time of the year. The phones are ringing with frantic calls from donors wanting receipts for prior year donations to support a deduction on their personal tax returns.

If your charity is receiving these calls, be aware: the IRS has been taking a harsh approach over the past few years and disallowing charitable donations simply due to the receipt not containing the required information. It’s time to take stock: are your donor receipts in compliance or are they preventing a donor from taking a charitable deduction?

While charities are not subject to IRS penalties for failing to issue donor receipts,

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