Sunday, June 27, 2010
A Nonprofit Accounting Update and a Remarkable Social Entrepreneurship Story – All in the Same Post!
Last week I attended the latest in a series of seminars for nonprofits offered by Sax, Macy, Fromm, an accounting firm in Clifton, NJ. For the last couple of years, Todd Polyniak has talked about how to deal with the current economy – sometimes a challenging subject. The theme last week was more upbeat and entitled “There is a Tomorrow.”
Todd began with financial nonprofit updates. At the recent AICPA conference an IRS official said that they had increased their staffing dedicated to exempt organizations and planned ramped up auditing of randomly selected nonprofits. They would be especially focused on organizations less than five years old and on payroll – not just 990s. Hmmm... I'll be advising a few agencies on this one.
He reviewed plans that the New Jersey government has including limiting the pay for top executives for nonprofit organizations receiving state contracts on a sliding scale and changes from a level of service to a fee for service payment format. This will require more administration for billing.
Todd also commented on these three issues:
•Changes in auditing standards will require increased sampling
•Disclosure requirements for NJ Unrelated Business Taxes on financial statements
•Nationwide uptick in fraud as nonprofits have cutback and there is less oversight and controls in place.
By the time Todd was done with this I was sure ready for the more upbeat part of the program – I think everyone else was too – even the accountants. Here are Peg and Frank Brady celebrating receiving The Purpose Prize.
Todd interviewed, Frank and Peg Brady, a truly remarkable couple who founded Medical Missions for Children. After retiring from a successful career that involved a great deal of international travel, Frank was not ready for a life of playing golf. He and Peg talked about what to do over the kitchen table, and Medicial Missions for Children (MMC) was born. Frank built on the memory of his own childhood, when a “new,experimental” drug not yet used on children saved his life. He gave away his age by revealing it was penicillin. MMC uses technology to have doctors in the United States diagnose children literally all over the world, and train local doctors to treat children with disease. Over 40,000 children have been helped with this global telemedicine and teaching network. You can see how proud and dedicated Frank and Peg are when they talk about the work of MMC.
Frank used his Roledex at first to raise funds. Next they turned to traditional fundraising approaches. But they soon found out that events are way too much work for the funds they earned. Now that is something we can all identify with.
Frank then founded a completely separate for profit business with the proceeds going to Medical Missions for Children. MMC Worldwide has some interesting businesses but the most fascinating for me is a joint venture with St. Joseph’s Hospital, Paterson, NJ and the city of Paterson to build a Hyatt Hotel on Saint Joseph’s property with the operating proceeds to fund MMC. This project will be a win-win-win for all the partners.
I haven’t written about social entrepreneurship before, but I am becoming increasingly convinced that nonprofits should be pursuing profit making businesses as an avenue to sustainability and growth. The days of government funding may have peaked but demand for services has not peaked. We still want to grow our organizations and make them better. Frank and Peg Brady, and the road they have taken with MMC provide a valuable example for us.
Thanks again Sax, Macy, Fromm for providing an informative and thought provoking program.