New Rules For Donor-Restricted Endowments

The Nonprofit Times newsletter recently related the following info on new rules for donor-restricted endowments:
The new year started on December 15. This new "year" is the one begun by the new provisions issued by the Financial Accounting Standards Board (FASB), set to take effect midway through the last month of 2008.

FAS 117-1 includes changes in financial statement reporting and disclosure requirements regarding donor-restricted endowment funds and board-designated endowment funds.

According to Mark J. Piszko, a partner in the Not-for-Profit Services Division of O’Connor Davies Munns & Dobbins, LLP, the disclosures required by FAS 117-1 include:

• The governing board’s interpretation of the law(s) underlying the net asset classification of the donor-restricted endowment funds;
• The organization’s policy for appropriation of endowment assets for expenditure;
• The organization’s investment policies, including a description of the organization’s return objectives and risk parameters, how those objectives relate to the organization’s endowment spending policy, and the strategies employed for achieving those objectives;
• The composition of the organization’s endowment by net asset class at the end of the period, in total, and by type of endowment fund, showing donor-restricted endowment funds separately from board-designated endowment funds;
• A reconciliation of the beginning and ending balance of the organization’s endowment, in total and by net asset class, including, at minimum, line items investment return separated into investment income and net appreciation or depreciation of investments, contributions, amounts appropriated for expenditure, reclassifications and other changes.