Donor fatigue is a phrase not-for-profits are painfully aware of, especially in light of an overly active hurricane season that produced the Katrina disaster.

With roughly $1.7 billion already given to hurricane relief
efforts, scavenging for remaining donor dollars has been a
difficult task for many organizations.

Particularly hard hit are smaller, local charities that rely more heavily on donations from individuals than their national counterparts.

The dual crisis of last year's south Asia tsunami and this year's hurricanes in the Gulf Coast regions could very well lead those organizations to tighten their belts, or at least keep a watchful eye on their finances.

That's because their survival could be at stake, said Arthur
Kobrin, senior audit manager at the Goldstein Lewis & Co.
accounting firm in Boca Raton, Fla. Kobrin manages audit and
related services for not-for-profits and public companies.

"We need to look at what is going to be happening in the future," said Kobrin, as Hurricane Wilma bore down on south Florida. "Are they going to raise enough funds in the next 12 months to be around? They may need to reduce their expenditures if they want to survive."

Or they can try to increase funding by reviewing whether
outstanding pledges are collectible, and getting confirmation that future donations are valid, he said.

"They don't like to decrease their programs, because people are looking for those programs to be supported," Kobrin said. "If they have to cut back, it doesn't help the community."

Conversely, not-for-profits such as the Red Cross, which provide aid in times of crisis, may be overwhelmed with donations. It may be even more overwhelming trying to keep track of the dollars.

For those relief organizations, Kobrin said, they need to guard against mismanagement by making sure the money coming in has a specific purpose tied to it, and that the recipients receiving the funds are actually eligible.

There also should be documentation from the donor to verify the intent of the donation, and a review from the agency regarding where the money is going, Kobrin said.

Even government entities are recognizing the importance of
oversight, as reconstruction costs in Louisiana, Alabama and
Mississippi are expected to run as high as $200 billion. The
federal government will supply the bulk of the financial support.

With so much money at stake, Louisiana State Treasurer John
Kennedy has called on the state to hire one of the "Big Four" accounting firms to help the state with the accounting and auditing of federal funds flowing into the state as part of the recovery effort.

Proposals were submitted in early October, and the contract is set to begin Oct. 31.

In a written statement, Kennedy said, "we need checks and
balances and rechecks and rebalances."

In that vein, Kobrin is certain not-for-profits will adopt
similar operating procedures included in the Sarbanes-Oxley Act that governs public companies. One of his larger clients already is starting to institute certain parameters of the law that requires directors to be independent of the corporations.

"They feel it's going to eventually have an effect," Kobrin said of the charitable organizations, "so they feel they might as well be at the forefront and not behind the eight ball."

You may like these other stories...

By Deanna C. White Indiana CPAs who want to learn about hot topics, financial news, best practices, and other pressing issues affecting the accounting profession have a new tool at their disposal.  On February...
To say that James Doty has had a lot on his plate during his first six weeks as chairman of the Public Company Accounting Oversight Board (PCAOB) would be an understatement. Jason Bramwell reports. "I would like to...
Realizing the full benefits and rewards of being a Certified Public Accountant comes when the CPA is involved with the profession and its future, said Conrad Davis, newly appointed chairman of the California Society of CPAs....

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.
Oct 30
Many Excel users have a love-hate relationship with workbook links. For the uninitiated, workbook links allow you to connect one Microsoft Excel spreadsheet to other spreadsheets, Word documents, databases, and even web pages.