Nonprofits need to appeal to donors’ self-images
Charitable appeals should take into account prospective donors’ self-concepts, new research published in the Journal of Experimental Social Psychology suggests. Study participants viewed appeals that emphasized the pursuit of shared goals — for example, “Let’s save a life together,” or individual achievement: for instance, “You = Life Saver.”
Psychologists found that people who earn less money were more likely to give in response to an appeal that emphasizes community. But those with incomes of more than $90,000 responded better to appeals focused on personal achievement. The researchers concluded that, rather than trying to persuade prospective donors to see the world as they do, nonprofits may find it more effective to “meet them where they are” when tailoring appeals.
FASB proposes changes to grant, contribution accounting
The Financial Accounting Standards Board (FASB) has released a proposed Accounting Standards Update (ASU) that could result in more grants and contracts being accounted for as contributions. The ASU, Not-for-Profit Entities (Topic 958): Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made, explains how to determine whether transactions should be considered contributions (which generally are recognized when pledged) or exchange transactions (which are subject to the revenue recognition standard, ASU No. 2014-09, Revenue from Contracts with Customers). The ASU also clarifies when a contribution is conditional rather than restricted by the donor, which affects the timing of revenue recognition.
The ASU would follow the same effective dates as the revenue recognition standard — with application for most nonprofits in periods beginning after December 15, 2018.
Congress eyes endowment tax issues
Federal legislators have expressed concern that the wealthiest educational institutions are sitting on huge and growing endowments — without paying taxes on their investment returns — while many students struggle to pay tuition. Orrin Hatch, chair of the Senate Finance Committee, has said that college endowments will be included in a tax code review, and reform proposals have already been made. Under one, colleges with endowments larger than $1 billion would be required to distribute at least 25% of their investment gains as tuition relief for students from working- and middle-class families.
Venmo explores nonprofit application
Venmo, a mobile payments app particularly popular with Millennials, is working on a channel that nonprofits can use to accept donations. Venmo is commonly used to transfer funds between friends who, for example, are splitting a restaurant check. With its emoji-filled news feed, the app could offer the opportunity for young people to donate, share their cause and perhaps subtly pressure their friends into donating, according to MarketWatch. The nonprofit program is currently undergoing testing with a limited number of organizations.
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