- 81 -
primarily by providing additional matters to be considered, and
had an effective date which made it applicable to petitioner’s
1988 financial statement.20 As petitioner’s chief financial
officer interpreted SOP 87-2, if the considerations set forth in
that SOP were applied--
to 1986 or 1987, we would have to show all expenses of the
Donor Development Fund as fund raising. This means that 96%
19(...continued)
15. All joint costs of informational materials or
activities that include a fund-raising appeal should be
reported as fund-raising expense if it cannot be
demonstrated that a program or management and general
function has been conducted in conjunction with the
appeal for funds. However, if it can be demonstrated
that a bona fide program or management and general
function has been conducted in conjunction with the
appeal for funds, joint costs should be allocated
between fund-raising and the appropriate program or
management and general function.
16. Demonstrating that a bona fide program or
management and general function has been conducted in
conjunction with an appeal for funds requires
verifiable indications of the reasons for conducting
the activity. Such indications include the content of
the non-fund-raising portion of the activity; the
audience targeted; the action, if any, requested of the
recipients; and other corroborating evidence, such as
written instructions to parties outside the
organization who produce the activity, or documentation
in minutes of the organization’s board of the
organization’s reasons for the activity.
20 SOP 78-10 and SOP 87-2 address only whether allocation
of a charitable organization’s fundraising appeal expenses is
appropriate. SOP 87-2 states that “this statement of position
does not address the issue of how to allocate joint costs. A
number of cost accounting techniques are available for that
purpose.”
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