TREASURER'S REPORT Mahadevappa Mahesh, PhD, Baltimore, MD

With the tax season looming, I think an appropriate topic to discuss in this issue is the types of contributions an AAPM member can make to the organization. In this regard, here is a short discussion on the two types of contributions, namely unrestricted and restricted contributions.

Unrestricted and Restricted Contributions

Not-for-profit organizations have several streams of revenue to support their missions. Organizations often receive a significant portion of their revenue from membership dues, special events, grants, publications, and investment income. For organizations, another source of significant revenue is contribution revenue. Contributions to a not-for-profit organization often take two different forms:

• Unrestricted
• Restricted

When making a gift or reviewing an organizations financial statements, it is important to understand the difference between the two types of contributions.

Unrestricted Contributions

Unrestricted contributions are donations to an organization that the not-for-profit can use for any purpose. Unrestricted contributions are often used by non-profits to cover operating expenses or they can be used for any purpose management or volunteer leadership so determines. Occasionally the board of directors for a not-for-profit will designate unrestricted contributions for a particular program or event. The process of a board designating funds for a particular purpose does not make these restricted contributions, however they still remain as unrestricted contributions.

Restricted Contributions

On the other hand, the second type of contributions is restricted contributions. It should be noted that only the donor can determine if a donation is restricted or not. The donor typically communicates the restriction in writing. On occasion an organization can solicit donations for a restricted purpose. As long as that restriction is communicated in advance the donation is deemed restricted. For instance, an organization can solicit donations for a building fund. A donor makes contributions and restricts its use for a particular program, activity, or event.

Restricted contributions often follow into two categories: Temporarily Restricted and Permanently Restricted.

Temporarily Restricted are those items that were received with a donor-imposed restriction that will be satisfied in the future (generally within one year). The donor's restriction may be for a particular purpose or program or for use in a specified time period.

Permanently Restricted items are those received with a donor-imposed restriction that states that the donation must be maintained permanently, but may permit the organization to use up or expend part or all of the income derived from the asset.

For fiscal years beginning after December 15, 2017, the accounting standards will change and at that time donations will be designated only as unrestricted and restricted.

Gift Acceptance Policy

To help protect itself from accepting gifts that will cost the not-for-profit organization time, money, and possibly its reputation, many organizations have developed a gift acceptance policy to provide guidelines for what gifts it will or will not accept.

Gift acceptance policies define the types of assets that are acceptable, and establish the gift forms that are acceptable.

Although it may seem counterintuitive, some potential gifts would serve an organization better if they were refused. Some potential gifts might include hidden costs, burdening the resources of the organization in either using or disposing of the gift. Through the years, organizations have received gifts of boats, airplanes, and timeshares. The resources required to maintain the gift and the resources (time, manpower and expense) needed to execute the sale of the assets have in some cases exceeded the net proceeds received from the sale of the gift.

Overall, restricted gifts help donors support causes within organizations that are nearest and dearest to their heart. At the same time, if an organization reliant upon donor contributions receives a substantial amount of restricted gifts as opposed to unrestricted gifts it might find itself struggling to cover its operating costs. However, the use of restricted gifts is a great opportunity for donors to support those causes most important to them.

There is always a dilemma for any not-for-profit organizations to accept restricted gifts (especially if the contributions are small and too many because they increase operating costs for the organizations). On the other hand, if a donor contributes under non-restricted funds, they do provide organizations such as AAPM more flexibility to utilize the funds in the right way.

I welcome members to support AAPM activities either through unrestricted or through restricted contributions. In fact, the Development Committee chaired by Colin Orton, PhD, have developed mechanisms to maximize member contributions such as matching funds to those who commit to contribute to AAPM above certain amount over a period of time. In fact, the Development Committee added the following information regarding matching funds: "The AAPM Board just approved providing matching funds (1:1) for any 'five-year pledge' donations of at least $500/year starting from January 1, 2016. Note that, as far as your donation level indicated in the list of donors is concerned, once you make this pledge and submit your first donation, you will immediately be credited not only with your full five-year donation amount, but also the matched full donation from AAPM, i.e. if you pledge a donation of $1,000 for each of the next five years, you will immediately be recognized as a Platinum Donor ($10,000 or above)."

I welcome AAPM members to check this out for more information and keep AAPM in mind during your tax seasons for tax-deductible contributions. Please feel free to reach out to me by email, twitter, or call me at 410-955-5115 if you have any questions concerning this report.

I would like to thank Robert A. McKoy, AAPM Finance Director for his subject matter contribution to this column.

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