Not-for-profit expertise
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Not-for-Profit case study

Case Study

Contract Analysis

The Situation
In the current economic environment, a once successful organization has come under financial pressure. In order to better forecast and plan, they are looking to better understand their financial picture.

KPM Business Idea at Work
KPM initially reviews the financial performance of every revenue contract to better understand the scope of services. This allows KPM to make specific recommendations as to contract changes and amendments that will better suit the current and future business environment. Further, KPM projects cash flow by each contract to determine feasibility of carrying certain programs in light of the overall mission of the organization. Armed with these facts, the organization enacts various programmatic changes that enable it to become profitable and continue to serve its mission.

 

 


Mergers and Acquisitions

The Situation
A health and human services organization has targeted various not-for-profit organizations for potential merger talks after establishing key programmatic and financial criteria for merger. The client has reached out to KPM to help with analyzing potential mergers and to perform ongoing financial due diligence upon initial agreement.

KPM Business Idea at Work
KPM’s team reviews key financial criteria with an eye toward identifying potential merger targets. KPM recommends additional key financial goals, which are incorporated into the client’s merger strategy plan. After initial talks, KPM is engaged to perform financial due diligence, including contract review, key financial ratio indicators, internal control assessments and developing pro forma financials for combined financial reporting.

 

 

 

Internal Control Assessments

The Situation
A local not-for-profit organization is operating a second-hand store, in which all items have been donated. Given the volume of the transactions, the client is looking to KPM to make recommendations regarding creating an inventory and retail sales control system.

KPM Business Idea at Work
Under a technical assistance contract, KPM worked with the client to provide recommendations for an inventory control system unique to challenges of the second-hand store, taking into account the workforce capacity of the organization and the level of donations received. Further, KPM recommended key internal control components based upon the value of the inventory.

 

 


Not-for-Profit Start-up

The Situation
A local entrepreneur desires to establish a not-for-profit organization based upon a societal need that is close to his heart. The entrepreneur does not know where to begin the process and looks to KPM to navigate the waters of obtaining a not-for-profit designation, filing related tax forms and providing general start-up advice.

KPM Business Idea at Work
With a deep knowledge of the not-for-profit market, KPM is able to aid the entrepreneur in making his dream a reality. As part of its start-up advice, KPM initially helps the client establish basic bookkeeping systems and standard compliance control systems for state contracts. Then, through an introduction to an attorney, KPM helps file for the corporate EIN #, completes the organization's 1023 applications and ensures that the organization properly files its 990 and state registration reports annually.

 

 

 


Financial Reporting

The Situation
A significant not-for-profit organization is looking to make various real estate investments. Further, as part of these transactions, the organization anticipates that it will restructure debt utilizing various derivative financial instruments. The client is looking to KPM to understand the financial reporting effects of the potential transactions.

KPM Business Idea at Work
KPM analyzes the proposed structure of the transaction to gain an understanding not only of the legal aspects but the substance of the transaction. Within the context of the transaction, KPM researches all relevant GAAP reporting issues, including consolidation considerations and valuation principles of derivative financial instruments. Based upon the research KPM provides, the pro forma effects of the transaction and recommends changes to the structure that would allow more desirable financial reporting outcomes.

 

 

 

 

 

Retirement Planning

The Situation
A founder of a local not-for-profit organization is anticipating retirement in the not-so-distant future. The organization desires to establish a retirement plan for the founder at the most feasible cost burden. The client looks to KPM to make recommendations of potential retirement plans and their related costs.

KPM Business Idea at Work
KPM first investigates available financial service products including, life insurance policies which would provide a retirement benefit to the founder with feasible operating burden. Additionally, KPM makes recommendations as to appropriate structure to ensure deferral of compensation to the founder under the appropriate IRC section. Lastly, KPM researches the financial reporting impact of the retirement plan to ensure that it would not adversely affect key financial metrics. The client is able to effectively establish a retirement benefit for the original founder, defer tax to the founder and reduce the costs to implement the plan.

 

 

 

 

 

Board and Executive Training and Governance

The Situation
A not-for-profit organization is experiencing tremendous turnover at the board level and has recently appointed a new executive director. The organization is looking to provide training for its new board and executives and advice regarding the appropriate lines of governance between management and directors.

KPM Business Idea at Work
KPM prepares and presents formal board training, focusing on governance structure, lines of communications, suggested committees, fiduciary responsibility and key financial information needed by the board for strategic decision making. Additionally, KPM provided key qualifications and composition for members of the audit and finance committees. Lastly, KPM assisted management in the creation of a financial dash board that management prepared on a monthly basis to ensure that the directors were getting the most-up-to date and appropriate financial information with which to make business decisions.

 

 

 

 

 

 

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Business Ideas at Work