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GASB ISSUES GUIDANCE FOR FUNDRAISING FOUNDATIONS

 

The Governmental Accounting Standards Board (GASB) has issued Statement No. 39, “Determining Whether Certain Organizations Are Component Units.” The statement provides criteria for determining whether certain organizations, such as not-for-profit foundations related to public universities, school districts, and hospitals, should be reported as component units based on the nature of their relationship with a state or local government.

Generally, a legally separate, tax-exempt fundraising organization whose primary purpose is to raise or hold significant resources for the benefit of a specific governmental unit (e.g., hospitals) should be included as a component unit of that governmental unit for financial reporting. Government hospitals that have qualifying fundraising foundations would be required to include, through discrete presentations, the financial activities of those foundations in their financial statements. Previously, many government entities did not report the financial activities of those foundations in their financial statements.


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