GASB issues guidance for fund-raising foundations - Updata - Brief Article

Healthcare Financial Management, August, 2002

The 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 fund-raising organization whose primary purpose is to raise or hold significant resources for the benefit of a specific governmental unit (eg, public hospitals) should be included as a component 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.

To order Statement No. 39, go to http://www.gasb.org.