| Answer | Below is a glossary of financial terms that appear within the Cultural Data Profile. Click on a term to jump directly to its definition.
Accumulated depreciation
An accounting estimate of the total decline in value of all fixed assets due to wear and tear or obsolescence.
Annual depreciation/Depreciation expense
A non-cash accounting estimate of the decline in value of physical assets over the course of a single year.
Audit/Review
Audits and reviews are two of the reports issued by independent accounting firms hired annually by an organization to examine its financial records and processes.
Board-designated endowment
Unrestricted funds voluntarily set aside by the board for income generation, or to support a particular project or program.
Current asset
An asset that will be converted into cash within one year.
Current liability
An obligation due within one year.
Donor-restricted endowment
Restricted funds set aside where the value of the original gift (or “corpus”) either cannot be spent and the income is available for use as specified in a board-approved spending policy, or the funds are invested for income generation over a specified time period, and then used according to the donor’s wishes.
Due to/Due from
Intercompany payables and receivables between restricted and unrestricted assets and liabilities. The amount borrowed should be reflected as a positive number in one column, and the amount owed as a negative number in another column. This line must total zero.
Endowment
A pool of investments or cash intended to generate income to support an organization's mission, facilities, or other projects.
A fiscal sponsor provides nonprofit status to your organization for grant applications but has no oversight over your management or governance.
Fiscal year
A 12-month period used for accounting that doesn't necessarily match the calendar year. The fiscal year you use must match your IRS 990 reporting, and should generally be consistent from year to year. The fiscal year is referred to by the year in which it ends.
Fundraising expenses
Costs associated with soliciting grants and contributions of money, goods, and services for your organization.
General and administrative expenses
Costs associated with the overall operations and management of your organization.
Independent contractor
An individual who provides services for your organization under an agreement and outside of an employer-employee relationship. Independent contractors are not paid through your organization's payroll, and your organization may provide them with an IRS Form 1099.
In-kind contributions
Non-cash contributions of goods or services received by your organization.
Investment revenue
Interest and other earnings on bank accounts, stocks, bonds, mutual funds, and other investments, including all realized and unrealized gains and losses.
Maximum annual withdrawal percentage
The percentage of your endowment fund that your organization can withdraw each year, per its spending policy.
Net assets released from restriction
The transfer of funds originally restricted by donor(s) that become available for use once program or timing stipulations have been satisfied.
Non-current asset
A long-term asset that your organization expects to hold for more than one year, or which is not due to be collected until a future year.
Non-current liability
An obligation due in more than one year, such as the long-term portion of a loan or mortgage.
Non-operating revenue
One-time revenue additions such as capital campaign receipts, bequests, realized and unrealized investment gains and losses on permanent endowments, and gains from the sale of property or other extraordinary items.
Non-operating expenses
Expenses incurred outside the normal business operations of the organization, and unusual or one-time costs, such as capital campaign expenses, expenses related to the sale of a property, business reorganization expenses, or expenses due to a lawsuit.
Operating expenses
The everyday costs of running your organization.
Parent organization
A parent organization is a larger entity which has oversight over your finances, management, and governance. If you are part of a larger organization that does not focus primarily on arts and culture, you will enter information about your arts and cultural project, program, or department and list your larger organization as a parent organization.
Permanently restricted
Funds that donors have specified must be held in perpetuity to generate income for operations or another purpose. This concept has been replaced by Restricted Revenue.
Prior period adjustment
A correction in an audit or review to a transaction that was either omitted from the prior year's document or listed incorrectly.
Professional fees
Fees paid to companies or organizations for services rendered.
Program expenses
Costs associated with activities that advance your organization's mission and that result in the delivery of programs, products, or services.
Reserve fund
A reserve contains unrestricted funds voluntarily set aside by your organization for a specific purpose, such as managing cash flow or to maintain fixed assets.
Restricted revenue
Restrictions can be imposed by donors at the time they make a contribution. Revenue restrictions occur when a donor specifies how or when a contribution can be used.
Corporate support for your organization's mission, programs, or events in exchange for recognition through name or logo display on printed materials, a benefits package, or other promotion.
Temporarily restricted revenue
Funds that donors have specified must be spent for a specific purpose or in a future time period. This concept has been replaced by Restricted Revenue.
Transfers and reclassifications
Funds reallocated between restricted and unrestricted funds over the course of the year, such as endowment draws, transfers of earned revenue items, adjustments due to new accounting rules, and other one-time revenue additions.
Unrestricted revenue
Revenue that can be used for general operations, or designated by your organization for any other purpose. |
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