What Just Happened at FASB’s Latest NFP Reporting Meeting

The Financial Accounting Standards Board’s Not-for-Profit Advisory Committee (NAC) met on March 20, 2025, and let’s just say, they didn’t hold back. From rethinking outdated standards to calling out inconsistent rules, the committee laid out a bold path forward for nonprofit financial reporting. Here's the lowdown on what went down, and why the future of not-for-profit entities (NFPs) is looking spicy.

What NAC Wants Now

The NAC made it clear: the not-for-profit sector needs cleaner, clearer, and more comparable reporting. Top of the agenda? Standardized operating measures. Right now, comparing one not-for-profit entity to another is like comparing street tacos to fine dining, same purpose, totally different presentation.

Other top asks:

• Excluding NFPs with conduit debt from the “public entity” bucket in Generally Accepted Accounting Principles(GAAP), it just doesn’t fit.
• Simplify the consolidation guidance that currently reads like a Rubik’s Cube with missing pieces.
• Address inconsistent public-private partnership accounting between FASB and the Governmental Accounting Standards Board(GASB), it’s confusing and costly.
• Improve liquidity disclosures and make cash flow statements useful, especially how endowment returns are shown.
• Separate realized vs. unrealized gains on investment returns for better transparency.

Standards That Got the Nod

Moving on from the "what needs to change" list, the committee took a moment to reflect on what’s already been implemented. Here’s the scoop on the recent updates:

• Leases (Topic 842): This was a heavy lift at first, but NAC gave it a big thumbs up. Improved comparability and transparency? Check. Ongoing application? Not too pricey. One member said it’s made financials “far more decision useful.”
• Credit Losses (Topic 326): The proposed updates for how NFPs measure credit losses got solid support, especially for accounts receivable and contract assets. But NAC’s not about half-measures; they’re calling for the scope to be expanded to include all NFPs, not just select players.

Where FASB’s Focus Is Heading

• Derivatives (Topic 815): The proposed clarifications are a nice touch, especially for health care entities dealing with risk-based revenue. But for the rest of the nonprofit crowd? It’s kinda like background noise at this point.
• Software Cost Accounting: This update’s a crowd-pleaser. The NAC applauded the modern take on software development costs. Even better—it won’t break the budget. A deferred effective date might help smaller NFPs catch up.
• Environmental Credit Programs (Topic 818): Disclosures around environmental credit obligations are getting a big push. One NAC member said they align with what analysts want to see: finally, some ESG clarity in the NFP sector. Another member flagged that any regulator-granted environmental credits (expected to be rare) should fall under this rule, too.

Still on the Radar

Two hot topics from the closed session matched what was said earlier: better disaggregation of investment returns and smarter cash flow reporting.

Other points:

• Intangibles accounting remains tricky, especially for internally developed assets, which are tough (and expensive) to measure.
• FASB vs. GASB inconsistencies, especially around leases and IT arrangements, are still frustrating nonprofit finance teams everywhere.

Final Take

This NAC meeting wasn’t just another checklist review; it was a recalibration. With calls for clearer operating metrics, smarter guidance, and a reality check on reporting standards, the NFP sector is stepping up its game. As one insider noted, “This isn’t just about compliance, it’s about creating a financial reporting model that reflects how nonprofits operate in the 2025 economy.” So, if you're in the NFP game, keep your eyes peeled. Big changes are coming, and they’re not just cosmetics. They're about giving nonprofits the tools to tell their story, and back it up with numbers that make sense. Subscribe to MYCPE ONE Insights for regular updates on industry developments, expert perspectives, and the latest in financial and tax news.