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Live Webinar TrainingOctober 6, 2016

What is NFFS?

Webinar PresentersKate Arno, Director, TV CSG Policy & ReviewBiniam Debebe, Senior Financial Reviews SpecialistKen Goulet, Senior Financial Reviews Specialist

Introductions

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Financial Reporting to CPBWebinar Series

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Intro to Financial Reporting

What is NFFS?

In-kind Contributions

AFRSchedules A, E & F

Indirect Administrative

Support

FSR

TV Grantees & Radio CSG Level C & D Radio CSG Level A & B

Institutional Licensees

CPB Office of Grants AdministrationGreg Schnirring, VP, Station Grants and TV Station InitiativesKate Arno, Director, TV CSG Policy and ReviewNadine M. Feaster, Director, Grants AdministrationElsie Hillman-Gordon, Manager, Grants AdministrationBiniam Debebe, Senior Financial Review SpecialistKen Goulet, Senior Financial Review SpecialistSharon Simmons, Project Coordinator

cpb.orgStation information page: cpb.org/stations/Online webinars: cpb.org/station-resource/csg-and-isis-training-opportunities

Help DeskEmail: [email protected]: (866) 635-4747Fax: (202) 879-9700

CSG Resources

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http://www.cpb.org/stations/

http://www.cpb.org/stations/isis/training

Where to Find ResourcesWebsite cpb.org

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• Press Q&A button in the top right of screen• At bottom right, choose Q&A• Under “Ask”, select “Host”• Type question in field at bottom of screen• Hit send

Submitting Questions

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By participating in this training, you will:

• Understand the definition of non-Federal financial support (NFFS).

• Know the purpose of reporting NFFS and why it matters to your station and to the public broadcasting system.

• Understand how to determine NFFS eligibility

• Know where to find help.

• Meet your annual training requirement for FY2018

Objectives

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• Overview of Financial Reporting to CPB

• Financial Reporting

• Overview of NFFS

• NFFS Exclusions

• NFFS Decision Charts

Agenda

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• NFFS Exclusions


Agenda

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• CSG Agreement and Certification of Eligibility– Signed by Head of Grantee and Licensee Official– Requirements located at cpb.org/stations– Explains requirements of the Communications Act of 1934, as

amended

• General Provisions and Eligibility Criteria– Terms and agreements of the CSG awards, updated annually – Located at cpb.org/stations

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Important Documents

http://www.cpb.org/stations


• Financial Reporting Guidelines– Explains reporting requirements, defines NFFS, provides line

item instructions.– Updated annually.– cpb.org/stations

• Principles of Accounting (May 2005)– Provides guidance on CPB’s requirements to submit audited

financial statements, both under Financial Accounting Standards Board (FASB) and Governmental Accounting Standards Board (GASB)

– cpb.org/stations

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Important Documents



Discrete AccountingThe Communications Act and CSG General Provisions requiregrantees practice discrete accounting of all CSG revenues and expenditures.

Discrete Accounting DefinedDiscrete accounting requires unique codes that identify CSG funds –both revenues and expenses, restricted and unrestricted – so that both the grantor and auditor can track CSG funds within the grant recipient’s accounting system. No required to segregate CSG funds in separate bank accounts. More info at cpb.org/stations/discrete.

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Important Documents

http://www.cpb.org/stations/discrete.html

CSG Non-compliance Policy:To increase grantees’ compliance with the Communications Act requirements and the Community Service Grant General Provisions and Eligibility Criteria, and to address consequences for grantees’ non-compliance.

More info at cpb.org/stations/non-compliance

Important Documents

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http://www.cpb.org/stations/non-compliance.html

CPB.org/stations– Communications Act Compliance, June 2016– General Provisions and Eligibility Criteria – Discrete Accounting (Definition/Requirements)– Financial Reporting Guidelines for Preparing AFR and FSR– Principles of Accounting and Financial Reporting– CSG Non-compliance Policy– Documenting In-kind Donations– Compliance Alerts– CPB Guidelines for Indirect Costs– Public Broadcasting Act of 1967 (cpb.org/aboutpb/act)

Online Resources

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• NFFS Exclusions


Agenda

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• Legal Form

– CSG Agreement and Certification of Eligibility Form

• Surveys/Reports

– Station Activities Survey (SAS) (TV & Radio)– Station Activities Benchmarking Survey (SABS) (TV)– Local Content and Services Report (LCSR) (TV)

• Financial Forms

– AFR or FSR

Annual Filing Requirements for CSG Recipients

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FY 2017 CSG Cycle

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Submit FY 2015 AFR/FSR (5 mo. after

FY end)FY 2017 grant offers made (Nov. 2016)

Certify & accept CSG (by June 30,

2017)

1st payment made (70% of

CSG)

SABS/SAS/LCSR (by Feb. 15,

2017)

FY 2016 AFR/FSR

submitted

2nd payment made (30%

of CSG)

• To identify which revenues qualify as NFFS.

• The AFR/FSR collects revenues and expenses in a standardized format for one fiscal year (FY)

• Revenue reported in the AFR/FSR must reconcile with your Audited Financial Statements (AFS).

Purpose of the AFR/FSR

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CSG Level Revenue Form AFS?

A & B < $300,000 FSR No

A & B ≥ $300,000 FSR Yes

C & D N/A AFR Yes

AFR or FSR & AFS?

• All TV grantees are required to file AFR and submit AFS• Radio grantees financial form requirements are determined by

CSG level and AFS requirement is based on revenue amounts

• The financial report, AFR/FSR, is due five months after the close of the grantee’s fiscal year.

• Grantees may request up to 2 extensions– 1st extension is 45 days (no justification required)– 2nd extension is for 30 days (requires justification and approval)

• There is a lag between the year in which a station earns and reports NFFS and when CPB calculates a CSG grant that is based on that reported NFFS.

AFR/FSR Due Dates, Filing Extensions andCSG Calculation

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• NFFS Exclusions


Agenda

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• Determine Grantee’s CSG program eligibility

• Factor in calculating incentive portion of CSG amount

• Total system-wide NFFS (aggregate of NFFS for all grantees) is part of the legal justification for CPB’s federal appropriation

Purpose of NFFS

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• Public Broadcasting Act (47 U.S.C §397(9)) - established the term Non-Federal Financial Support and defines it.

• NFFS is the total of direct revenue and the fair value of property and services received as either a contribution or apayment, which meets specific criteria as to: recipient, form, source, and purpose.

• Not all revenue qualifies as NFFS.

• CPB can add additional restrictions to NFFS, but it cannot contradict the law.

• Definition of NFFS and policy restrictions (NFFS exclusions) can be found in the Financial Reporting Guidelines

What is NFFS?

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• The recipient must be a public broadcasting entity, on behalf of a public broadcast station.

• Examples of public broadcasting entities include (but not limited to)– CPB– Any licensee or permittee of a public broadcasting station– Any nonprofit institution engaged primarily in the production,

acquisition, distribution or dissemination of educational and cultural television or radio programs. Includes, but not limited to:

• American Public Television• National Public Radio • Public Broadcasting Service • Public Radio International

NFFS: The Recipient Criterion

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• Contributions

– Grants– Gifts or donations of cash, property, or services– Bequests– Appropriations from licensee (institutional stations)

• Payments

– Cash, property, or services in exchange for materials and services related to public broadcasting services

NFFS: The Form Criterion

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• Contributions may be from any source except:

– The federal government, or– Public broadcasting entities

• Payments must be from either:

– State and local government agencies, or – Educational institution

NFFS: The Source Criterion

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Eligible Sources

Ineligible Sources

Federal Government

Public Broadcasting Entities

State and Local Government Agencies

Public and Private Colleges and Universities

Individuals

Not-For-Profits and Foundations

For-Profit Entities

Contributions

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Eligible Sources

Ineligible Sources

Federal Government

Public Broadcasting Entities

State and Local Government Agencies

Educational Institutions

Individuals

Not-For-Profits and Foundations that are not Educational Institutions

For-Profit Entities

Payments

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• For contributions, the purpose must be for:– Construction or operation of a non-commercial,

educational public broadcasting station, or– Production, acquisition, distribution, or

dissemination of educational television or radio programs

• For payments, they must be in exchange for:– Services or materials with respect to the provision

of educational or instructional television or radio programs

NFFS: The Purpose Criterion

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Contributions Payments

Recipient A public broadcasting entity on behalf of a public broadcasting station

Form Gifts, grants, bequests, donations, appropriations

An appropriation or contract payment in exchange for specific materials or services related to public broadcasting (see Purposebelow)

SourceAny source except the Federal Government or a Public Broadcasting Entity

Must be a state or local government or agency thereof, or an educational institution

Purpose

Must be for the construction or operation of a noncommercial, educational public broadcast station or for the production, acquisition, distribution, or dissemination of educational television or radio programs and related activities

Must be for services or materials with respect to the provision of educational or instructional television or radio programs

NFFS Criteria Summary

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Q & A

Test Your Knowledge

Questions & Answers

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Question 1

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Which of the following statements regarding NFFS are true?

A. All revenues included in a station’s AFS qualify as NFFS.B. The four criteria for determining whether revenue is NFFS

are Recipient, Form, Source and Purpose.C. Revenue needs to meet only one NFFS criteria to be

eligible as NFFS.D. CPB can add additional restrictions to NFFS.

Question 1 - Answer

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Answer (B and D) – Remember, that NFFS is the total of direct revenue and the fair value of property and services received as either a contribution or a payment, which meets specific criteria as to: recipient, form, source and purpose. Revenue items must meet all NFFS criteria and not excluded from NFFS per CPB policy exclusions as identified in the CPB Financial Reporting Guidelines. Therefore, not all revenues qualify as NFFS.

Question 2

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A station sold various products with the station logo on them to individuals throughout the year in the amount of $2,000. Which statement is correct?

A. The revenue is eligible as NFFS since it was from the saleof station logo items.

B. The revenue is in the form of contributions and eligible asNFFS since contributions from individuals meets sourcecriterion.

C. This is an exchange transaction, and such payments areexcluded from NFFS.

D. None of the above.

Question 2 - Answer

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Answer (C) – This revenue is from an exchange transaction that does not meet the source and purpose criterion. The form is a payment that was not from an eligible source, so it did not meet the source criterion. It also did not meet the purpose criterion. Reminder that payments for non-broadcast activities and not in exchange for services directly related to producing, developing, or delivering educational or instructional programming are not eligible as NFFS.



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Question 3

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A TV station received a grant from each of the following sources for the production and distribution of educational television: USDOE, for-profit entity, Foundation and another public broadcasting entity. Which statement is correct regarding NFFS eligibility?

A. All contributions for the purpose of production anddistribution of educational television are NFFS eligible.

B. Contributions from USDOE and other public broadcastingentities are NFFS ineligible.

C. Contributions from Foundation and for-profit entities areNFFS eligible.

D. Both B and C.

Question 3 - Answer

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Answer (D) – The revenue received met the recipient criterion as the amounts are received by the Station. The revenue is in the form of a contribution for which eligible sources include ALL sources except Federal Gov’t and Public Broadcasting Entity. As for the purpose criterion, these contributions meet the criterion that such contributions are for the production and distribution of educational television.




• NFFS Exclusions


Agenda

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• An institutional station is a department, division, or unit of a licensee that is not devoted primarily to public broadcasting:

– State and local governments– Colleges and universities– Governments of United States territories

Source Criterion Exceptions: Institutional Stations

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• An institutional station may include revenues and support from its own licensee as NFFS:

– Direct revenues, including appropriations from the licensee and expenses incurred or absorbed by the licensee specifically for the station

– Indirect administrative support (IAS)

• Do not claim NFFS for in-kind contributions from the licensee.

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Source Criterion Exceptions: Institutional Stations

• Federal funds

• Funds from CPB and other Public Broadcasting Entities (PBEs)

• Quid Pro Quo contributions – “thank you gifts” exchanged for contributions

• Funds derived from subsidiary enterprises and other activities unrelated to public broadcasting

• Spectrum auction revenues including interest & dividends earned from those funds and/or received, presenting station fees, capital Funds (TV only), gains from sale of property & equipment, realized & unrealized investment gains & losses.

• Appropriations for pension expenses (net pension liability) adjustments made by licensee per GASB 68 on behalf of the station (if applicable). (Limit NFFS to only the actual pension contributions made by the licensee on behalf of the station).

NFFS Exclusions: Direct Revenues

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• Certain in-kind contributions are excluded from NFFS (Section 2.4.2)– Third party production payments– Contributions in quid pro quo transactions– Non-professional donated volunteer services– Prerecorded compact discs, records, tapes, cassettes, and film

libraries– Fundraising related activities– ITV or educational radio outside the allowable scope of approved

activities– Local productions– Program supplements– Programs that are nationally distributed– Promotional items– Regional organization allocations of program services– TV Grantees only – in-kind contributions of capital assets (see FRG

Section 2.4.1)

NFFS Exclusions: In-kind Contributions

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Q & A

Test Your Knowledge

Questions & Answers

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Which of the following in-kind contributions received by a radio station are eligible for NFFS?

A. Fundraising related activitiesB. Local productionsC. Promotional itemsD. Program supplements E. None of the above

Question 4

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Answer (E): None of the above. See list of exclusions per sections 2.4.1 and 2.4.2 of the Financial Reporting Guidelines.

Question 4- Answer

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A station received an in-kind contribution of new equipment from a local business with an FMV of $5,000. The equipment is for continued use by the station but it does not meet the station’s capitalization threshold. Is this in-kind contribution NFFS eligible?

A. Yes

B. No

C. It depends

Question 5

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• Answer (C)-It depends

• For TV stations -donated equipment is NFFS ineligible (per section 2.4.2 of the Financial Reporting Guidelines).

• For Radio stations -donated equipment is NFFS eligible.

Question 5-Answer

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• NFFS Exclusions


Agenda

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NFFS Revenue Decision- Contributions or Payments?

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Contributions Criteria

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Contributions

Meet SOURCE

criterion?

Meet PURPOSEcriterion?

YES

Excluded by POLICY?

YES

NFFSNO

Not NFFSNO

Not NFFSNO

Not NFFSYES

In-kind Contributions Excluded from NFFS Eligibility

Third party production paymentsContributions in quid pro quo exchange transactions

Non-professional volunteer servicesPre-recorded compact discs, records, tapes and cassettes

Fundraising related activitiesITV or education radio outside the allowable scope of approved

activitiesLocal productions

Program supplementsPrograms that are nationally distributed

Promotional items Regional organization allocations of program services

Services that would not need to be purchased if not donatedTV Grantees only - direct and in-kind contributions of capital assets

Other

Direct Revenues Deduct the value of a high-end premium given in exchange for a

contribution from the value of contribution.

Appropriations for pension expenses (net pension liability) adjustments made by licensee per GASB 68 on behalf of the station

(if applicable).

Payments Criteria

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Payments Excluded from NFFS Eligibility

Sales of excess premiumsSales of program guides

Unrelated business income as reported on federal form 990T

Revenue from ITV or educational radio outside the allowable scope of approved activities

Spectrum Auction revenues including interest & dividends earned and/or receivedPresenting Station Fees

Other

Payments

Meet SOURCE

criterion?

Meet PURPOSEcriterion?

YES

Excluded by POLICY?

YES

NFFSNO

Not NFFSNO

Not NFFSNO

Not NFFSYES

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Other Income

Passive Income Sale of Property & Equipment

Gains & Losses on Investments

Additional Non-Eligible

Royalties,Interest & Dividends,

Pass-through copyright royalties (PBS or NPR,

NOT Datacast)?

NFFS

Gains from sale or exchange of property/

equipment used in operations?

Not NFFS

Realized, unrealized, and actuarial

gains/losses on investments?

Not NFFS

Refunds, rebates,

reimbursements, insurance proceeds?

Income from for-profit subsidiary engaged in

non-broadcast activities?

Not NFFS

Contributions Payments

Recipient A public broadcasting entity on behalf of a public broadcasting station

Form Gifts, grants, bequests, donations, appropriations

An appropriation or contract payment in exchange for specific materials or services related to public broadcasting (see Purpose below)

SourceAny source except the Federal Government or a Public Broadcasting Entity

Must be a state or local government or agency thereof, or an educational institution

Purpose

Must be for the construction or operation of a noncommercial, educational public broadcast station or for the production, acquisition, distribution, or dissemination of educational television or radio programs and related activities

Must be for services or materials with respect to the provision of educational or instructional television or radio programs

Summary of NFFS Criteria

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Q & A

Test Your Knowledge

Questions & Answers

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Question 6

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A TV station received CPB CSG grant of $100,000, underwriting of $65,000, insurance proceeds of $10,000, and gifts for facilities and equipment of $150,000. Which of the following is the correct total NFFS?

A. $325,000B. $65,000C. $215,000D. $225,000

Question 6 - Answer

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Answer (B) – NFFS is $65,000 - Eligible amounts include only underwriting of $65,000. CPB CSG Grant is ineligible because source criterion is not met (Grant is a contribution, but ineligible sources for contributions include Federal and Public Broadcasting entities). Insurance proceeds are other income that does not meet the source and purpose criteria. Gifts for facilities and equipment for TV station only are NFFS ineligible due to CPB policy restrictions.

Question 7

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A TV station received a membership donation of $750. The member was given tickets to a local theatre performance with a FMV of $100, a high-end premium. Which statement is correct regarding membership revenue and NFFS eligibility?

A. The donation of $750 is membership revenue and the entire amount is NFFS eligible.

B. The donation of $750 is membership revenue and the FMV of the premium ($100) is netted against revenue for NFFS purposes only, therefore $650 is NFFS eligible.

C. Only the net donation of $650 is membership revenue and NFFS eligible.

D. None of the above.

Question 7 - Answer

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Answer (B) – The revenue recorded in the Audited Financial Statements and CPB Annual Financial Report is equal to the amount of the donation actually received. The FMV of any premiums that are not of insubstantial value (high-end premiums) that are given to members as “thank-you gifts” for their donation must be netted against the revenue for NFFS purposes only. Please see further guidance in the CPB Financial Reporting Guidelines. This has been a common finding in FY2015 AFR reviews and in recent IG audits.



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Question 8

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A Radio station received payments for the rental of excess tower capacity to the local government in the amount of $10,000 and to a private business in the amount of $20,000. Are these payments NFFS eligible?

A. Payment from the local government is NFFS eligible andthe payment from the private business is NFFS ineligible.

B. Payments from the local government and private businessare NFFS eligible.

C. Payments from the local government and private businessare NFFS ineligible.

D. Payment from the local government is NFFS ineligible andthe payment from the private business is NFFS eligible.

Question 8 - Answer

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Answer (C) – This revenue item meets the recipient criterion as the amounts are received by the Station. The revenue is in the form of a payment for which eligible sources include only State and Local Gov’t Agencies and Educational Institutions, therefore the payment from private business does not meet the source criterion. As for the purpose criterion, these payments do not meet the criterion that such payment must be for services or materials with respect to the provision of educational or instructional television or radio programs. Therefore, the payments from both the local government and private business are NFFS ineligible since they do not meet all four NFFS criteria.




• NFFS Exclusions


Completed Agenda

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By participating in this training, you should now:

• Understand the definition of non-Federal financial support (NFFS).

• Know the purpose of reporting NFFS and why it matters to your station and to the public broadcasting system.

• Understand how to determine NFFS eligibility.

• Know where to find help.

• Meet your annual training requirement for FY2018.

Objectives

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CPB Office of Grants AdministrationGreg Schnirring, VP, Station Grants and TV Station InitiativesKate Arno, Director, TV CSG Policy and ReviewNadine M. Feaster, Director of Grants AdministrationElsie Hillman-Gordon, Manager, Grants AdministrationBiniam Debebe, Senior Financial Review SpecialistKen Goulet, Senior Financial Review Specialist Sharon Simmons, Project Coordinator

cpb.orgStation information page: cpb.org/stations/Online webinars: cpb.org/station-resource/csg-and-isis-training-opportunities

Help DeskEmail: [email protected]: (866) 635-4747Fax: (202) 879-9700

CSG Resources

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http://www.cpb.org/stations/

http://www.cpb.org/stations/isis/training

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