First Book Company – NFP

The selected NFP company is the First Book Company. The company has a strong belief
that education is one of the strategic solutions for poor children that are in need. Thus, the
company’s primary aim is to remove quality education barriers to the community’s poor kids.
Therefore, they take part in providing books that are of high quality and educational resources to
the children. The company was founded in the year 1992. Since then, they have been able to
distribute a total of 185 million books and other educational resources to schools that serve
children from low-income families. The distribution takes place in more than 30 countries, and at
the moment, they can reach over 5 million children in a single financial year. They have a total
of 475,000 educators and approximately 1000 educators that join the program each week. Their
primary focus is on the diversity of the children and workers, focuses on inclusion, and has been
successful because of togetherness. The Board of Directors has a role in preparing the form 990
for auditing (Neely and Harris, 2018). Kyle Zimmer is the current CEO of First Book Company.
The business model for the company is to maximize efficiency.
A total of 95% of the revenue generated by First Book company’s devotion is towards the
program’s cost. Form 990 is for the return of the organization exempt from income tax. The
company is excepted from income tax because it is a nonprofit organization. The lasts form 990
for the First Book organization is for the year 2019. Form the form, the total number of
employees in the company as of 2019 is one thousand. At the moment, they do not have
volunteers or revenue from any other unrelated business. In the year 2018, the total revenue for
the program services was $7,717,727, while that for 2019 was $11,648,198 (“First Book,” 2020).
Form the figures, and it is evident that the revenue for program services is increasing. The
increase is attributed to the increasing number of children they offer their service each year.

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While starting the company, they would only reach 200 to 600 students in a single year.
However, the company has expanded, and they can now reach over 5 million who are diverse
and from different countries. Their focus on children is now growing towards the international
level, and they are still aiming to include more children from different countries.
Also, there has been an increase in the total expense for the First Book Company. In 2018
the total expense was summing up to $94,889,119 while that for the 2019 financial year was
$101,137,707. The increasing expenses are due to the expansion of their activities to
accommodate more students. However, there has been a decrease in the company’s total assets
and increased total liabilities. In 2018 and 2019, the total assets for First Book company were
$47,823,862 and 42,783,579, respectively. In 2018 and 2019, the total liabilities for First Book
company were $4,111,998 and $4,722,052, respectively (“First Book,” 2020). With an increase
in the number of students they offer their services to, the company runs out of resources to
provide the relevant services. The main source of funding for the company is fundraising and
endowment. The partners of the company include corporations and foundations. Some of the
corporations are nonprofit organizations. The main aim of partnering with the nonprofitable
organization is to lower their expenses in printing books. Some of the partners include the
American Red Cross, Attendance works, American Library Association, and Calvert Foundation.
The partners also take part in making contributions to their fundraising events.
The majority of the company employees work for an average of 40 hours in a single
week. However, some work on an average of one hour per week, such as the CEO. The higher-
paid employee is the CEO with an income of $41,129. Also, some independent contractors
partner with First Book company. Some of the independent contractors include M&M, Olive LP,
and Coast cloud LLC. The higher compensated independent contractor is M&M, with an amount

FIRST BOOK COMPMANY – NFP 4
of $306,645. In the statement of revenue, the total contributions, grants, and gifts to the company
sum up to $83, 822,752 while the non-monetary contributions sum up to $69,729,357. The
company’s expense is to donate books, books, purchase, shipping, and warehouse charges. The
expense for books donation, purchases, shipping a warehouse are $70,506,740, 12,150,642, 2,
456,809, and $1,962,589 respectively (“First Book,” 2020). Form 990 requires the organization
to provide a detailed description of how the funds from grants were used for auditing. In Europe
and Africa, the grants were towards the provision of books to children. However, in North
America, the grants were towards the purchase of books. The allocation of grants depends on the
level of activities that take place in the region.
The manner of cash disbarment in all the regions was through the wire, and the method of
valuation Was FMV. There is a procedure that the company uses to monitor the use of the funds
from grants. The strategy involves staying in touch with the organization to ensure that the
books’ distribution takes place following the company’s mission statement. Also, there are no
monetary grants and expenditures according to the fair market value that would allow otherwise
accounts in various financial documents. A total of $47,700 was directed to the foreign
organizations to donate to their activities, whose prominent role is to obtain and deliver the
books to the children. In the year 2019, the company received grants from two of its partnering
companies. One of the companies was the Boys and Girls Club of Great Dallas that provided a
total of $10,000 as a grant. The other company was The Asian Foundation, which provided a
total of $21,000 as a grant. The compensation of the employees in the First Book company
involves three main stakeholders. The stakeholders include the compensation committee,
compensation survey/investigation, and the Board of management whose main role is to approve
the compensation.

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The noncash contributions of the company are towards five main activities. The activities
include books and publications, clothing and household, intellectual property, security, and food
inventory. The respective activities are as follows $69,527,407 for books and publications,
$16,686 for clothing and household, $12,768 for the intellectual property, $164,186 for security,
and $8,310 for the food inventory. The method of evaluation for all the noncash contributions is
FMV (Riahi and Khoufi, 2016). There is a strategy that the company uses to review form 990. In
the First Book company, the form is distributed to all the Board of directors to review before it is
duly signed and submitted.

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References

First Book. (2020). Form 990. Retrieved from https://www.firstbook.org/about/financials/.
Accessed 1 October 2020.
Neely, D. & Harris, E. (2018). Determinants and Consequences of Nonprofit Transparency.
Journal of Accounting and Finance, 1(1), 12-45.
Riahi, O., & Khoufi, W. (2016). Effects of Fair Market Value on Company’s Reputation.
International Journal of Accounting and Economics Study, 4(1), 36.