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Government

What Nonprofits Need to Know About the Consolidated Appropriations Act of 2021

By | Government, Nonprofit, Tax | No Comments

The Consolidated Appropriations Act of 2021 offers relief to nonprofits hit hard by the coronavirus pandemic. The new relief efforts clarify elements of the Paycheck Protection Program, offer funding for new loans (PPP2), enhance the employer tax credit, and extend employee benefit modifications.

Paycheck Protection Program Updates

The Paycheck Protection Program offered significant benefits to help organizations retain employees who might otherwise go on unemployment benefits. PPP2, an extension or continuation of the Paycheck Protection Program, allocated $284.45 billion for loans, $43.5 billion in Small Business Administration (SBA) debt relief, and $20 billion for certain live venues and cultural institutions that remain shut down or have significant operational restrictions due to the pandemic.

The new Act not only extends the PPP2 loans into 2021 but provides additional guidance and clarification. Nonprofit managers should now focus on PPP loan forgiveness and whether or not they should access funding under the new PPP2.

PPP2: New Guidelines

PPP2 comes with brand new guidelines for potential borrowers, so it is important for nonprofits to review the guidelines again in light of these changes. It encompasses organizations with 300 or fewer employees and reduces the maximum loan amount from. $10 million to $2 million. If your organization did not previously quality for the Paycheck Protection Program, these changes may qualify it in 2021.

SBA Requires “Loan Necessary” Questionnaire

The new PPP act requires borrowers to complete a new questionnaire from the Small Business Administration attesting to the necessity of the loan. The new version of the questionnaire for nonprofit was finalized on November 30, 2020 and is an entirely separate requirement for the loan application. Nonprofits seeking loans of $2 million or more are required to complete both the questionnaire and the loan application. Note that evidence must accompany the responses, too, such as proof of liquidity and revenues between 2019 and 2020 and other facts to attest to the need for the loan.

Tax Treatment of PPP Loans

The PPP loan clarification also includes confirmation that any amount of PPP loans forgiven will not be taxable.

Employer Tax Credit Enhancements

Two employer tax credits are in the Consolidated Appropriations Act of 2021: Employee Retention Tax Credit and Employer Tax Credit for Family and Medical Leave.

Under the 2021 bill, the Employee Retention Tax Credit (ERTC) has been extended to employers who claim PPP loans. One important item to note: wages used to justify forgiveness of any PPP loan may not be used again to calculate the ERTC. Although this limits the possible benefits for recipients of PPP loans, it also expands the eligibility for the credit to others.

The Employer Tax Credit for Family and Medical Leave refundable payroll tax credits have been extended through March 2021. Note that this extension does not require an employer to provide the leave—it simply extends the credit for employers who voluntarily provide the leave.

The credit is equal to 12.5% of eligible wages if the rate of payment is 50% of such wages. It is increased by 0.25 percentage points (but not above 25%) for each percentage point that the rate of payment exceeds 50%. The maximum amount of family and medical leave that may be taken into account with respect to any qualifying employee is 12 weeks per taxable year.

Seek Professional Advice

As with any new bills, this one may take some time to fully understand its limits and ramifications. If you’re in doubt about the financial or tax implications to your organization, please contact Welter Consulting.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Tips to Offset the Postal Price Increase

By | Government, Nonprofit | No Comments

Just when you thought it was safe to send out more direct mail, the United States post office announces an increase. This year’s 10 % rise represents one of the most significant price hikes in the cost of a first-class stamp from .50 cents to .55 cents per ounce.

For those nonprofits who use both DSCF (nonprofit bulk mail) and first class mail to solicit for donations, it’s a double hit: both first class and DSCF are going up this go-round.

Most nonprofits take advantage of the post office’s third-class nonprofit rate which saves considerable money on mailings. This bulks price must be obtained after securing nonprofit status with the United States post office and using a special indicia on outbound mail with a nonprofit permit number.

However, even with the nonprofit rate, the price of nonprofit bulk mail has gone up too, rising twice the rate of inflation from 4.8 to 5.5% for destinational sectional center facility (DSCF).

Save Money on Mailings: What You Can Do Now

It’s a shame that the price increase impacts nonprofit organizations. Nonprofits remain one of the post office’s most prominent customers as fewer people send cards, letters, and other mail via first class, relying on email and texting instead.

But what’s done is done, and now is the time not to complain but to act to reduce the cost of mailings. Here are a few steps you can take to keep prices down:

  1. Clean up your mailing lists: Work with a mail service provider or list vendor to clean your lists. The mailing list should be cleaned annually of old, unusable addresses, incomplete addresses, returned mail, and duplicate mailings. Mailing list data handlers can access files from the post office of people who have moved or died during the past year; they can then update those who have moved and remove the deceased persons from your mailing list. This alone can update a list so that less mail ends up in the trash or undeliverable.
  2. Stop sending trinkets: Although many nonprofits send items such as stickers, cards, and pens to potential donors, these add to the cost of the mailing. Instead of sending return address labels, consider uploading something printable to your website and inviting people to download it. Not only will you save on the cost of outbound postage because the envelopes weigh less, but you can track the open rate of your letters by determining the percent of recipients who received the letter and downloaded the freebie.
  3. Talk to your printer: Printing companies offer people who are experts at their craft and who can advise you on ways to reduce the cost of your mailings. For example, an experienced printer can suggest an alternative paper for your printing job that cuts the weight down of each envelope and reduces the cost per piece. Printers can also recommend the best times to mail so that your nonprofit mail isn’t swimming against the tide of high volume or better ways to batch your mail so that you achieve the maximum postal discounts possible.
  4. Improve your ROI: As costs of direct mail increase, the need to achieve a mailing ROI increases. To improve your direct mail, consider A/B tests, which test a control (a mailing package with a known response rate) against a test piece (the same package with one element changed, such as the design or the copy inside). By continually testing and improving with each mailing, you’ll be able to improve your ability to meet or exceed the mailing ROI.
  5. Increase online donor solicitations: Learn to use all forms of online donor solicitations from better email outreach to social media. Although direct mail remains a popular and effective method of meeting fundraising goals, the more expensive it gets, the more you may need to switch to online fundraising.

Although the postal price increase is a ‘done deal’ and effective in 2019, the impact upon your nonprofit isn’t signed, sealed, and delivered. You can affect and mitigate its effects by using these steps to counteract the steep postal price increase.

Welter Consulting

Welter Consulting bridges people and software technology to help nonprofits be more efficient and effective. We work exclusively with nonprofits and have the experience necessary to help them build, grow, and develop over time. We invite you to contact us for any assistance you need with nonprofit technology and business solutions. Call 206-605-3113 or contact us.

National Defense Authorization Act Raises Micro-Purchase and Simplified Acquisition Thresholds

By | Accounting, Government, Nonprofit | No Comments

If you work with tribes or are part of a tribal government, you should closely follow the changes made to the National Defense Authorization Act. On June 30, 2018, the NDAA issued changes that  increased the minimum thresholds for micro purchases and simplified acquisition.  These changes impact many individuals and groups, as well as impact tribal governments.

Raising the minimum threshold should ease some of the reporting burden on those receiving federal funds.

What Are the Exact Changes?

  • The threshold for micro-purchases is increased from $3,500 to $10,000
  • The threshold for simplified acquisitions is increased from $100,000 to $250,000

What Should You Do?

Groups currently receiving federal awards, including tribal governments, may wish to immediately revise internal procurement policies so that they can implement the new thresholds.

Memorandum M-18-18 also outlines changes for institutes of higher learning, nonprofit research organizations, and independent research organizations that wish to use a micro-purchase threshold higher than $10,000.

Specific Recommendations

There are some specific recommendations that can help you follow the new guidelines as stated in M-18-18.

  • Micro-purchase: You should include purchases when the aggregate dollar amount does not exceed $10,000. It may be helpful to distribute micro-purchases fairly among qualified suppliers if you can. You don’t need competitive quotes if management determines that the price is reasonable. Document a definition of how you define ‘reasonable’ prices so that you have something to reference to confirm your choices.
  • Small purchases: You can use simplified acquisitions for the purchase of property services that do not exceed an establish amount pursuant to 200.88 in the Uniform Guidance. This also includes purchases up to $250,000 according to M-18-18. Informal purchasing procedures are acceptable under the guidelines, but you should always obtain several price or rate quotes before making your choice. This is just good business practice that will also help you comply with the new requirements.
  • Sealed bids: Large projects, such as construction projects, commonly exceed $150,000. A formal RFP or bid solicitation process is required. The fixed price, lump sum, or unit price should be awarded to the best bidder who conforms to all the material terms and provides the best price.
  • Competitive bids and proposals: A formal bidding or solicitation process is required. Competitive bids and proposals covers purchases over $150,000. Fixed-price or cost-reimbursement contracts, as well as a formal bid process, should be used when sealed bids aren’t appropriate or warranted. Awarding the contract should be based on the quality of the program with price being one, not the only, factor.
  • Sole source: You can only use the sole source designation when specific criteria is met. The criteria includes:
    • The product or service is only available from a single source – no one else offers what you need
    • There is a public emergency, and the fastest or best way to handle the emergency is to buy from one source
    • Federal warding agency authorization, or the awarding agency specifically authorizes a non-competitive procurement. This is usually after a written request from the non-federal entity.
    • There’s not enough or inadequate competition after you’ve asked for bids from multiple sources.

Can you request an even higher threshold than these new amounts? Yes, but with a catch. You’ll need to request approval from your institution’s appropriate Federal agency for indirect cost amounts. They will then assign you to the appropriate office inside the agency who can approve the new amount and maintain records indicating compliance with the new amount. It’s also a good idea to keep records on your own to support any moves you make when it comes to micro-purchases.

The world of nonprofit accounting is always changing, and new thresholds and guidelines like these are important to understand and follow. Welter Consulting can help you if you have any questions about these guidelines or other nonprofit accounting and software needs.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Personalized Training Plans Offer More Meaningful Professional Development

By | Abila, Accounting, Government, Grant Management, HR, MIP Fund Accounting, Nonprofit, Professional Development, Training | No Comments

CPAs, like other professionals, need an additional 40 hours of continuing education units annually to maintain their certification. Even if your industry does not require taking continuing education courses, everyone benefits from refresher courses and keeping abreast of changes and developments in their industry.

There is great value to designing a personalized plan for continuing professional development. These plans build a customized training roadmap for individuals, so that instead of taking a prescribed set of courses to meet your continuing education requirements, you create your own curriculum. Here’s why they work.

The Benefits of Personalized Professional Development Plans

  1. Relevant: Personalized course plans are highly relevant. They take into consideration your currently level of skills, interests, and needs, as well as those of your employer or company. You can choose the courses that are right for you and fit your personal learning goals.
  2. Flexible: You choose when you wish to take the courses, creating a plan that lets you take courses on the weekends, at night, or even during your lunch hour. You aren’t locked into a set schedule.
  3. Higher completion rate: Because the courses in your personalized plan are relevant and on a schedule that meets your needs, they tend to have a higher completion rate than other courses.
  4. More feedback and interaction: Some personal development plans include interaction with a mentor or trainer, providing more personalized feedback and interaction from the one to one mentoring.
  5. Noticeable difference: Personal plans offer you the added bonus of being able to identify specific goals to work towards. You can document progress toward your goals through milestones and checkpoints. Not only does this help you achieve them, it also helps you see both the ‘before’ and ‘after’ picture. You can see just how far you’ve come.

Does Personalized Professional Development Stand Alone?

Most companies blend both personalized development with general professional development activities,  offering both the benefits of personalization and group interaction that’s valuable for team building and shared knowledge.

Why Professional Development Matters

Lifelong learning is important for all professions. While we tend to think of professional development for teachers, accountants, financial managers, others benefit from continually sharpening their skills.

Professions change over time. New governmental and IRS regulations, for example, may change how accountants and financial planners manage specific tasks and functions. Yes, you can read about these changes in professional journals or online bulletins from the managing organizations, but in some cases, in-depth professional development through workshops, conferences, or classes may be the best way to completely understand something new.

Technology is changing how CPAs manage data, how sales and marketing professionals do their jobs, and how human resources managers organize their files. By taking additional professional development courses in technology-enhanced areas, you’ll be able to maximize the use of such  developments to create a stronger, better organization.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.