Due to the changes in the federal tax law resulting from the passage of the 2017 Tax Cuts and Jobs Act, the deduction for business interest can be severely limited for many taxpayers for tax years beginning after December 31, 2017. The interest deduction cannot exceed the sum of: Business interest income for the tax year 30% of the taxpayer’s adjusted taxable income Taxpayer’s floor plan financing interest (applicable to auto ... more
3 Traditional Midyear Tax Planning Strategies for Individuals That Hold Up Post-TCJA
With its many changes to individual tax rates, brackets and breaks, the Tax Cuts and Jobs Act (TCJA) means taxpayers need to revisit their tax planning strategies. Certain strategies that were once tried-and-true will no longer save or defer tax. But there are some that will hold up for many taxpayers. And they’ll be more effective if you begin implementing them this summer, rather than waiting until year end. Take a look at these three ideas, ... more
The Basics of Creating and Growing an Endowment
All nonprofits should think about setting aside money for a rainy day, but it’s a bigger consideration when you do it through an endowment. Endowments, by their nature, are not usually collected for the purpose of spending the money. The definition of an endowment, is the portion of funds set aside that are “permanently restricted” unless a donor or the court says the organization can spend it. The interest and dividends from the endowment, ... more
Make The Most of Your Fundraising with Simple Metrics
The amount of money your not-for-profit raises in fundraising campaigns is meaningful, but so is how efficiently you’re able to raise it. Such costs can be measured using two metrics: Cost ratio and return on investment (ROI). Let’s take a look. Find a formula These two metrics can be used to evaluate both fundraising activities as a whole and individual fundraising events or campaigns. Concentrating not only on the big picture, but also on ... more
Four Things to Increase Employee Loyalty
Attracting quality employees is a tough challenge. And despite assumptions, money is not a motivating factor for employees, especially if other aspects of their job are unsatisfying or even toxic. With sufficient pay and benefits as a baseline, employees actively select workplaces for more personal reasons. They will also stay longer when those personal needs are met. The Nonprofit Times reported in May that neuroscientists are now mapping out ... more
Modern Donors are Changing Fundraising
A recent survey of almost 1,500 donors from all generations found that only 9 percent factored direct mail into their decision to support a charity. The Chronicle of Philanthropy reported in April that all of the donors surveyed had made a gift to a charity that they hadn’t previously supported. They were asked about how they made their decision to choose a specific charity. A full report was published by Cohort3, a fundraising consulting ... more
Tax Deferral ‘Opportunity Zones’ Approved for California
As part of the Tax Cuts and Jobs Act of 2017, the Governors of each state spent the first few months of 2018 requesting public comment and nominating certain census tracts as Opportunity Zones. Out of 3,516 census tracts in the state, 879 were designated by the Governor and all were certified by the U.S. Department of the Treasury in April 2018. Video: Understanding Opportunity Zones Within these designated Opportunity Zones, investments made ... more
Important Tax Update for Qualified Transportation Fringe Benefits
by Stanley Woo, CPA Due to the changes in the Federal tax law brought on by the 2017 Tax Cuts and Jobs Act, the transportation fringe benefits provided by an employer to employees are no longer deductible by the employer. This change in the law will impact employers in the for-profit sector and surprisingly, employers in the not-for-profit sector. For non-profit organizations, the transportation fringe benefits provided to employees are now ... more
Procurement procedures: Is your nonprofit really in compliance?
The relatively new federal procurement standards significantly alter the way not-for-profits receiving federal funding handle purchasing. And while your organization may have changed its written policies to comply with the revised standards, it may be easier to follow the rules on paper than in practice. Summing up the standards The standards, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” ... more
Should your not-for-profit have an advisory board?
Chances are, your not-for-profit is governed by a board of directors. However, an informal advisory board can bring complementary — and valuable — skills and resources to this group. Enhance representation Look at the demographics and collective profile of your board members. Does it lack representation from certain groups — particularly relative to the communities served by your organization? An advisory board offers an opportunity to add ... more
Plan, Don’t Panic for Possible Market Corrections
We’ve seen a lot of optimism across industries in the last year thanks to huge U.S. stock market gains and expectations for lower corporate tax rates and infrastructure spending. But is this party winding down? Now that some major tech stocks have stumbled and federal interest rates were raised once again, the stock market looks a little shaky. As an individual investor or a business owner, you may be wondering how to respond to market ... more
Are We Destined for Four Interest Rate Hikes in 2018?
Economists globally are paying close attention to the Federal Reserve’s focus on “further gradual increases in the federal funds rate” in 2018. According to Bloomberg reports, Fed officials announced three tentative interest rate increases for the year as part of quarterly projections in December. They reiterated that plan at the end of January. However, Bloomberg’s survey of 29 respondents watching the global market estimated an upper-bound ... more
How Nonprofits Can Regain Their Tax-Exempt Status
Thousands of not-for-profits lose their tax-exempt status every year because they’ve neglected to file required annual forms with the IRS for three consecutive years. Fortunately, if your organization is on the revocation list, you can re-attain your exempt status by following the proper steps. File the right form Assuming you lost your exempt status due to one of these automatic revocations, you can regain your status by filing: Form ... more
Fewer Charitable Giving Deductions, or More, in 2018?
By doubling the standard deduction for the 2018 tax year and going forward, the law known as the Tax Cuts and Jobs Act of 2017 may potentially reduce the number of U.S. taxpayers itemizing deductions by 25%. That means no specific deduction for charitable giving except among about 5% of the U.S. population. Nonprofits worry that the changes to how many Americans file their taxes could also reduce charitable giving. Since individuals will no ... more
Repeal of Partnership Technical Termination
The 2017 Tax Cuts and Jobs Act passed by Congress and signed by President Trump on December 22, 2017 has repealed the “technical termination” of partnerships. When there is a sale or exchange of 50% or more of a partnership interest, such event will no longer cause the partnership to be treated as terminated. Hence, such event will no longer trigger stub period returns. This new rule is effective for partnerships whose tax years begin after ... more
Tax Reform Updates 12/22/2017
Congress is enacting the biggest tax reform law in thirty years, one that will make fundamental changes in the way you, your family and your business calculate your federal income tax bill, and the amount of federal tax you will pay. Since most of the changes will go into effect next year, there's still a narrow window of time before year-end to soften or avoid the impact of crackdowns and to best position yourself for the tax breaks that may be ... more
Tax Reform Updates
It seems we may be closer to revised tax law for the 2017 tax year. At this rate, floor votes may still happen prior to the holiday break. But rest assured that legislators will pore over the published tax bill before a vote. Proposed Changes The House & Senate Republican Conference Committee have agreed in principle to a consensus tax reform bill that reconciles the differences between the bills passed by the two legislative bodies. The ... more
What You Need to Know About Year-End Charitable Giving in 2017
Charitable giving can be a powerful tax-saving strategy: Donations to qualified charities are generally fully deductible, and you have complete control over when and how much you give. Here are some important considerations to keep in mind this year to ensure you receive the tax benefits you desire. Delivery date To be deductible on your 2017 return, a charitable donation must be made by Dec. 31, 2017. According to the IRS, a donation generally ... more
Financial Literacy Programs Support Employee Retention
Studies coming out this year about Americans’ financial literacy and savings rates show that employers could do a lot to improve the financial wellness of their employees — at minimal cost. A survey of 1,000 adults this year by Bankrate.com showed that 31 percent of people now have emergency funds to cover six months or more of expenses, the highest percentage since Bankrate started the survey seven years ago. However, 32 percent of people age ... more
Repealing the Federal Estate Tax Can Be Bad for Giving
Two bills introduced in Congress in January 2017 called for elimination of the federal estate tax. One was introduced by a Republican Representative from South Dakota and another was introduced by a Republican Representative from Texas. Both bills were introduced to the House Ways and Means Committee, and that is all the action that has been taken to date. Now, President Trump’s “Unified Framework for Fixing Our Broken Tax Code” includes a ... more
Clarify Your Not-for-Profit’s ‘Story’ in Financial Statements
Over more than 30 years of work with not-for-profits, the team at Lindquist, von Husen & Joyce LLP has looked for new ways to help organizations share their unique story. Often, we help them tell it through their numbers. Numbers are a language, but sometimes they can become a foreign language in financial statements. When reviewing the financial statements of most not-for-profit affordable housing developers, for example, we’ve seen that ... more
Will Reinstated NFIP Mean Higher Costs for Multi-Family Housing?
The National Flood Insurance Program (NFIP) is slated to expire at the end of September. Since 2004, it has racked up more than $24 billion in debt — most recently due to 19 major flooding episodes across the country last year. This year’s tragic hurricane season is only more cause for worry among lobbyists and lawmakers on the topic of new NFIP legislation. As Congress negotiates a reauthorization package — or at least a short-term extension — ... more
Reporting Collaborative Activities: A Complex Issue for Not-For-Profits
More and more not-for-profits are joining forces to better serve their clients and cut costs. But such relationships can come with complicated financial reporting obligations. Starting with the simplest For accounting purposes, the simplest relationship between nonprofits may be a collaborative arrangement. These are typically contractual agreements in which two or more organizations are active participants in a joint operating activity — for ... more
Nonqualified Stock Options Demand Tax Planning Attention
Your compensation may take several forms, including salary, fringe benefits and bonuses. If you work for a corporation, you might also receive stock-based compensation, such as stock options. These come in two varieties: nonqualified (NQSOs) and incentive (ISOs). With both NQSOs and ISOs, if the stock appreciates beyond your exercise price, you can buy shares at a price below what they’re trading for. The tax consequences of these types of ... more
Major Gift Programs Can Offset Decreasing Donors Rolls
For every $100 gained in giving in 2016, $95 was lost through the absence of repeat donors, according to the 2017 Fundraising Effectiveness Survey conducted by the Fundraising Effectiveness Project. Donor retention has hovered around 50 percent for the past decade, but that dropped a bit to 45 percent in 2016, according to the survey of 797 American charities. Of those charities that showed healthy gains of 15 percent or more in the past year, ... more
5 Tips for Successful Not-For-Profit Succession
Every not-for-profit organization needs a comprehensive succession plan to ensure smooth leadership transitions. Here are five tips for making a written plan successful: Look within. It’s important to develop employees who can move up the ladder when an executive director or other senior manager leaves. But don’t rule out hiring an outsider. Promoting from within can be difficult for smaller organizations with limited “bench ... more
Universal Charitable Deduction Could Reduce Taxes, Boost Giving
Itemizing your charitable giving on your tax return has always been a great incentive to give — along with the warm feeling of supporting good causes. However, tax reform proposals by Republican lawmakers and the Trump administration that would increase the standard deduction for individuals and families may take away that incentive. After all, it’s easier to take a nice standard deduction than to spend time — or pay someone to — track and ... more
What Really Motivates Not-For-Profit Donors
What do charitable donors want? The classic answer is: Go ask each one individually. However, research provides some insight into donor motivation that can help your not-for-profit grow its financial support. Taxing matters The biennial U.S. Trust® Study of High Net Worth Philanthropy, conducted in partnership with the Indiana University Lilly Family School of Philanthropy, regularly finds that wealthy donors are primarily motivated by ... more
Does your Not-For-Profit’s Board Understand its Fiduciary Duties?
Interest in not-for-profits’ governance practices from lawmakers, watchdog groups and the general public has been growing in recent years. If your board hasn’t reviewed its roles and responsibilities recently, now is a good time. 3 primary responsibilities Not-for-profit board members — whether compensated or not — have a fiduciary duty to the organization. Some states have laws governing the responsibilities of not-for-profit boards and ... more