Congress’ recent spending package offers an increased $4.5 billion to HUD for fiscal year 2023, including a “Yes in My Backyard” (YIMBY) grant program and increased funding for several existing programs. This news may or may not ease concerns among developers about significant project cost increases and funding gaps. A recent article in Affordable Housing Finance noted that developers are relying on “partners at all levels” to make new deals ... more
Not For Profit
Tips to Avoid Misstatements in Affordable Housing Intercompany Transactions
We frequently get questions from affordable housing managers regarding the reconciliation of intercompany accounts and confirmation of balances between business units. Intercompany transactions are not unusual for developers with multiple properties, but they can result in misstatements on the balance sheet without proper internal controls. During the planning phase of an audit, we often identify intercompany transactions as an area of ... more
How Does Resyndication Work For Affordable Housing?
For older multi-family housing properties that need rehabilitation beyond what is possible with replacement reserves, developers will seek outside investors interested in tax credits. New private equity players are assembling funds to support these projects and preserve affordable housing, but the project must be large enough to make it worth their investment. Resyndication is one way to expand the scope of the deal, specifically by ... more
New Broadband Access Grant Program for Affordable Housing
Developers in underserved communities will have access to federal passthrough state grants to lower installation costs of broadband internet in new developments and existing multi-family properties. The grants will help finance delivery of free Wi-Fi access to residents. Part of the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA), the Broadband Equity, Access, and Deployment Program (BEAD) offers $100 million (minimum) to each state ... more
Preparing for Your Single Audit
For many not-for-profits, federal funding is vital for sustaining programming and operations. However, the funding could carry requirements for compliance and financial reporting. For example, if a not-for-profit entity expends $750,000 or more in federal funds in its fiscal year, this will trigger the requirement for a single audit under the Uniform Guidance for testing of the entity compliance with federal award requirements. Furthermore, ... more
New How-To Guide for Affordable Housing Finance
Over the coming months, the U.S. Department of the Treasury (Treasury) is conducting webinars and briefings with states, local governments and nonprofit and private sector entities to discuss how State and Local Fiscal Recovery Funds (SLFRF) can be used to expand affordable housing supply. They have also published a how-to guide. New guidance clarifies how states and localities can use SLFRF to make long-term loans to affordable housing ... more
Prepare for Your Regional Center’s New Audit Team
Although changing audit firms can seem difficult, California’s regional centers must do it every five years. California’s legislature enacted the Welfare and Institutions Code (“WIC” section 4639), in 2011, which states that regional centers shall not use the same accounting firm more than five times in every 10-year period. After management publishes their request for proposal for a new audit firm, consider the following factors when selecting ... more
3 Tips to Help Your Board Members Succeed
Board members have a fiduciary duty as stewards of public trust to act in the best interests of the organization that they serve. They lay aside personal interests to focus on ethical oversight of the organization’s mission accomplishments, results of operations and financial position. Nonprofit board members may monitor support and other funding to ensure that it is used in accordance with the nonprofit’s mission. They are concerned that the ... more
New IRS Guidance: Non-Deductibility of Expenses Paid with PPP Loans
The Paycheck Protection Program (PPP) created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act provides loan funds to small businesses in order to help them pay eligible expenses (payroll costs, mortgage interest, rent, and utilities). These covered loans are to be fully forgiven and not to be treated as income to the loan recipients as long as the loans are used to pay eligible expenses. While it was clear that a ... more
Nonprofit Purchasing Policy Considerations
Nonprofits have a multitude of compliance standards to juggle, and constructing a comprehensive nonprofit purchasing policy is no exception. Maintaining tax-exempt status requires adherence to very specific behaviors, and written policy should be reviewed periodically to ensure your organization meets or exceeds standards. Under the new procurement standards, all NPOs receiving federal awards must have a written procurement policy that outlines ... more
Webinar Round-Up: Risk Identification Matrix Unveiled
S. Scott Seamands, partner at Lindquist von Husen & Joyce, LLP, and Julie Goldfine, COO/CFO at Mutual Housing California, revealed a risk identification matrix currently under development by our firm that serves as an information network for financial learning in the nonprofit affordable housing industry. After years of interviews and discussions with CFOs about their approach to risk, we are creating this comprehensive tool designed to help ... more
Pandemic Heightens Sustainable Affordable Housing Efforts
Since the PATH Act in 2015, no major federal legislation has come about to address massive shortages in affordable housing across the U.S. While the House and Senate introduced many bills since then, legislation seems to die in committee or across the aisle. Much more legislation is enacted at the state level, but we know that new affordable housing can be a tough sell at the neighborhood level. There is still a public perception that ... more
How Affordable Housing Really Happens: Finance + Community
An article last fall in the New York Times demonstrated what billions can and can’t do to bring about more affordable housing in a large metropolitan area. It can’t, for example, convince community groups to allow development in their neighborhoods or local government leaders to support it. Money alone also can’t ensure that a deal is properly structured to support sustainable affordable housing. Citing efforts by tech giants Apple, Google and ... more
FASB Updates Post COVID
As a result of COVID-19 and the disruption it is causing, FASB has issued an Accounting Standards Update (ASU) 2020-05, Revenue from Contracts with Customers (ASC 606) and Leases (ASC 842) Effective Dates for Certain Entities regarding deferral of effective dates for Revenue from Contracts with Customers and Leases. Revenue from Contracts with Customers (ASC 606) According to FASB, “The deferral of the effective date applies to private ... more
Pitfalls of Revenue Recognition for Nonprofits
One of the challenges many not-for-profit organizations face is determining whether or not revenue falls under the category of a contribution or exchange transaction. In some cases, it’s a pretty straight forward determination, but the waters can occasionally become a bit murky. In June 2018, the Financial Accounting Standards Board (the FASB) issued the Accounting Standards Update (ASU) 2018-08, Clarifying the Scope and the Accounting Guidance ... more
SBA Revises Forms for PPP Loan Forgiveness, Including New EZ Form
The Small Business Administration (SBA) has issued a revised Form 3508, Paycheck Protection Program (PPP) Loan Forgiveness Application. The SBA also released a streamlined PPP Loan Forgiveness Application, Form 3508EZ. The newly issued application forms were needed to address the changes brought upon by the PPP Flexibility Act (PPPFA) of 2020. Form 3508EZ This new three-page form reduces the documentation and calculations required to apply ... more
Paycheck Protection Program Flexibility Act of 2020
The Paycheck Protection Program Flexibility Act (PPPFA) was signed into law on June 5, 2020, to modify certain provisions related to the forgiveness of loans under the Paycheck Protection Program (PPP). One change allows recipients of loan forgiveness under PPP to also defer a portion of 2020 payroll taxes, but there are several other modifications. The following chart summarizes the key provisions compared to the original CARES Act ... more
PPP Loan Forgiveness Application and Instructions Now Available
The Small Business Administration (SBA) has finally released the much-anticipated guidance on how borrowers can request forgiveness of their Paycheck Protection Program (PPP) loans. Borrowers will file SBA Form 3508, Paycheck Protection Program Loan Forgiveness Application. Form 3508 is an 11-page application with instructions that provide guidance on calculating the amount of loan forgiveness. The application form consists of four components: ... more
CDFI Fund Seeks Comment on Proposed Certification Standards
The Community Development Financial Institutions Fund (CDFI Fund) is seeking public comment through August 5, 2020, on proposed changes to the CDFI Certification Application and two additional Certification reports that are intended to improve the process for certifying, evaluating and recertifying CDFIs. CDFIs are certified by the U.S. Department of the Treasury to deliver capital and credit to families, businesses and communities ... more
SBA Provides New Safe Harbor for PPP Loans, Extended Repayment Date
Ever since the Coronavirus Aid, Relief and Economic Security (CARES) Act introduced the Paycheck Protection Program (PPP) in late March 2020, the U.S. Small Business Administration (SBA) continues to release piecemeal guidance to the public. One major concern for the borrowers is whether they had met the requirement that the loan was necessary, as borrowers not meeting the necessity requirement could be subject to fines and criminal ... more
Accounting for Forgivable Loans and Other Revenue
With recent passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, 501(c)3 non-profit organizations and 501(c)19 veterans organizations with 500 or fewer employees (or that meet SBA size industry standards) can apply for emergency relief. Part of that relief comes in the form of potentially forgivable loans through the U.S. Small Business Administration. In our last blog post on revenue recognition, we talked about how to ... more
Pitfalls of Revenue Recognition for Nonprofits
One of the challenges many not-for-profit organizations face is determining whether or not revenue falls under the category of a contribution or exchange transaction. In some cases, it’s a pretty straightforward determination, but the waters can occasionally become a bit murky. In June 2018, the Financial Accounting Standards Board (FASB) issued the Accounting Standards Update (ASU) 2018-08, Clarifying the Scope and the Accounting Guidance for ... more
OMB Provides Single Audit Extension Due to COVID-19
The US Office of Management and Budget (OMB) released memorandum M-20-17 on March 19, Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations. This memorandum is addressed to federal awarding agencies and instructs that the federal awarding agencies are authorized to take certain actions, as they deem appropriate and to the extent ... more
Don’t Risk Having Procurement Costs Disallowed
Federal grantee procurement standards, as stipulated in the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” impose strict requirements on not-for-profits receiving federal funds. These standards have significantly altered nonprofit purchasing policy and documentation. After a lengthy grace period to allow more time for implementation, the requirements became effective in calendar year 2018 or ... more
Affordable Housing Outlook Cites Concern Over IRS Bond Caps
At a recent boot camp for affordable housing accountants, we heard several leaders voice concerns and some optimism for the coming year of affordable housing development finance and legislation. In California and its biggest cities, there are several new laws put forth to support new construction and rehabilitation of affordable housing, but concerns over lack of available land is dampening some optimism. Of biggest concern to CFOs, however, ... more
Make your Nonprofit Stand out on National Day of Giving
National Day of Giving is a great opportunity for nonprofits and philanthropic organizations to procure donations before the end of the year. However, it has become a popular day on the calendar and many organizations like yours are looking to benefit from this day created just for them. For 2019, National Day of Giving, also known as Giving Tuesday, falls on December 3rd. Start your planning with these tips to make your nonprofit stand out from ... more
Maintaining Not-for-Profit Compliance and Tax-Exempt Status
Not-for-profit organizations need to be continuously aware of what is required to maintain their tax exemption. Engaging in activities that affect this status can result in penalties called intermediate sanctions or the revocation of the organizations tax-exempt status. Here are a few areas that could put your not-for-profit’s tax-exemption status at risk: Earning Unrelated Business Income (UBI). Earning too much income that is not ... more
Nontraditional Funding Methods for Not-for-Profit Organizations
Funding a not-for-profit is a big endeavor. Most organizations are familiar with the usual funding sources consisting of grants, donors, membership fees, crowdfunding sites, foundations, sponsorships and planned giving programs. What happens when you’re doing everything you can but you still need to generate additional revenue? This is when it’s time to look at some new and different funding sources that cut expenses and/or generate ... more
Government Grants: Exchange or Contribution? It Depends.
When nonprofit organizations report certain government grants, revenue recognition standards can still be tricky. Although FASB has provided clarification, new accounting standards regarding revenue recognition from contracts (FASB ASC 605) have created more questions about how to categorize grants. Are they an exchange or a contribution? But first, let’s define the difference between an exchange and a contribution. Exchange transactions ... more
Charitable Giving Planning Through Automated Giving Programs
Automated giving programs are on the rise as a convenient way to boost monthly charitable nonprofit revenues. Sometimes called recurring givers, donors who choose this method can give the same amount at regular intervals, usually through credit card transfers or automated account deductions. Here are some strategies to create or increase monthly automated giving programs. But first, consider the additional work required: Educate your team and ... more