The IRS recently announced an increase in the optional flat mileage rate deduction for use on business travel that occurs between July 1, 2022 and December 31, 2022. The flat rate was increased from US$0.585 per mile to US$0.625 per mile. The decision to raise the flat rate was a result of rising gasoline prices.  

For the business use of an automobile, an individual can either deduct actual operating costs or the actual milage traveled using the flat mileage rate as described above. Although individuals who elect to use the flat mileage rate cannot deduct actual auto expenses on a tax return, tolls and parking fees are allowed in conjunction with the flat mileage rate.

For nonprofit volunteers, the cost of using a personal car to provide charitable volunteer services may be deducted. Volunteers may either use actual expenses or the flat charity mileage rate; however, this rate is different from the rate outlined above. The charity mileage rate is US$0.14 per mile, and this rate was not affected by the recent IRS change.

New York recently updated the requirements for public charities filing form CHAR 500 (the annual financial report) to the New York Attorney General’s Charities Bureau which went into effect on March 16, 2022.  Under the new regulations, charities and other CHAR 500 filers (with the exception of private foundations, see below) are no longer required to disclose the names and street addresses of donors.  Instead, such organizations can 1) provide a redacted IRS Form 990 Schedule B without the names and street addresses but including the amounts of the donations and the states from which the donations were received or 2) provide a statement of the gross amount of contributions received from individuals and entities residing or domiciled in New York.  

Organizations that do not file IRS Form 990 Schedule B may simply provide on form CHAR 500 the gross amount of contributions received from donors in New York.  

Private foundations, on the other hand, must continue to provide the foundation’s complete, unredacted IRS Form 990 Schedule B. 

The State of California signed into law Assembly Bill 488 with the goal of providing critical oversight by the California Department of Justice over charitable fundraising that occurs on internet platforms. Given the rise of charitable giving through internet platforms (such as those engaged in crowdfunding), the new law is designed to protect both donors and charities from deceptive or misleading solicitations by creating a framework that specifically defines online platform entities and requires them to register and report to the Attorney General’s Registry of Charitable Trusts.  

More information on the new law can be found at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB488.  

On May 4, 2021, the U.S. Small Business Administration (#SBA), which oversees the Paycheck Protection Program (#PPP), announced that the program has run out of funds. Outstanding loan applications will continue to be processed, but other than those applications already submitted and being processed, the website is closed to new applications.

The COVID-19 pandemic has challenged nonprofits in unprecedented ways. While some front-line organizations have seen a sharp increase in demand, others are struggling to remain financially viable amid the current economic volatility. Given this, many nonprofits are now realizing that a realignment of their current annual budget is needed as revenue projections and spending is different than originally anticipated.  

Read more about budget forecasting.  

On March 30, 2021, US President Joe Biden signed the PPP Extension Act of 2021 which extends the Paycheck Protection Program (PPP) by two additional months. The program's end date is now May 31, 2021. 

One of the most significant changes included in the Consolidated Appropriations Act (CAA), signed into law in December 2020, allows nonprofits that received a Payroll Protection Program (PPP) loan to also claim the Employee Retention Credit (ERTC), though the same wages cannot be used for the credit and loan forgiveness. Prior to the passage of the CAA; nonprofits who obtained PPP loans were not eligible for this credit.

Nonprofits that paid qualified wages between March 12, 2020, and December 31, 2020, and experienced full or partial suspension of their operations or a significant (50%) decline in gross receipts when comparing the gross receipts for the same quarter in the previous year are eligible to claim the ERTC. 

The 2020 credit amount equals 50% of qualified wages paid, including qualified health plan expenses, up to $10,000 per employee. The maximum credit available per employee in 2020 is $5,000.

For 2021, the qualifications was amended to be a 20% drop in gross receipts when comparing the first two quarters of 2021 to the same quarter in 2019 and the credit is increased to 70% of qualified wages with a limit of $7,000 for each quarter. 

Recently, the availability of PPP loans was expanded to include most Section 501(c)(6) organizations—including trade associations, professional societies, business leagues, and chambers of commerce—and to destination marketing organizations. Under this expansion, section 501(c)(6) organizations are eligible to apply for PPP loans as long as they:

B. Have 300 or fewer employees.

C. Are not a professional sports league, political campaign, or political activities organization. and 

The new law did not, however, clarify the definition of "lobbying activities" and how such activities would be measured. However, on March 3, 2021, the SBA clarified that the definition of "lobbying activities" set forth in the Lobbying Disclosure Act (LDA) should be used by Section 501(c)(6) organizations for purposes of determining their eligibility for PPP loans. 

The implementation of FASB’s ASU 2020-05 (Topic 606) and IFRS 15 changes the way in which membership associations are required to report membership dues revenue.  Under the new standard, the member benefits specified in the membership agreement embody goods and/or services that the nonprofit has promised to transfer to members. These promises are deemed “performance obligations”, and the transaction price for each good/service must be accounted for when recording membership dues.

Read more on how to account for membership dues under these new standards, see an accounting example, and understand best practices in documentation. 

Under the Consolidated Appropriations Act of 2021, Section 501(c)(6) organizations are now eligible for Paycheck Protection Program (PPP) loans of up to US$10M. This includes local chambers of commerce, labor and trade organizations, business boards, destination marketing organizations, and other similar groups. However, associations that meet the following criteria are excluded from eligibility: 

PPP loans can be used for payroll, rent, covered mortgage interest, and utilities. Borrowers can qualify for a loan of up to 2.5x their average monthly payroll costs and can apply for forgiveness after the completion of the 24-week period in which the funds must be spent.