As 2020 begins, nonprofits face three hot operational issues that can help or hurt their bottom-lines. First, we all can celebrate the repeal of the income tax on nonprofits for expenses for their employees' transportation benefits - and that it was done retroactively, so nonprofits can receive refunds for what they've paid the last two years. Next, we all should join nonprofits around the world to #SaveDotOrg because the proposed sale of the nonprofit .org domain registry to a private equity firm could result in significant price increases for .org domains, decreased reliability of the domains, and potential censorship of vital nonprofit work. Finally, there’s breaking news about potential clarifying improvements to ensure nonprofits are reimbursed fairly for work they’ve done.
Tax on Nonprofit Transportation Benefits (Finally) Repealed. Now What?
Great news! Thanks to almost two years of persistent advocacy from nonprofits across the country, Congress finally repealed the tax on transportation benefits provided by nonprofits to their employees. Even better news: the tax was repealed retroactively, so nonprofits that paid the tax can claim a refund.
House Ways and Means Committee Chair Richard Neal (D-MA) and Oversight Subcommittee Chairman John Lewis (D-GA) recently sent a letter to the IRS Commissioner asking the IRS to create an expedited process so nonprofits can quickly secure refunds.
This repeal was achieved through the hard work of many, many people across the country. As with any advocacy victory, it wasn’t a single meeting, or data point, or tweet that was responsible; it was the collective action of thousands that convinced every member of Congress that this tax was wrong; so wrong that this repeal makes it as if the tax never existed. Thank you for the part you played in this huge victory for nonprofit missions.
How Nonprofits Are Working to #SaveDotOrg
A website ending in .org occupies a special place on the web. A place of trust. A place of reliable service free from price gauging and censorship. A place nonprofits have been able to call home for decades. A place that’s been managed by a nonprofit for almost 20 years. Yet that could all change, quickly.
In November 2019, soon after the entity overseeing all web domain registries removed longstanding caps on price increases for .org domains, plans were announced that a newly-formed private equity firm would purchase that nonprofit for more than $1 billion - money it will need to recover for its investors, plus profits. The proposed sale exposes your nonprofit and the more than 10 million other .org users to the potentiality of significantly increased prices, decreased reliability, and censorship. Everyone from state charity regulators to the inventor of the World Wide Web have expressed concern about the potential harm. More than 21,000 people and 600 organizations (so far) have signed to save the .org registry.
Proposed Improvements to Paying Grants to Nonprofits
The federal rules governing grants to nonprofits would be substantially improved under proposed revisions to the Uniform Guidance pubished today by the U.S. Office of Management and Budget. Most notably, the proposed revisions to the OMB Uniform Guidance would strengthen the guarantee that grantees receive reimbursement of indirect costs of at least 10 percent of their modified total direct costs (de minimis rate). The draft also clarifies that all granting agencies paying nonprofits with federal funds – whether federal, state, or local governments, native tribes, or other nonprofits – must pay nonprofits using the nonprofit's existing negotiated indirect cost rates and, if no negotiated rate exists yet, then they have the obligation to negotiate rates, at the option of the nonprofit. To date, various granting agencies have misinterpreted the rules in ways that deny nonprofits' rights under the Uniform Guidance. In other changes, the proposed rules would provide greater flexibility under procurement standards, implement standard data elements across agencies and grants, promote the collection of data in machine-readable formats, and strengthen end-of-grant closeout procedures and enforcement. OMB is conducting a public webinar on Thursday, January 23 to explain the proposed changes and will host a public forum in Washington, DC on Tuesday, February 4. The public is invited to review the proposed regulations and submit comments by March 22, 2020. Read the National Council of Nonprofits' analysis of the proposed regulations.
Nonprofit Knowledge Nuggets
Giving Tuesday 2019 Impact Report Released
As we wait for the final overall giving tallies for 2019, the results from #GivingTuesday are cause for celebration. More than $511 million dollars were donated online (a 28 percent increase over 2018), in amounts large and small – and to nonprofits large and small – with another almost $1.5 billion estimated in offline donations. Check out the Giving Tuesday 2019 Impact Report for more statistics and stories of generosity.
Reminder: New Overtime Rule Is in Effect
On January 1, 2020, the new Overtime Rule went into effect. This rule is estimated to affect about seven percent of the nonprofit workforce. To ensure your nonprofit is classifying employees correctly for purposes of calculating overtime, check out our article that breaks down your nonprofit’s obligation to pay overtime and the webinar we hosted last fall with experts from the U.S. Department of Labor.
Cryptocurrency Contributions Reporting
New guidance from the Internal Revenue Service instructs that charitable donations made via cryptocurrency must be reported as noncash contributions. Organizations should treat such donations as noncash contributions on Form 990s using fair market value at the time of the contribution. The nonprofit may also be required to acknowledge receipt of the currency. The guidance supplements guidance provided in 2019 for treatment and reporting on cryptocurrencies for taxpayers.
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