All posts by Mike Sperling

Be prepared for IRS audits of COVID-19 ERC claims

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The availability of Employee Retention Credits (ERCs) during the height of the COVID-19 pandemic — particularly the ability to claim advance payments of the credits — played a critical role in keeping many nonprofits afloat. Now, however, the IRS has begun to subject some employers that claimed ERCs to audits. Given the extended five-year statute of limitations for such audits, nonprofits that claimed the credits need to prepare. This article highlights what nonprofits should do to prepare for a possible ERC audit.

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How an energy-efficient building tax deduction could pay off for nonprofits

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Much of the Inflation Reduction Act signed into law in late 2022 contains provisions intended to combat climate change, largely through tax incentives. Such tax breaks aren’t usually relevant to the work of nonprofits. But for organizations constructing new facilities or adding improvements, the Act’s changes to one tax deduction could benefit them. This article reviews the benefits available under the Act. In addition, a short sidebar covers how the Act allows eligible organizations to receive certain tax credits — which otherwise would be of little use to nonprofits that pay no income tax — as direct payments from the IRS.

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It’s time to vote — Watch out for IRS limits on nonprofit political activities


The mid-term elections are near, and jockeying for 2024 elections isn’t far behind. That makes this a good time to review the IRS rules regarding Section 501(c)(3) organizations and political activities. This article reviews the rule and how noncompliance can lead to costly excise taxes and jeopardize a nonprofit organization’s tax-exempt status. A short sidebar discusses the concerns for nonprofits that primarily advocate on certain issues.

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NEWSBYTES

Study finds positive signs for the future of nonprofits

The past two years have been challenging for nonprofits, but the “2022 Nonprofit Technology Trends Report,” sponsored by Sage Intacct (a provider of cloud financial management), found encouraging signs for the future. For example, more than twice as many of the more than 900 nonprofit leaders surveyed (44%) saw more of a revenue increase in 2021 than in 2020 (21%). Of those organizations with higher revenues, 34% enjoyed increases of more than 25%. And giving was higher across all types of funders — individuals, corporations and governments.

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Data analytics — Using technology to meet your nonprofit’s goals


In today’s technologically advanced world, data rules. But simply having highly relevant information will be of little use if organizations don’t know what to do with it. This article discusses how organizations can harness the power of data by using it in day-to-day decision making and strategic planning, as well as providing stakeholders, donors and volunteers with up-to-date information about fundraising, programming and outreach.

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New accounting rule could bring change to nonprofits’ financial statements


A new accounting standard from the Financial Accounting Standards Board (FASB) appears on its face to apply only to financial institutions. But it could affect nonprofits that adhere to Generally Accepted Accounting Principles (GAAP). This article highlights Accounting Standards Update (ASU) No. 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This ASU requires earlier reporting of credit losses on receivables, loans and other financial assets, and expands the range of information considered in determining expected credit losses.

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Ways to diversify your revenue streams


Many nonprofits learned the importance of revenue diversification the hard way over the past two years. Unexpected reductions, or even elimination, of certain revenue streams had them scrambling to meet increased demand — or simply to stay afloat. This article examines how nonprofits can achieve the greater financial stability that typically comes through diversification of revenue streams. A short sidebar covers a few potential downsides of revenue diversification that each organization must assess to determine whether the benefits outweigh the costs.

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