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Enhancing Your Nonprofit Organization In A New World Norm

Posted on July 2021July 2021 by info

By Vivian Gant

During the height of the COVID-19 pandemic, the future was still very uncertain. Many nonprofits found themselves applying for government assistance, such as Paycheck Protection Program (PPP) loans, as they braced for continued negative financial impacts. Although the road ahead is still not completely clear, organizations are now looking to the future and considering how to ensure they are set up for success in both the near and long term.

For some organizations, this includes facing a very different challenge: considering how to use a surplus of funds, many of which came from an increase in contributions amid the pandemic as donors looked to support nonprofits’ missions. This leads to a completely different set of questions about how to maximize this advantageous position. The post-pandemic landscape is an opportune time for nonprofits to use these extra funds to re-invest not only in their organization but also their people and, ultimately, their mission.

Although there are a number of ways for nonprofit organizations to reinvest for growth, they should consider focusing on the following:

Enhance Cybersecurity

With cyberattacks on the rise, it has never been more critical for nonprofits to ensure they – and their information – are protected. Nonprofits have access to sensitive donor data, which can make them a target. Organizations should consult with experts to study their current security environment, locate vulnerabilities and make recommendations for improvements. These organizations can then upgrade their current security in order to reduce the chances of an attack, which can lead to diminished trust with donors and stakeholders.

Strengthen Tech Capabilities
As the pandemic taught us, technology helps us stay connected. Nonprofits can use this time to reassess the tools they have in place, those they added amid the pandemic and those they need for future success. Investing in tools that will allow the organization to operate in a hybrid work model, communicate with donors when they can’t be face to face and streamline internal operations will foster better communication and strengthen relationships. The connected workplace that became commonplace amid COVID-19 is not likely to go away anytime soon – in fact, nonprofit leaders should only expect to see an increase in digital tools moving forward. Investing soon and doing so strategically will ensure nonprofits are not left behind in a technology-first future.

Improve Internal Infrastructure

Enterprise resource planning (ERP) systems have come a long way. Nonprofits can reinvest in the organization by updating their current ERP systems, which can be used to manage day-to-day activities and streamline their internal processes. Upgrading to the latest ERP technology can assist not only with fundraising activities, but also with event management, online payment processing for donors, marketing efforts and more. ERP systems can typically also automate back-office functions, which can help to eliminate redundancies in the organization’s overall operations, helping it to stay focused on its mission.

Establish a Board-Designated Endowment

Another way nonprofits can utilize excess funds is to set up a board-designated endowment. This allows nonprofit boards to set aside funds specifically for board initiatives.

These funds can be invested with a trusted financial institution. To do so, the board should create an investment policy that outlines how the funds are to be invested and establishes what these funds are to be used for – which should align with the organization’s mission.

Invest in Human Capital

The pandemic was a trying time for employees. Compensation increases were likely limited during 2020 as nonprofits attempted to cut costs and save for the unknown, and a lack of in-person interaction left little room for team bonding or training opportunities. Investing in programs or events that promote team bonding or providing opportunities for ongoing education can help make employees feel valued and build trust and goodwill between leadership and staff.

In these unique times, nonprofits should be creative in ways that will help not only their mission but also their workforce. Financial decisions made by nonprofits during this time will likely have lasting effects for years to come, so thinking ahead about how to reinvest in your organization is key.

Support For Global Minimum Tax And New Allocation Rules Announced From G-7 Finance Ministers

Posted on July 2021July 2021 by info

The Group of Seven finance ministers on June 5 issued a statement in support of a 15% global minimum tax imposed on a country-by-country basis, and expressed a commitment to reaching “an equitable solution” on the allocation of taxing rights among jurisdictions.

The G-7 ministers, representing Canada, France, Germany, Italy, Japan, the UK and the U.S., met in London on June 4-5 to discuss economic initiatives to encourage deeper multilateral economic cooperation.

Pillars 1 and 2

The ministers endorsed the efforts being led by the G20/OECD Inclusive Framework to address the tax challenges arising from globalization and the digitalization of the economy and to adopt a global minimum tax. The OECD’s initiative centers around a two-pronged proposal issued in late 2019. Pillar 1 of the OECD blueprint would revamp tax allocation rules so that a portion of a multinational entity’s residual profit would be taxed in the jurisdiction where the revenue is sourced. Such an allocation would award taxing rights to market countries – broadly, those where a digital business’s users are located — on at least 20% of profits that exceed a 10% margin in the case of the largest and most profitable multinational enterprises. Some of those profits would be allocated using a formula rather than the arm’s length standard. Pillar 2 focuses on the implementation of a global minimum tax.

The announcement in essence declares the ministers’ support for both Pillars 1 and 2 of the OECD plan, and advocates for the notion of reaching agreement on both pillars in tandem.

The ministers vowed to provide international coordination to apply the proposed international tax rules and repeal the various digital services taxes that have proliferated in recent years.

Treasury Secretary Janet Yellen issued remarks following the close of the finance ministers’ meeting decrying the “global race to the bottom” whereby countries compete by lowering their tax rates.

Yellen lauded the G7 for taking significant steps by committing to a global minimum tax at a rate of “at least 15%.” She did not address the allocation of taxing rights– Pillar 1–in her comments, but at a subsequent press conference, Yellen acknowledged the agreement the finance ministers reached on that topic. Yellen added that the timing of implementation of the agreements remains to be worked out, and stated that “there is broad agreement that these two things go hand in hand.”

Time Frame

While achieving high-level political consensus on these international tax issues at the G7 stage is an important milestone, it is only the first step in a long process.

The next step in that process is the June 30-July 1 meeting of the OECD’s 139-member Inclusive Framework in Paris.

The finance ministers in their communiqué stated their desire to reach agreement on these proposals at the next meeting of the G20 finance ministers and Central Bank governors, scheduled for July 9-10 in Venice. This meeting is expected to yield at least “the outline of a deal,” according to former OECD Secretary General Angel Gurría.

The international meetings will culminate at an Oct. 29-31 meeting of the G-20 leaders in Rome, where participants may finalize the international tax plan.

Domestic legislation in each individual jurisdiction will then have to be enacted to implement any agreement reached by the G-20 and the Inclusive Framework. The timeline for this broad global enactment is uncertain.

SBA To Withdraw Forms 3509 And 3510

Posted on July 2021July 2021 by info

Any Paycheck Protection Program (PPP) borrower that has already received a request for Form 3509 or Form 3510 from its lender should contact that lender for instructions on how to proceed in light of reports that the SBA will withdraw the requirement for these loan necessity questionnaires.

Borrowers who have not yet received a formal request for the loan necessity questionnaire may not receive one.

In a statement dated June 23, Associated General Contractors of America (AGC) President Stephen E. Sandherr said that, after weeks of lawsuit negotiations with the U.S. Department of Justice (DOJ), DOJ had told AGC that SBA intends to withdraw Form 3509.

The SBA’s withdrawal of the loan necessity questionnaires was discussed June 24 on the AICPA’s Town Hall webcast. A replay of the webcast is available for free on AICPA TV.

Since November 2020, SBA has required Form 3509, Loan Necessity Questionnaire (for-profit borrowers) and Form 3510, Loan Necessity Questionnaire (nonprofit borrowers) from borrowers requesting PPP loan forgiveness of $2 million or more when aggregated with PPP loans received by affiliates. Form 3509 focused on the “good faith” certification that businesses had to make when applying for a PPP loan, but it asked for significant documentation about how the borrower fared after receiving the loan.

Until the SBA publishes official guidance, caution is advised and requests to complete the questionnaire should not be ignored. Typically, borrowers are given only 10 days to submit the completed form to the lender. Usually, the request for Form 3509/Form 3510 also includes a request for other supporting documents that the borrower was instructed to maintain in its files; that documentation might still be required, even if Form 3509/3510 no longer is.

The withdrawal of the loan necessity questionnaire in its current form may not change the SBA procedures regarding the audit of all PPP loans of $2 million or more. Therefore, documentation of all aspects of those loans, including necessity, remains essential.