nonprofits

Article Dean Dorton

Kentucky’s Employee Child Care Assistance Partnership (ECCAP) has to be one of the more interesting pieces of state legislation to appear in some time. It helps parents cover the high (and fast-rising) cost of child care. At the same time, the law helps Kentucky companies offer generous child care subsidies to attract and retain top talent. ECCAP looks like a smart piece of public policy that benefits just about everyone—and it’s just beginning to take effect now. This update has all the details.

The Basics of House Bill 499

When Kentucky employers help their employees pay for child care costs, ECCAP chips in matching funds. For example, if any employer offers a $200 a month subsidy, the state would provide $200 more, and the employee would get $400 each month (paid directly to the child care provider). The program was designed to help Kentucky parents, particularly working mothers, stay in the workforce rather than reducing hours or leaving jobs to care for children.

The program has several stipulations to be aware of:

  • Qualifying Child Care Providers – To qualify for funds, employees must send their child to a licensed child care provider that participates in the KY ALL STARS program. Some care providers aren’t licensed or forego the program, in which case the state would not provide matching funds.
  • Sliding Fund Match Scales – Employees that make less than or equal to the state median household income (SMI) of $77,700 will receive 100% matching funds, but the match goes down on a sliding scale as incomes rise higher above the SMI. At the low end, high earners with an income above $139,860 receive a 50% match.
  • Program Duration – ECCAP was designed to be a one-year pilot program, and the state has allocated $15 million in funding. Once the funding runs out or the program expires, whichever comes first, the matching funds will go away.
  • Participation Requirements – Employers must apply to participate in ECCAP by completing an application (available here), including details about the applicable employees and their child care providers. The program began accepting applications in April and expects to approve all applications within 30 days of receiving them.

Ready to get Started?

Talent gaps and labor shortages are a problem for businesses across Kentucky. At the same time, child care costs and the demands of balancing parenting life with professional life are a struggle for families statewide. ECCAP addresses both those issues, so it’s no surprise that interest in the program is expected to be brisk.

The cost of the ECCAP may be worth its savings in employee retention. Access the ECCAP website here to learn more about the program and begin your application.

Make Dean Dorton your partner for reliable, best-practice accounting and business advisory services, data optimization, compliance requirements, and leveraged technology. Our work frees you up for the work that makes you grow!

Article Dean Dorton

Nonprofits and any tax-exempt organization are now eligible for major financial incentives newly offered by the federal government.

Previously, businesses and individuals were eligible for tax credits (substantial in some cases) if they invested in renewable energy sources like solar power or sustainable technologies like electric vehicles. The tax credits offset the capital costs of these projects. And by all indicators, they created a compelling incentive for people to “go green,” pushing society in a more sustainable direction through effective public policy.

There was only one problem: organizations that didn’t pay taxes couldn’t, by definition, receive tax credits. The incentive was off the table.

The Inflation Reduction Act (IRA), which took effect at the beginning of 2023, changes all that. Nonprofits can now take advantage of the same financial incentives as everyone else—plus additional ones exclusive to 501(c)(3) organizations.

Whether or not your nonprofit has been looking to go green, this opportunity deserves your close consideration.

New Incentives Now Available

A key goal of the Inflation Reduction Act is reducing America’s greenhouse gas emissions and accelerating the transition to cleaner energy sources. To advance that objective, the new law offers 12 disparate credits that lower the barrier for things like purchasing electric vehicles or installing solar panels. The intent is to make these initiatives more attractive to more entities—including nonprofits in particular. These credits are designed to be accessible to tax-exempt entities as refund elections on their Form 990 tax returns.

The IRS will now refund nonprofits at least 30% of the cost of solar projects, for example. Other entities receive this incentive as a tax credit; nonprofits get it as a direct payment. That means if a church spent $100,000 installing solar panels, it could get $30,000 back if expenses are incurred in alignment with the program and the appropriate election is made on their Form 990 for the year inclusive of the work.. And that’s just the start.

Nonprofits may be eligible for a number of additional (and substantial) incentives. For example, if the solar project uses materials primarily produced domestically, that adds another 10% to the payback. Building in certain areas deemed disadvantaged qualifies for another 10%, with identical increases for building in low-income communities and federally subsidized affordable housing..

It’s not unrealistic for the average nonprofit to receive one or even two extra incentives, in which case the IRS would cover half the total cost of the project (exemptions apply). When you also factor in the long-term cost savings of using solar panels rather than purchasing energy from the grid, these projects may pay for themselves on a surprisingly short timeline.

Making Green by Going Green

Nonprofits stand to gain a lot by embracing clean energy—not just in the form of direct payments but also in reduced utility costs, new program opportunities, and a more positive impression among stakeholders. That said, nonprofits shouldn’t proceed with energy investments without considering the situation carefully. There are financial, logistical, and strategic issues unique to each nonprofit that require a deep dive before doing anything.

With ample experience in the nonprofit world, Dean Dorton can help guide that process.

What’s possible for your nonprofit? Contact us to find out.

Article Dean Dorton

Written by Kaydee Ruppert, Nonprofit Accounting and Financial Services Manager

Last month the Biden administration announced a limited-time application window for PPP loans for nonprofits and other businesses having fewer than 20 employees. Applications received no later than Tuesday, March 9 are to receive top priority! The final deadline for PPP applications is currently March 31, 2021, but applicants should be aware that many lenders stop taking applications in advance of the final day.

The U.S. Small Business Administration (SBA) offers details regarding eligibility and applications for various COVID-19 relief options, including PPP loans. The loan program is better defined than it was initially, but nonprofit organizations should take note of the revised eligibility requirements for both first-time and second-time borrowers. This article focuses on the “25% revenue reduction requirement” for second-time borrowers.

Financial Eligibility – Gross Receipts

Nonprofit organizations that received a PPP loan previously may qualify for a second loan if the organization can demonstrate a 25% reduction in gross revenue between 2019 and 2020 or comparable quarters in 2019 and 2020. There are many revenue items of which nonprofits should be aware, including a change in the value of investments or endowments, and beneficial interests in other organizations or funds.

The Consolidated Appropriations Act, 2021(“Act”) states that, for purposes of determining PPP eligibility for nonprofit organizations, the term “gross receipts” means gross receipts within the meaning of section 6033 of the Internal Revenue Code. An analysis of the guidance related to the definition and the reduction calculation suggests that all gross receipts, with the possible exception of unrealized gains or losses and in-kind gifts, should be included in the calculation of gross receipts. The Act specifically excludes previous PPP receipts.

Although revenue can be calculated using a cash, modified cash, or accrual method of accounting, the same method must be used for all periods being compared. Total gross receipts considered in your determination of eligibility cannot be decreased for the initial cost or other basis of investments or assets that were sold during the period, and it doesn’t matter if the sale proceeds were reinvested or deposited for operations. The gross amount from sales of investments or assets must be included. Likewise, if an organization has inventory that is sold, the cost associated with what is sold cannot decrease total gross receipts for the period. While there is no guidance that specifically addresses certain other revenue items, such as a gain or loss related to a beneficiary interest in another organization or fund, borrowers should exercise judgment and consult their financial advisor or lender for further guidance.

If a PPP loan is for $150,000 or less, and all other parts of the application are properly completed, a loan may be awarded solely on the applicant’s affirmation of eligibility, but evidence of eligibility is required when the borrower applies for forgiveness. Nonprofits unsure of what to include in their calculation of “gross receipts” should resolve those questions before certifying the application is accurate and completed in good faith.

Financial Eligibility – Quarterly Comparisons

Nonprofits can evidence the required 25% reduction in gross receipts, and thus meet the financial eligibility requirements for the loan by comparing any individual calendar year 2020 quarter to the same quarter in 2019. In addition, an annual comparison is acceptable at the election of the borrower. It’s important to note, however, that the SBA has been silent to date on the degree to which it might review the comparative information for completeness, accuracy, and consistency.

Organizations using an accrual basis of accounting should be aware that the financial statements relied on each month or quarter may include estimates and assumptions or omit some elements of income altogether because the information is simply not available when the period is being closed. This is a common and acceptable accounting practice for interim financial record-keeping. These estimates are later “trued up”, so totals being reported via IRS Form 990 are accurate and comparable with other like organizations.

Simply running the quarterly revenue results for all of 2019 and 2020 from your accounting system may not give you results by quarter that include all gross receipts, free of estimates or assumptions. While it may be acceptable to compare quarters that were consistently prepared using interim estimates, the documentation to support this comparison may differ as there is no standard format for this documentation. Proactively engaging your lender on required documentation may prevent an applicant from erroneously assuming eligibility or being unprepared to produce the documentation when applying for forgiveness.

Dean Dorton has been closely monitoring the relief opportunities available to nonprofit organizations in this time of crisis. We are here to provide consultation, collaboration, or confirmation in your journey to sustainability.

Did you enjoy this article? Learn more about the author by clicking the link below.

Meet Kaydee Ruppert

Kaydee Ruppert, CPA, MSA
Nonprofit Accounting and Financial Services Manager
kruppert@deandortonstg.wpenginepowered.com • 859.425.7730

Article Dean Dorton

It just isn’t enough to focus solely on your mission, or your expertise in today’s market. To stay relevant in business, you also need to focus on using modern technology.

If you’re still using an outdated, on-premises style system like Great Plains, you may be spending too much time and too many resources gleaning insights from your data. That outdated type of set up can, in time, leave you scrambling to keep up with competition.

If your teams suffer inputting mountains of data into Excel, or other disconnected systems, take longer to close the books, or if you don’t have updated company performance at your fingertips, there’s an easier solution.

UPLIFT YOUR MODERN ACCOUNTING TEAM

When teams move from Great Plains to Sage Intacct, a best-in-class cloud-based financial management solution, accounting teams can work faster and smarter.

Executive teams, finance, and stakeholders can work with current performance metrics and reporting data from customizable dashboards.  Sage Intacct’s flexible electronic workflows mean a lot more decision-making can happen faster, which just can’t be done with static, in-house based systems.

WORK FASTER WITH MORE AUTOMATION

Automation for a great number of manual tasks allows frees time up for more focus on strategy. Sage Intacct’s configurable architecture means your company can set up transaction tracking, electronic approvals and a number of operational processes to suit your unique structure, to save time, reduce errors, and focus on growth.

MORE VISIBILITY INTO INSIGHTS

No matter your metrics, and how frequently they change, working in the cloud means you can have access to your company or organization’s performance, with to-the-minute data accuracy, from wherever and whenever you need it.

With a powerful cloud-based financial management solution like Sage Intacct, your company can have access to not just financial, but operational data as well. This offers your key players a clearer direction for stronger growth strategies and as many performance updates as they need.

KEY EXPANSION TOOLS

As your company grows, on-premises financial management software often cannot streamline your workflow by integrating with the other software solutions you rely on. In addition, when it comes to setting up entities, working in the cloud offers a faster, easier way.

Sage Intacct offers integrations with many other key solutions, so you won’t need to reinvent the wheel to streamline your workflow and boost accuracy. And as your business grows, Sage Intacct’s fast entity setup feature means your solution will scale with your business today, and in the days to come.

“With Sage Intacct, we have a true cloud system that streamlines our financial processes and gives a wide variety of people in our organization real-time visibility into key financial metrics from anywhere.” – Jennifer Sharp, Senior Accounting Manager, IslandWood

If your business is growing and you’re still using Great Plains, contact us for help in more easily scaling your financial processes with your business.

9 REASONS SAGE INTACCT BEATS DYNAMICS GP

Looking to accelerate growth for your business, but your on-premise solution is stifling those possibilities? Check out our free whitepaper to discover 9 reasons Sage Intacct is blazing past Dynamics GP when it comes to financial management capabilities.

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