Impact of Wayfair Supreme Court Decision on Nonprofit Organizations
Mar 12,2019
Sales tax is imposed upon retail sales of tangible personal property and taxable services in 45 states and the District of Columbia. Each state determines the circumstances under which a sales tax is imposed on the purchaser. Purchases by nonprofit organizations are exempt in most of the states, if the tangible personal property or taxable services are used or consumed exclusively for the purposes for which the organization was established. The states usually require each legal entity to register as a nonprofit entity with the state to receive state tax-exempt status. Upon state authorization, the entity can provide a state-approved exemption certificate to its vendors in order to purchase goods and services without paying sales tax. While nonprofit organizations can make purchases free of sales tax, their sales of goods and taxable services are usually taxable. One could argue that these sales ultimately benefit the organizations’ nonprofit activities but most states...
Attracting Donors in Light of Tax Reform
Mar 01,2019
Following the enactment of the Tax Cuts and Jobs Act (TCJA), nonprofits have expressed concern about decreased contribution revenue because of changes in the new tax law, such as an increased standard deduction. There is still opportunity to attract donors to support your mission. Charitable giving can provide not only tax deductions, but also the satisfaction of doing good. On top of that, it’s one of the most flexible tax planning tools because donors can control the timing of their deductions to best meet their needs. Background: Prior to 2013, taxpayers could not directly transfer funds tax-free from an IRA to a charitable organization. Instead, individuals were required to pay tax on the distribution, regardless of their charitable intentions. In effect, the tax law worked against retirees who wanted to use IRA funds for charitable donations but no longer itemized their deductions. One opportunity available to nonprofits is the qualified...
Doug Shipman, CEO of The Woodruff Arts Center, Talks Music Investment Act Amendment
Feb 27,2019
Georgia’s entertainment industry has enjoyed explosive growth, in large part due to our state’s generous tax credits and incentives. Those tax advantages did not spill over into the music side of the performing arts until the Georgia Music Investment Act (HB 155) was passed in January 2018. While the goal was to bring investment and music production to Georgia, there were weaknesses in the original legislation that kept it from being the boon to the local economy that it could be. On February 19, 2019, several Georgia legislators proposed an amendment to the Georgia Music Investment Act, HB 347. If passed, it will provide a welcome boost for the industry – and the state. Highlights of the amendment include: Transferability and salability of credits Increase in percentage of production expenditures considered for tax credits (from 15% to 30%) Lowering of thresholds Removal of the 12-month period from the definition of...
Sales and Use Tax Exemption Applied for Georgia’s Fine Arts Organizations
Jan 29,2019
On January 15, 2019, the Georgia Department of Revenue issued a letter ruling on the sales tax exemption for certain ticket sales to fine art performances. The sales of tickets to fine art performances held in a venue owned and operated by a §501(c)(3) organization are exempt from Georgia sales tax even if the nonprofit organization co-presents the performances with a for-profit organization. The sales tax exemption (in effect until July 1, 2020) applies to the sales of tickets, fees or charges for admission to certain fine arts performances or exhibitions in Georgia. The exemption is to be applied to §501(c)(3) organizations whose mission is to advance the arts in Georgia, and provide arts, educational, and culturally significant programming and exhibits for the benefit and enrichment of Georgia citizens. For purposes of the exemption, “fine arts” means poetry, photography, ballet, dance, opera theater, dramatic arts, painting, sculpture, ceramics, drawing, watercolor,...
Are Grants Subject to Revenue Recognition?
Nov 06,2018
Nonprofits received long-awaited clarification on a key accounting question from the Financial Accounting Standards Board. As discussed in the article on page 1, the FASB released a final accounting standards update (ASU), Not-for-Profit Entities (Topic 958): Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made. The ASU aims to standardize how grants and other contracts are classified across the sector, as either an exchange transaction or a contribution. Classifying grants as either a contribution or exchange transaction is the first step in implementing revenue recognition. The clarified guidance in ASU 2018-08 aims to help nonprofits complete that first step in a consistent way across the sector. This article outlines a practical example of the process to evaluate a grant under the new ASU. Practical Example: How to Evaluate a Grant Under the New Guidance Description of ‘Nonprofit A’: A large research association that specializes in space exploration. Its mission...
5 Things to Know About Substantiating Donations
Nov 06,2018
There are virtually countless charitable organizations to which you might donate. You may choose to give cash or to contribute noncash items such as stock, personal property or real estate. Whatever you donate, once you do the good deed, you owe it to yourself to claim a tax deduction (provided you itemize rather than taking the standard deduction). One requirement is documentation. And precisely what you’ll need depends on the type and value of your donation. Here are five things to know about substantiating charitable donations: Cash contributions of less than $250 are the easiest to substantiate. A canceled check or credit card statement is sufficient. Alternatively, you can obtain a receipt from the recipient organization showing its name, as well as the date, place and amount of the contribution. Bear in mind that unsubstantiated contributions aren’t deductible. So you must have a receipt or bank record. Noncash donations of...
Nonprofits’ New Commuter Headache: Tax on Transportation Benefits
Oct 09,2018
Does your tax-exempt organization provide transportation and parking benefits to employees? If so, you may have another commuter headache: a new tax. Under the tax reform law, a provision was added to the Internal Revenue Code that will likely require many tax-exempt organizations to pay unrelated business income tax (UBIT) on transportation benefits. Certain costs of qualified transportation, including transit passes, qualified parking and more, will now be taxed as unrelated business income at 21 percent. The law added the following provision to the Internal Revenue Code: Internal Revenue Code (IRC) Section 512(a)(7): Increase in unrelated business taxable income by disallowed fringe. This provision was an attempt to put exempt organizations on the same footing as taxable organizations that will no longer be able to deduct these costs as a result of the tax reform law. The provision is effective for amounts paid or incurred after Dec. 31, 2017. Under...
Sean Taylor’s Article Published in Nonprofit Information
Jul 11,2018
With the passage of the Tax Cuts and Jobs Act (TCJA) this year, nonprofits are steeling themselves for increased competition for decreased donations – an anticipated result of the change in charitable contribution deduction rules. Some nonprofits looking for an edge are exploring the option to accept cryptocurrency for donations. The most commonly referred to cryptocurrency is Bitcoin, but there are numerous currencies available. While adding this as an option for donors may increase the organization’s reach and its reputation for being on the leading edge, it comes with some cautions and important safeguards. Read Sean’s full article here.
Survival Tips for the New Era of Fundraising
Jul 09,2018
For nonprofits looking to stand out in an increasingly crowded giving landscape, experimenting with new giving models and integrating new technology into your current campaigns could help you stand out from the crowd. If the bulk of your fundraising budget is still directed toward age-old direct mailing campaigns, consider diversifying and exploring a few of the following emerging trends. Match Donor Behavior What influences someone to donate to an organization? While many Americans make regular contributions to priority causes, successfully converting new donors takes a combination of two elements: (1) A compelling case for why your organization’s work matters, and (2) a clearly articulated value proposition, or the impact of their individual donation. But a poignant campaign is only half the battle. If your organization relies solely on wire transfers or other slow processes to accept donations, you’re unlikely to see money pouring in. Nonprofits that limit the barriers to giving and...
Mission Matters
Jul 09,2018
A mission statement is more than mere words plastered on a website or at the top of an annual report – it represents everything an organization stands for and all that it can accomplish. It drives the organization and its work. There is a cyclical ad infinitum relationship between a nonprofit organization’s mission, its impact, and its fundraising efforts. Developing a powerful mission statement is critical to clarifying: the core purpose for why the organization exists and its goals what makes the organization different than the other 1.5 million nonprofits operating in the U.S., and directional focus, serving as a guidepost for decision-making to keep actions on-point and avoid mission creep While a powerful mission is critical to a nonprofit’s success, mission alone won’t bring funding to your door. Prove Your Worth How is your organization delivering on its mission? With fewer donors giving to fewer organizations today and donor retention declining, it’s more important than ever...

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