Program Income

Three people (Two women taking notes and one man in a suit) sit around a table with a laptop, notebooks, and a graph. One of the women is seated in a wheelchair.

There are very specific rules (in Health and Human Services Uniform Administrative Requirements in 45 CFR 75) about program income, including the costs of generating income and how that income may be used.

First, if your award (or approved budget) allows it, the costs of generating program income can be deducted from total program income in determining the net amount (which may be negative as you are getting underway).

The default for program net income is that it must be deducted from total allowable costs to determine the net amount you can be reimbursed for under your federal award.

However, if your HHS awarding agency approves, program net income can be used to expand your services.  In other words, you can incur additional costs for similar purposes using the program income.

If you continue to receive income after the period of performance of the federal award, by default, you can use that income at the discretion of your agency unless the federal awarding agency specifically states that income, after the period of performance, must be used to reduce the federal share of cost or to expand your program.

John F Heveron, Jr. Principal, Heveron and Company CPAs

Be particular about Consumer Control

Consumer control is the foundation of Independent Living, and permeates the board, staff and management of Centers as well as the Statewide Independent Living Council (SILC). The requirements are clear:

  • More than 50% (51% or more) of the board members of a Center for Independent Living must be individuals with significant disabilities.
  • More than 50% of the management staff of a Center (whether that is a single person in the Executive Director, or a management team) must be individuals with disabilities.
  • More than 50% of the other staff in a Center must be individuals with disabilities.
  • More than 50% (a majority) of the voting members of the Council must be individuals with disabilities NOT employed by any State agency or center for independent living.

These requirements make it clear — Independent Living isn’t about professional staff as much as it is about people with disabilities forming their own responses to what independence looks like in their community. There should be no hesitation if the CIL is able to have 60% or 80% or 100% people with disabilities in these areas, but absolutely individuals with disabilities MUST form a majority in every component of IL in your state. This is about consumer CONTROL! That word is used for a reason — because unless people with disabilities control the work of both CILs and SILCs, we have missed a key requirement of IL.

There is an area that appears to be a sticking point in some states. Not all disabilities are visible, so if you can’t tell if someone has a disability, you need to ask them. This is definitely not a problem with the board and the council, but asking an employee to disclose a disability is a little touchier, and you cannot ask a prospective employee if they have a disability. What to do? I suggest that you are clear in your interview with prospective employees that you are looking for a qualified person with a disability and if they aren’t aware of disability history and philosophy, provide the short version. Then ask, “What is your personal experience with disability? How do you think you will fit in at a consumer controlled organization?”

Sometimes I hear the complaint that members of the board, or the CIL ED, or council members are not “disabled enough” to serve in their role. First, note that only the members of a Center’s board are required to have a “significant disability”. That term “significant” is not used in any of the other requirements. As a person whose disability is usually not noticeable, I am sensitive to this concern. Certainly we want the community to be able to see that we are consumer controlled, and for that to happen we have to have a fair representation of visible disabilities, but that is not a requirement. When someone asks me about whether a disability is “enough”, my response is, does the person consider themselves part of the disability community? Do they interact in the world as a person with a disability in their work, their home, their community? If not, then they may technically meet the requirement but have missed the spirit of the law. We are community when we come together in our disabilities. We are strong because we are many and we represent a cross-section of disabilities, both visible and invisible.

Here is the toughest part of this conversation. You and I don’t get to decide if someone else is “disabled enough” to count. Each person makes their own declaration. We do not, and will not, require medical proof of disability. While this may allow for people claiming a disability to claim some power, I hope our community is strong enough to weather such actions and continually shift the control of the IL Network firmly to individuals with disabilities.

Is it a conflict for the CIL rep to chair the SILC?

I want to say first that it is not a conflict of interest for a CIL staff member to serve in any office on the SILC, including as chair. The regulations only require that the chair be a voting member, which is the case for all CIL staff members. Not only is it NOT a conflict of interest, but the Rehabilitation Act requires a CIL representative for a reason, and that is to assure that the council is acting in a way that shows they understand Independent Living and the role of Centers. Title VII of the Rehabilitation Act requires, in Section 705(b)2(A) among its voting members, at least 1 director of a center for independent living chosen by the directors of centers for independent living and Section 705(b)2(B) “among its voting members, for a State in which 1 or more centers for independent living are run by, or in conjunction with, the governing bodies of American Indian tribes located on Federal or State reservations, at least 1 representative of the directors of such centers.” This is the first required member(s), I think at least in part because of the importance of a CIL voice on the SILC.

Section 705(b)4(A) requires that the Council “be composed of members — (i) who provide statewide representation; (ii) who represent a broad range of individuals with disabilities from diverse backgrounds; (iii) who are knowledgeable about centers for independent living and independent living services; and (iv) a majority of whom are persons who are— (I) individuals with disabilities described in section 7(20)(B); and (II) not employed by any State agency or center for independent living.”

Note two things in this section of the law. First, ALL members appointed are to be knowledgeable about CILs and the IL services from Title VII of the Rehabilitation Act. Second, while members who work for a CIL cannot be counted in calculating the majority, that membership is not limited in any other way.

Also note that a majority of CILs in the state must agree with the SPIL. Again, evidence of the strong role that CILs are expected to play in collaboration with the SILC.

I am not saying there could never be a conflict of interest. If a specific issue came up where one center was favored over another in some way, a CIL representative may need to express the possible conflict and abstain from discussion/voting. Interestingly enough, depending on the bylaws, the chair often does not typically get a vote except to break a tie, so a CIL executive director who serves as chair might actually have less influence rather than more. But unless one CIL has some advantage over all the others, there is not a conflict. The role of the CIL representative is to make sure the voice of the CILs is heard by the council.

Which brings us back around to the question – can a SILC decide to exclude CIL members from serving on the executive committee? I strongly urge against such a policy or such language in your bylaws. The council is a body that includes at least one CIL representative selected by the CILs, and then may have other members from CILs as well. The council is a key focus point for the discussion of independent living in your state, both in the development of the SPIL and in monitoring its implementation. The CILs are critical partners in that function.

That said, I regret to tell you that it is permissible for the SILC to adopt such a policy, but I strongly discourage it.

COVID-19 awkwardness -some social thoughts

It is hard to believe most of us have been limiting social contact and working from home for more than six months. All our emergency preparedness didn’t prepare most of us for this weird situation.

And now we are entering a new phase of awkwardness – resuming changed social contact at the office and in the community. Are you used to hugging when you haven’t seen co-workers for awhile? Do you usually shake hands when you greet a consumer? Now we don’t know quite how to greet each other. Hugs and shaking hands are out. I hesitate at elbow bumps because we are coughing into our elbows, right? If we are true to six foot distancing most of us (except maybe Michael Phelps) can’t touch each other at all, not even a fist bump without getting closer. So what do we do? Wave? Maybe. And laugh a little with each other as we discuss our new social rules.

Let’s give each other permission to get used to each other again. If you are requiring masks, be aware that facial expressions are only partly visible unless you are using clear masks. Take care to listen carefully and speak carefully. Even people you have known for a long time may be responding differently than in the past, or you don’t have the facial cues you were used to so misinterpret.

Be aware that returning to work can be overwhelming, mixed with excitement and anxiety for you and your co-workers and consumers. And for parents who have the added responsibility of protecting their children in school and care situations, there is added confusion and tension. Each of us has our own coping mechanisms. For some people it is to shut others off, while other talk more than usual or laugh a lot or miss the jokes or blow their stack over little things. Some people get caught up in a frenzy of activity while others are a little dazed. If we approach this return to the office understanding that our coworkers may be feeling stressed or vulnerable, we will be more understanding and more patient with each other.

We will adapt to the new normal. Hopefully one day we will be able to lift some or all of the current restrictions. In the meantime let’s be gracious to one another. If someone reaches to shake your hand remember it is probably a habit. Let’s allow each person to set the social distance they are comfortable with — and it is okay to back away from contact. Then talk about it. And don’t be hard on yourself or your coworkers and consumers. We will figure this out.

As you return to the office…

As your communities open up following the initial closures due to COVID-19, some centers have begun to open their doors, or at least open access to the Center a little bit. Here are some practices we are seeing (in keeping with the local requirements of course).

Individual wearing a mask is posting a sign that says
“OPEN, Business as New Normal”
  • The center has invested in the needed equipment to work from home effectively, and the offices remain closed. Some policies specify that they will not reopen until a vaccine is readily available. Services are offered remotely and consumers have been equipped or connected with the technology to participate in independent living skills classes, individual appointments, peer groups, etc.
  • One or two staff are returning to the office to handle face to face appointments in urgent situations. Notice that services on site are few, and by appointment only. Masks are worn, surfaces are regularly disinfected, and there is access to UV light to disinfect cell phone, keys or other high-touch items.
  • One or two staff are in the office daily to manage phone calls, distribute mail and if needed respond to it, and keep the lights on. The office is still closed to the public.
  • Half of the staff are in the office and use a rotating schedule so that staff can socially distance. Screens have been added at reception and between cubicles. Lobbies have been reconfigured to allow for social distancing. Masks are worn. Staff are responsible for cleaning all the surfaces they touch. A janitorial contract provides regular deeper cleaning. If consumers are seen it is by appointment only.
  • Assistive technology/durable medical equipment loans or gifts are set up during phone or email contacts, and are delivered without direct contact — through a door at either the person’s home or the office. Instructions for use of equipment is demonstrated, usually by video call.

Where is your center in this process? Share any creative or interesting approaches you are taking to reopening. Use the comment option below.

Closing in on year-end — what you should do now

Image of financial report, calculator and pencil

Your current federal Part C grants are winding down for the year. By September 29 you will have encumbered any remaining funds, or they will be absorbed back into the U.S. Treasury. (You won’t see them disappear from your account right away, but you can’t use them.) Some of you have spent less than usual of your Part C federal dollars because some staff have not been working or have transferred to CARES Act funded work, vacant positions have taken longer to fill, travel is reduced, utilities in the office have been reduced, etc. If you haven’t already, you need to figure out NOW what funds are unencumbered, and if you have a need for items that will support the purposes of the grant, you should purchase them now. A few caveats:

  • You cannot save or carry over Part C dollars except to pay for expenses encumbered during the current year.
  • You cannot use these funds to pay down your debt.
  • Any expense of $5,000 or more for equipment or building improvement requires prior approval from your Program Officer at ACL.
  • Your financial statements are kept on an accrual basis. This means you cannot pre-pay expenses but must charge them when they are utilized. They will be accrued to when the funds are used.
  • You can encumber funds during the current fiscal year and pay them from this year’s funds even if the bill doesn’t come until after September 29, the last day on your grant.
  • If items are backordered but you charged them during this fiscal year, the expense is typically allowable even though the item doesn’t arrive until next fiscal year. (Does anyone else feel like backorders are much more common than they used to be?)

Can volunteer board members be paid?

An older woman stands at the head of a table in a business setting. Around the table are a professional woman in a red wheelchair, a black man in a suit, a blond woman and a dark haired woman, and an older white man in a suit.

Question: Is it possible to pay board members a $100.00 per meeting stipend as a means of encouraging board membership?

A board member typically is not paid by a non-profit as a provision of serving on the board without a conflict of interest. You would have to check your secretary of state’s office to see if that is true in your state. You will also want to check your bylaws, which typically prohibit this. It is considered best practice by the IRS not to compensate your board members and if you do, you have to report that on your annual 990 filing. If they are paid more than $600 a year you would need to file a 1099 form for them. The IRS does consider “reasonable” compensation to be allowed, although they do not define what is reasonable.

There are some things you can pay board members for. You can provide them with mileage or other reimbursement for costs of attending the meeting or representing your organization in the community. You can provide them with memberships to professional organizations like NCIL and APRIL. You can provide them with materials related to representing your center in outreach, like business cards or a notebook or portfolio of information, and with polo shirts from the organization so they can represent you in the community.

Probably the area of greatest concern is that board members that receive compensation for their services as board members can lose immunity in lawsuits if your state protects volunteer board members in its Good Samaritan Act or similar law.

In the case of the SILC, board/council member compensation is addressed in Section 705 of the Rehabilitation Act as amended:

(f) COMPENSATION AND EXPENSES.—The Council may use available resources to reimburse members of the Council for reasonable and necessary expenses of attending Council meetings and performing Council duties (such as personal assistance services), and to pay reasonable compensation to a member of the Council, if such member is not employed or must forfeit wages from other employment, for each day the member is engaged in performing Council duties. 29 U.S.C. 796d

How are you planning for the future? Has your “roadmap” changed?

I am from an older generation. I grew up loving maps, paper maps that I could unfold, refold to show the part I wanted, and then determine our route. We had a drawer of them for all our hoped for destinations. I would carefully unfold them on a large table and check out all the landmarks we wanted to visit on our way from home to our destination,. There was usually an index of tourist type locations. We would use highlighters to mark the map. Yellow for the preferred route. Orange for the landmarks.

A map, whether digital or printed, can be used to see all the possible routes from your home or starting point to all the desired locations so that you can plan. And then the map becomes the plan, and you move along your desired route, following the plan you laid out. If you are taking a long trip, you need to identify when/where you will stop for the night and how many days you have for the journey. Even if you are detailing a short trip, you will plan for stops along the way. You need to know your starting point and ending point for each goal.

How a Center for Independent Living plans for future is the development of a roadmap. Your mission and vision identify your destination. Your goals and the steps to accomplish them are how you get there. You determine the length of the trip — a three year or five year plan are typical (three years because that is expected of CILs by regulation) but sometimes a more detailed, shorter time frame is needed for a specific project. You decide how detailed the written plan or map is. Are you noting outcomes for a goal, or are you capturing in detail the steps you anticipate to complete that goal? There is more than one way to plan.

But plan you must. If you don’t have a plan you run the risk of failing your mission and vision because your CIL is lost in the day to day without planning the journey. During this pandemic, planning may or may not take place at a traditional “retreat” for staff or board or consumers or all three. Still, you need a written plan that is known by the board, staff and those you serve; one that everyone buys into, that will guide you into the future.

While you are in the business of planning, don’t forget your own disaster planning, and how your city, county and state include people with disabilities in planning. As many of us learn when there is crisis, we are still struggling with gaps in disaster planning in our community. Your center may want to plan how you will interact with and influence local disaster plans. Here is a podcast to provide you with some disaster planning ideas.

Here are some resources with ideas for planning:

Did you receive a PPP loan?

by John Heveron, Jr. Principal, Heveron and Company CPAs, Rochester NY

If you received a Paycheck Protection Program (PPP) loan, your next objective is to apply for forgiveness.  However, there are still several unanswered questions about forgiveness, so the wisdom is to wait until later in the year to complete the forgiveness documents.

  • The expansion of the forgiveness timeframe from 8 weeks to 24 weeks means that many nonprofits will be able to receive full forgiveness with payroll only.
  • SBA’s questions and answers on loan forgiveness reductions give examples of the impact of salary and hourly wage reductions on the amount that can be forgiven.
  • Recent updates to the forgiveness questions describe how a lender will be able to confirm the amount of any EIDL loan advance (notice advances are not repayable but do offset PPP forgivable loans).  Also there is guidance for lenders on how to handle any remaining PPP loans that are not forgivable.  These amounts generally get rolled into two-year or five-year loans.

There have also been some other useful insights and recommendations based on the uncertainty created by the pandemic:

  • For example, how do you report the PPP loan in your internal financial statements or your year-end financial statements if you have a fiscal year-end?  Assuming the forgiveness has not been approved, the options for reporting are to treat the amount as a loan or as a “conditional contribution”.  Treating it as a conditional contribution means that we expect it to be forgiven but not all of the criteria for forgiveness have been met at the time of the financial statement, so the amount is recorded as a liability.  Conditional contribution seems to be the preferred method.
  • Expenses that are paid for with PPP funds cannot also be charged to grants.  This means that if you have federal or other governmental reimbursement of expenses for your programs, you cannot claim reimbursement for payroll or other amounts paid for with PPP funds that are forgiven.  This may add some accounting complexity
  • Another recommendation is to prepare budgets at different levels of activity based on the likely scenarios for your organization.  For example, will you be open and operating, will you be operating virtually or will there be a blend? Prepare budgets under each of these scenarios.
  • There is also a suggestion to have a response prepared in case anyone questions why you took PPP funding.  Some organizations were criticized for doing that and it seems wise to be prepared with an explanation.
  • Another observation is the need for improved automation and document storage and retention. 
  • You may have heard of an issue that is raised when somebody lives in one state, and works for an organization in another state.  They are generally considered employees in the state in which they are working.  What happens when they start working from home?  New York says that they would still be New York workers, even if they operated from home outside New York.

Nonprofit and business workers talk about meeting fatigue, so thought leaders in this area confirm that best practices include fewer meetings that are long, or large, or back-to-back. 

  • Microsoft Teams observed that with normal meetings there is always a little break between meetings.  Virtual meetings should do the same.  Best practices are to keep meetings short and small with breaks between meetings
  • There were actually more one to one meetings. They facilitate mentoring and improve efficiency because project objectives can be discussed and made clearer.
  • There also needs to be a proper balance between work time flexibility, and the need to collaborate among team members.

Protecting Nonprofits from Catastrophic Cash Flow Strain Act:

  • This legislation was signed into law in August and it clarifies that nonprofit organizations that self-fund or self-insure their unemployment do not have to reimburse their state for 100% of the unemployment and then wait for reimbursement for 50% (which is going to be paid by the federal government under the CARES Act).

Breaking news

Updates to Uniform Guidance Issued

On August 13, updates to the Uniform Guidance were published in the Federal Register.  Generally these updates are effective November 12, 2020 with some limited exception for amendments that are effective immediately.

One important area for organizations with procurement policies is section G which confirms increased procurement thresholds.

There are also updates to some definitions including period of performance and some revisions to the pass-through entity requirements. (With regard to Part B, the Designated State Entity is a pass-through entity.)

Here is the link: