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
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. https://www.ilru.org/podcast/show-08-including-people-with-disabilities-emergency-planning
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.
There are resources to help us understand, calculate and document forgiveness:
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).
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.)
First a little background. What are the CARES Act Funds? The CIL CARES Act funding went to the federally funded (Part C) centers for direct response to the COVID-19 crisis among people with disabilities in their service area. They have until September 30, 2021 to spend the funds in a way that 1) addresses the needs raised by the virus, in keeping people with disabilities safe and healthy and 2) in efforts that are allowable with federal funds as described in 45 CFR 75.
Notice that the spending must still be in keeping with regulations that oversee the Federal grants. You will be familiar with some of the most common potential expenses that are not allowed with federal funds. Lobbying and alcohol are the most widely known, but there is a list at 45 CFR 75.420 of some specific costs and their allowability. This regulation applies to all federal funds, including the CARES Act funds. The cost must be allowable under federal regulations. That is why you see the term “life-sustaining food” to describe potential food purchases under the Act. Food for entertainment purposes is not allowed, but life-sustaining food is. It is the responsibility of the center to determine the allowability of the cost. And as with all expenditures of federal funds, the purchase must be reasonable, necessary and properly allocated across funding sources (see 45 CFR 75.404). As always, prior approval is needed for any equipment purchase that exceeds $5,000.
I get a lot of questions from the field about whether something is or is not allowable under the CARES Act funds, and I will repeat, it is up to the Center to determine allowability. In addition to being an allowable expense with federal funds, the CARES Act funds must be spent as a direct response to the COVID-19 crisis.
The Centers were directed to utilize the entirety of the funds to respond to the COVID-19 pandemic and the surge of needs of individuals with disabilities to access or reconnect with services and supports they need to remain safely in their communities. This is not a way to fund the Center’s “wish list” unless the purchase is directly related to a response to COVID-19.
One of the things most centers are addressing is how to use technology to enable and support the core services provision from home-based offices, since most offices are closed and most staff are working from home. In some situations this meant beefing up services or equipment so that staff could be effective in doing their jobs from home. Sometimes the type of internet service to their offices was not sufficient to carry the load of everyone working remotely. In some cases the staff had been using desk top equipment, some of it too old to allow web-based conferences, and needed to replace it. Likewise to serve the consumer, the consumer had to have access to the internet from a phone or tablet or computer. We have seen some significant improvements in the infrastructure needed for remote services to happen.
Supplies needed for people to be healthy and safe are also allowed, so centers have purchased masks, gloves, hand sanitizer, soap, paper towels, toilet paper, and more for both the staff and consumers. When consumers have personal care in their homes, they can now require the personal care-givers to take all the needed precautions and can provide them with supplies when in their home providing their care.
I know a center that is working with the food bank and their own resources to create food boxes together with recipes and plan to hold drive through cooking classes, outdoors in the parking lot They will set up stations with handwashing, cutting boards, knives, and food ingredients. Masked instructors from six feet away will walk them through a recipe and they will take home the item in carry out containers along with the rest of the food. I have also seen cooking classes by ZOOM, combining on line instruction with food delivery. Combining food provision with independent living skills training seems like an excellent approach.
The Frequently Asked Questions document from ACL lists these appropriate areas of emphasis for CARES Act funds: • Service coordination during and after the COVID-19 pandemic; • Services and activities that assist individuals with disabilities who are at risk of being institutionalized to remain in their communities; • Services and activities that assist individuals with disabilities to move from an institutional setting to a home in a community-based setting; • Services and activities that address the shortage of accessible housing; • Partnerships with local agencies that address food insecurity; and • Systems advocacy to ensure health equity in medical settings.
Notice that three of these items are related to getting/keeping people with disabilities out of congregate living. Look at the statistics. Most of the COVID-19 cases are people in some sort of congregate living — detention centers, prisons, nursing facilities have more than half the cases in the area where I live. There has never been a more important time to get people out and keep people out on institutional living situations. CARES Act funds can be used to accomplish this important goal for the health and safety of people with disabilities in your community.
The Uniform Administrative Requirements found in the Code of Regulations (45 CFR 75) are the reference for questions related to how you handle things financially with federal grants. With the influx of CARES Act funds, some of you are considering capital improvements in order to have the phone system or server necessary for remote work, or other upgrades such as cables and wiring that might be required for these things. My understanding — based on what is below — is that if these costs exceed $5,000 you must secure prior approval from ACL/OILP. Be sure to contact your Program Officer about these expenses.
(3)Capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the HHS awarding agency, or pass-through entity. See § 75.436 for rules on the allowability of depreciation on buildings, capital improvements, and equipment. See also § 75.465.
(4) When approved as a direct charge pursuant to paragraphs (b)(1) through (3) of this section, capital expenditures will be charged in the period in which the expenditure is incurred, or as otherwise determined appropriate and negotiated with the HHS awarding agency.
(5) The unamortized portion of any equipment written off as a result of a change in capitalization levels may be recovered by continuing to claim the otherwise allowable depreciation on the equipment, or by amortizing the amount to be written off over a period of years negotiated with the Federal cognizant agency for indirect cost.
(6) Cost of equipment disposal. If the non-Federal entity is instructed by the HHS awarding agency to otherwise dispose of or transfer the equipment the costs of such disposal or transfer are allowable.
With the influx of the CARES Act funds to Part C centers, you have been purchasing personal protective equipment, food, technology, internet or delivery services and more. Are you following your own procurement policies? And do they fall within the federal requirements? Let’s take a look.
First, why was a purchase COVID-19 related and why was it necessary? For example, did you upgrade your server or other internet or computer resources? Was that necessary for capacity for everyone working from home? Describe what was needed and how the purchase met that need.
Second, all of your costs must be reasonable, and you must document this by capturing similar costs from other venders and/or by making a case for the reason you are making the specific purchase. Often the rationale for “reasonable and necessary” is stated together.
Next, make sure your procurement policies are equal to or less than the limits for each area found in the federal regulations. It may make sense to use the federal terms and definitions in your financial policies and procedures. The first of those categories — the level where you use a simple purchasing process of approval without price comparisons* or bids — is call “micro-purchase” and applies to any purchase of supplies or services, in aggregate, that are under the threshold of $10,000. “In aggregate” means that you would be able to apply this simpler approval method only if all the purchases for that vendor for the year, when added together, are still under this threshold. To the extent practicable, you should distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if you consider the price to be reasonable
The category called “small purchase” applies to purchases over $10,000 and less than $250,000 . Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold. If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Note, however, that theses are not necessarily formal bids. You can check prices by email or phone, or use posted prices on the internet, as long as you document your process assures that purchases are reasonable.
Above the small purchase amount of $250,000 you must secure sealed bids with formal advertising. There are a lot of requirements for that level of purchase, but I doubt the CARES Act funds will be sufficient to make purchases at this level. Refer to 45 CFR 75.329 for more details. Other considerations when purchasing include:
Contracting with small and minority businesses, women’s business enterprises and labor surplus area firms.
Following the executive order to “Buy American, Hire American”
Assure there is no conflict of interest related to the purchasing of goods or services.
Getting prior approval from ACL on equipment costs in excess of $5,000.
*I still recommend price comparisons to show reasonableness.
After years of saying we don’t have enough funding, the Part C centers received a very generous infusion of cash. The purpose was to be able to offer flexible and immediate support to the vulnerable people we serve to meet their needs related to COVID-19. What needs could be funded were not defined – your center needs to figure out with people what they need to stay safe and healthy NOW. If you are not pushing funds out to benefit your consumers, you need to reassess and get things going. You were given some examples in the FAQ from ACL referenced below and in recent correspondence from them.
I have spoken to only a few of you about this. Some of you have said you want to wait – that the need isn’t that great yet in your area. Others that you think the next wave is going to be more serious and you want to save some for that. Still others that the state’s CILs are meeting to figure out what is needed. (ACL recommends that you not work on state redistribution until they provide guidance, but that you meet the needs of your community first and immediately.)
None of these are good reasons to let funds sit while people with disabilities are facing life-threatening situations as part of the response to the COVID-19 pandemic. Have you talked to your consumers? Have any of them expressed fear? Lost caregivers? Don’t know how to hold it all together right now? Some centers have lost people to this pandemic. Yes, people are dying, and those with fragile health or breathing disabilities are at very high risk. Some, even behind the closed doors of their home, are extremely fearful of this disease. If they need shared care givers who come in and out of their home, they are at substantially greater risk. What are you doing about it?
Remember – the purpose of the CARES Act was rapid response. Meetings don’t result in people getting assistance. If you anticipate more need is coming, go ahead and plan but also act. Secure supplies now. You can provide support now AND plan for further need. Buy PPE for individuals and their caregivers now, in anticipation, so you can give a same-day response when a consumer turns to you.
You received a “Dear Colleagues” letter this week from ACL. Were you as shocked as I was that less than 20% of centers have drawn down funds? The letter stated in part:
As of May 18, 2020, the PMS drawdown reports show that 82% of CILs have drawn down $0 of CIL CARES Act funds. Please be reminded that CILs were directed to utilize the entirety of the funds to respond to the COVID-19 pandemic and the surge of needs of individuals with disabilities to access or reconnect with the services and supports they need to remain safely in their communities. Surge needs are now. Guidance has been provided in the CIL CARES Act FAQ on allowable expenses and areas of emphasis that include:
Service coordination during and after the COVID-19 pandemic;
Services and activities that assist individuals with disabilities who are at risk of being institutionalized to remain in their communities;
Services and activities that assist individuals with disabilities to move from an institutional setting to a home in a community-based setting;
Services and activities that address the shortage of accessible housing;
Partnerships with local agencies that address food insecurity; and
Systems advocacy to ensure health equity in medical settings.
ACL strongly cautions CILs against delaying COVID-19 pandemic surge services and activities in your communities. The ACL Disaster Services Policy provides guidance on coordinating services and activities that may overlap existing service areas or reach into unserved areas. The Disaster Services Policy does not provide exceptions to CIL funding distributions (emergency or otherwise) or the recipient CIL’s responsibility for the use of funds. CILs who have received CIL CARES Act funds should not delay using the funds for services in their communities or in communities where disaster services agreements are in place.
I hope you are listening carefully to what your funder is saying. NOW, SURGE, IMMEDIATE, URGENT, EMERGENCY – I hope you get the picture. Identify how the need is COVID related and provide the much needed response NOW. When was the last time your center had the funds to assist people in such a concrete way? The CILs that are regularly checking in with their consumers are learning what is needed. They are responding with life sustaining food, safe water, soap, hand sanitizer, costs of food deliveries, communication, protective equipment, and more because they are providing what the consumers tell them is needed in this very scary time. How can we NOT respond NOW?
The questions started as soon as the money did. ACL has published a comprehensive Frequently Asked Questions document that covers most of them. If you go to our site it is an alphabetical list of resources under ACL FAQs. Everything in this post is based on that document and the federal regulations found in 45 CFR 75.
Q: We’re reaching out for clarification on part of the FAQs for the CARES Act funding. Under Question 8, it says policies and procedures need to be updated by May 31, 2020. Does this only apply to expenditures that we choose to cover retroactively back to our state of emergency date or to all expenditures through September 30, 2021? We want to plan appropriately, and since the current COVID-19 landscape is very fluid, we envision needing to update policies throughout the next year, in advance of expenditures, as necessary adaptations are made to how the CARES Act funds are used.
A: Note this language at the end of Question 8: “Due to the unprecedented nature of the COVID-19 pandemic, ACL understands that CILs may not have had all the policies and procedures in place that would address current and unusual circumstances. CILs should actively develop and/or update their policies and procedures as necessary and have them in place no later than May 31, 2020. Policies and procedures may be made effective retroactive to January 20, 2020. “ (Emphasis mine.)
I think this recognizes that you may have been required to react very quickly due to shut downs by your state, and may have acted outside your written policies and procedures. This FAQ grants you a grace period to go back and update your policies to address any costs that weren’t clearly allowed, or to adjust approval procedures to match what you were required to do in these unusual circumstances. My read is that you can make sure you didn’t violate any of your own policies and procedures by modifying them now, to be retroactive to a date earlier than most centers closed their offices to the public. My first step would be to re-read all your policies to verify you followed them or identify when you did not. When you are reviewed for compliance, you will need to show that you followed your own policies and procedures. Examine your policies with that in mind, reviewing them regularly. And just this once, you can make them effective retroactively.
It seems likely that some of these new or revised policies will be related to the state of emergency. If you write them that way, they will be in place during any emergency, not just this one, and would be in force until your board chooses to change them. Yes, you may need to continue to update your policies and procedures – I suggest that at the end of each you carry a list of revision dates so that you also track how fluid the situation is. As far as we are aware, though, this is the only time that you can adjust policies retroactively. Be sure you take advantage of this opportunity to check your actions against your own policies and procedures.
While the correct answer is “it depends”, my more honest reaction to this question is, “Do you think that is the intention of this funding?”
Because, first and foremost, the funding is for the purpose of assisting your consumers — people with a significant disability who approach you for aid and are enrolled in services — with a direct response to the COVID-19 pandemic. Read the FAQ on this topic carefully. The funds “must be focused on responding to needs that are the result of the COVID-19 pandemic.” These new dollars are not intended as a way for you to pay for your wish list. I have no doubt that we all wish we could pay staff more, but we know that this is one-time money, intended to assist people in crisis, and won’t sustain raises all around.
So I have received questions about bonuses and hazard pay. Here is another quote from the FAQ: “CILs are encouraged to have policies in place that adequately support hazard pay decisions including ensuring policies are fair and equitable across the agency.” Typically you are required to have these policies in place before any incentive or bonus or other special pay is invoked. Spontaneous bonuses have never been allowed. Rather you are expected to have a plan in place that everyone is aware of, and staff may choose to meet the requirements for the extra pay or not. Here is what Uniform Guidance says:
45 CFR 75.430 Compensation—personal services. (f) Incentive compensation. Incentive compensation to employees based on cost reduction, or efficient performance, suggestion awards, safety awards, etc., is allowable to the extent that the overall compensation is determined to be reasonable and such costs are paid or accrued pursuant to an agreement entered into in good faith between the non-Federal entity and the employees before the services were rendered, or pursuant to an established plan followed by the non-Federal entity so consistently as to imply, in effect, an agreement to make such payment.
As you can see in (f) Incentive compensation may be allowable if it meets the test of reasonable and if there was an “agreement entered into in good faith” with the employees in advance, before the service was rendered. This agreement would not necessarily be in writing, although an approved policy and procedure would be the typical way to agree in advance to such an item. An “established plan” would also typically be in either the budget or in policy or in some other way documented IN ADVANCE of the expenditure being made. Hazardous pay seems to fit this category. Let’s look at the FAQ again:
“Not all work being done during current stay-at-home orders is considered hazardous. Hazard pay means that employees are paid additional wages for performing hazardous duty or work involving physical hardship, including exposure and potential exposure to the COVID-19 virus. Work duty that requires this hardship that is not adequately alleviated by alternative stations or protective devices are deemed to impose a physical hardship. It is possible and likely that an employee may have some hours that are worked in a hazardous condition and others that are not.”
I suggest that you approach any additional pay to employees very, very carefully. If I were in your shoes, I don’t think I would feel right about giving or taking extra pay.
I suggest caution because, when these funds are audited, I personally think one big red flag will be how much of your CARES Act allotment was used to pay current staff.