Brief financial updates

CFDA (Catalog of Federal Domestic Assistance) numbers quietly disappeared and were replaced with Assistance Living Numbers.

Let your search engine track down “Why Unrestricted Funds Matter”, a great article on the benefits of unrestricted funds.

Update your “responsible person” information with IRS if their database does not have current contact information. The solution is simple, go to IRS.gov and complete form 8822-B Change of Address or Responsible Party.

For more information see IR-2021-161, July 30, 2021.

The American Rescue Plan Act of 2021 included changes to this credit for the third and fourth quarters of 2021, and recently IRS’ notice 2021-49 provided additional information about these changes. (CAUTION-the economic stimulus package may eliminate this credit for the fourth quarter of 2021).

This credit, which can total $7,000 per employee per quarter (70% of up to $10,000 in wages per employee), can be claimed by businesses and nonprofits that experience a 20% or greater revenue decrease between corresponding quarters in 2019-2021.

Revenue Procedure 2021-33 clarifies that PPP loan forgiveness can be excluded from the calculation of gross receipts. Shuttered Venue Operators Grants and Restaurant Revitalization Grants are also excluded in determining whether there was a gross receipts reduction.

Wages claimed for PPP forgiveness do not also qualify for this credit.

Employers with under 500 employees can amend their 941 forms or file form 7200 to claim a refund. https://www.irs.gov/pub/irs-pdf/f7200.pdf

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

Why Unrestricted Funds Matter

What is unrestricted funding? Two philanthropy experts explain

When money comes with strings attached, it doesn’t always do the most good. spukkato/iStock via Getty Images Plus

Genevieve Shaker, IUPUI and Pamala Wiepking, IUPUI

Unrestricted funds are grants or donations nonprofits get to spend any way they believe is appropriate to further their mission.

Unrestricted funding can also come with some limitations. Donors might, for example, designate the money for operating expenses like rent or to help strengthen the organization through support for leadership development.

However, only about 20% of U.S. funding for nonprofits has any degree of flexibility, the Center for Effective Philanthropy has estimated.

More often, nonprofits get money for a specific project in exchange for agreeing to several conditions and a specific timeframe. For example, someone might give a museum or a hospital US$20 million to spend building a new wing within three years.

Photo of MacKenzie Scott
MacKenzie Scott gave about $8.5 billion to charity by mid-2021. Evan Agostini/Invision via AP

Starting in 2020, author and billionaire MacKenzie Scott has disclosed donations of at least $8.5 billion to 798 nonprofits. Unlike most major philanthropists, Scott has encouraged the nonprofits to spend the money as they see fit. In addition, foundations including the MacArthur Foundation and the Ford Foundation are providing more unrestricted funding. They hope it will help the organizations they support address complex issues like social and racial justice.

[Understand key political developments, each week. Subscribe to The Conversation’s politics newsletter.]

Why unrestricted funds matter

Like businesses, nonprofits must employ skilled staff and use updated technology – and they have many other expenses.

When funders provide money that can be spent only on specific projects, nonprofits may struggle to cover these overhead costs. Their staff can end up working too many hours for not enough pay, without the equipment and other essential expenses they need to get their jobs done right. This “starvation” can make organizations less effective – reducing how much good every donated dollar does.

When they get multi-year unrestricted funding, nonprofits can become more financially stable. That increases their ability to respond when crises arise or situations change, while making it easier for them to innovate and take risks.

The coronavirus pandemic challenged nonprofits to be flexible and adaptable and to respond quickly to new needs.

But, at least before Scott shook up the charitable world by distributing billions of dollars in unrestricted donations to historically Black colleges and universities and other groups focused on racial justice, nonprofits led by Black people and others with historically marginalized backgrounds were less likely than organizations with white leadership to receive unrestricted funds.

All in all, unrestricted funding can certainly help nonprofits achieve their mission with greater effectiveness. But its role is also more complex than it might appear, for donors and nonprofits alike.

The Conversation U.S. publishes short, accessible explanations of newsworthy subjects by academics in their areas of expertise.

Genevieve Shaker, Associate Professor of Philanthropic Studies, Lilly Family School of Philanthropy, IUPUI and Pamala Wiepking, Visiting Stead Family Chair in International Philanthropy, Lilly Family School of Philanthropy; Professor of Societal Significance of Charity Lotteries, Center for Philanthropic Studies, Vrije Universiteit Amsterdam, IUPUI

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Defending against Cybercrime

Cybersecurity continues to be a hot topic. CNN recently reported that in 2020, ransom payments were up more than 400% from the prior year.

CNN had some insights and some cautions for organizations that may be victims of cybercrime.

If you get a cyberattack, it is probably from someone with extensive IT training, state-of-the-art “burglar tools”, and wildly committed to get money from you. Without professionals on your side, it is not a fair fight!

An outside monitoring company can provide you with guidance to reduce the likelihood of a successful cyberattack, and also educate you and your staff about what to do and what to avoid. For example, consider all of the free resources from www.iconicit.com.

Cyber insurance is also becoming very common and gets you more than insurance. You get access to a team of IT/cybersecurity specialists, attorneys, and negotiators who can deal with the cyber criminals to reduce payouts and help you regain access to your data. Although, CNN points out that information about these policies is accessible to cyber criminals, so they know that you have such coverage and what your limits are. This could lead to demands for more money.CNN reports that negotiations will usually happen quickly, using chat tools. In addition to threatening you with loss of access to your important data, criminals will often threaten to publish confidential information.

CNN recommends keeping software up to date, use multi factor authentication, use firewalls and monitor your network to catch unauthorized Internet traffic.

The National Council on Nonprofits reiterates the risk of cyberattacks and makes regular recommendations. Recent recommendations from them included limiting employee access based on what employees need to do their jobs. This can reduce the amount of data that is accessed if there is a breach and improve efficiency, because fewer options to navigate make it easier for people to do their jobs.

They also point out that your website needs updates to be secure. Websites are built on Content Management Systems, and they typically have additional plug-ins or modules to provide additional functionality. You (or your webmaster) need to make security updates required by these systems. You can and should receive notification when new updates are released.

How do the banks do it? Banks do a pretty good job of not getting hacked, and of keeping their customers safe. What are their secrets? In a recent Rochester Business Journal article, a few local bank security specialists weighed in on their strategies. Their key strategies are the things we have talked about like software updates, strong passwords, two-factor authentication, and educating staff and clients about cybersecurity, especially helping them recognize phishing attempts. They enhance these basic strategies with encryption, regular phishing tests for their employees, and “behavior analytics”. Behavior analytics include things like requiring additional verification when a new device accesses a customer’s account. They also look for unusual scenarios, like logging in to an account from New York in the morning, and from California later that morning.

Microsoft recently talked about the risk of “open redirects”.  These are sometimes used appropriately for business, but recently they have been used more and more by hackers.  When you hover over a website, you may see something that looks okay and that you are familiar with, but when you click on the website you are redirected to a malicious site.

If you intend to go to a site, don’t click on a link, put the address into your browser to reduce this risk. – John Heveron, Jr.

Does the executive order apply?

The morning after President Biden announced the Executive Orders related to required vaccines, I received a flood of calls/emails asking, “Does that apply to us?”

The orders were for federal contractors. CILs that receive direct grants (Part C) are grantees, not contractors. The executive orders do not apply to CILs.

Some centers are requiring staff to be vaccinated. Staff may request a reasonable accommodation for religious or disability reasons. Centers that grant this accommodation are sometimes requiring testing, most typically weekly, if the staff person works in person or from the office.

Giving credit where credit is due

Most grants — including those your center receives from Health and Human Services, are required to include that information in any press releases or other ACL supported publications and forums describing projects or programs funded in whole or in part with ACL funding. This means those carefully developed PSAs to urge people to get vaccines, or the flyers and other materials paid for through the CARES Act or Part C or the CDC Vaccine funds must have language that follows what your grant award says. (Yes, you should read that Grant Award carefully. It does require some things of you.)

Here is the sample language from a grant award from HHS.

If the HHS Grant or Cooperative Agreement is NOT funded with other non-governmental sources: “This (project/publication/program/website, etc.) (is/was) supported by the Administration for Community Living (ACL), US Department of Health and Human Services (HHS) as part of a financial assistance award totaling $XX with 100% funding by ACL/HHS. The contents are those of the author(s) and do not necessarily represent the official views of, nor an endorsement, by ACL/HHS or the U.S. Government.

If the HHS Grant or Cooperative Agreement IS partially funded with other nongovernmental sources: “This (project/publication/program/website, etc.) (is/was) supported by the Administration for Community Living (ACL), U.S. Department of Health and Human Services (HHS) as part of a financial assistance award totaling $XX with XX percentage funded by non-government sources(s). The contents are those of the author(s) and do not necessarily represent the official views of, not an endorsement, by ACL/HHS, or the U.S. Government.

Lobbying: What can SILCs and CILs do?

The first rule is that you cannot ever endorse a candidate. (This has to do with IRS rules around non-profit status, if you have that, and rules against state entities endorsing candidates if you are not a non-profit.)

The second rule is that you cannot use federal money to lobby. This means several things.

  1. A any action you take to attempt to influence related to money you are receiving or wish to receive is considered lobbying.
  2. Any action you take to support or oppose a specific piece of legislation is considered lobbying.
  3. The SILC or CIL can lobby if there are no federal funds spent in supporting the effort either in direct costs, salaries, or indirect costs.
  4. The SILC council members and CIL board members, as long as they don’t imply that they are speaking for the council/board and as long as the council/board doesn’t assist with any costs, can speak to any matter as members of the public unless the state prohibits this in its executive orders or other documents related to council operations.
  5. Testimony around the effectiveness of centers for independent living or other issues of concern to the disability community can be provided by SILC or CIL staff or council/board members at SILC/CIL cost (including federal funds) as long as it doesn’t end with a request for continuing or increasing funds or opposing or supporting legislation.
  6. Reports of statewide effectiveness of IL can be provided by SILC staff or council members at SILC cost, or CIL staff at CIL cost, as long as there is not a request for continuing or increasing funds or opposing or supporting legislation.
  7. You can respond to questions asked in a hearing or other forum, as long as you don’t lobby – that is ask for a specific vote for or against a bill or budget item.

Can I use grant funding to establish incentive programs? New FAQ released.

Dark-haired, bearded man in denim shirt and seated in a wheelchair, sits at the kitchen table with a bowl of food and looks at reports.

Recently our key funder, ACL, released information on using grant funds to purchase incentive items as part of the program of a center. While this FAQ answers the pressing question of incentives related to CDC and ACL funds and COVID-19, the guidance could be considered in other situations as well. You are expected to have a well-designed incentive program, so a written policy and procedure should back up your practice. Some key points:

  • Grantees may use federal funding to establish one or more incentive programs.
  • Incentives should be used in “limited circumstances” to meet program goals.
  • Gift cards, gift items, giveaways and prizes may be used. Cash gifts are not allowed with funding under the CARES Act and from the CDC Vaccine funding
  • When using gift cards you must avoid appearing to endorse, or that HHS or ACL endorses a specific company.
  • Your records must clearly show how each gift card is distributed, verifying that they were used for the purpose of the program and weren’t for example, recycled into petty cash or used for staff or board incentives not related to your incentive program.
  • Your program should address potential ethical considerations, including potential conflicts of interest by board and staff.
  • You must be able to show that the expense charged to your federal grant is reasonable and necessary, and if it supports goals in more than one grant, is properly allocated across your funding sources.

ACL recommends that grantees consider the following seven elements in designing an incentive program:

  1. Proposed Incentive: i.e., what incentive will be provided?
  2. Justification: what is the purpose for the incentive and what is the specific reason for selecting this incentive? What evidence indicates that an incentive is needed, and what evidence suggests that the selected incentive will be effective at achieving the desired result?
  3. Anticipated gains: explain how providing such an incentive will defray societal costs or have a positive return on investment, for example by increasing overall participation. Additionally, describe potential unintended negative consequences and how those are outweighed by the benefits.
  4. Defined amount: cost per person and total allocated funding for the recipient incentives.
  5. Qualifications for issuance: what makes a person eligible for the incentive? Does it take into consideration issues related to equity in your community?
  6. Method of issuance and tracking: how will the incentive be delivered? Does the proposed plan and implementation align with any relevant policies and procedures governing your organization (e.g., procurement, ethics, etc.)? How will the budget and supply be tracked? Can the grantee assure usage will only be for allowable expenses?
  7. Method of evaluation: how will the incentive plan be evaluated for effectiveness?

One last thought. While you cannot guarantee how an individual will spend a gift card incentive, you can communicate your expectations that it will assist them in meeting the unique needs presented by the pandemic.

How can your board find a new Executive Director with a disability?

The rules for consumer control indicate that 51% of your managers must have a disability. In smaller centers where there is only one manager — the Executive Director — the board must hire a person with a disability. Even if there are two managers, 51% of two is two, and both must have a disability. As a result, most centers are seeking a person with a disability to fill the ED role.

Clear board with the words AFFIRMATIVE ACTION in black. A hand with a marker is underlining it in red.

There was a time when this was extremely awkward, because the Equal Employment Opportunity Commission (EECO) was clear that you could not ask interviewees about having a disability for fear that you might discriminate against them because of the disability. We have quite the opposite reason for asking — and now that reason is validated by guidance related to pre-employment questions about disability. This new guidance says that if you are asking about whether the person has a disability for the purposes of your affirmative action program, you may invite applicants to voluntarily self-identfy if:

  • The CIL is undertaking affirmative action because of a federal, state, or local law. This is the case for centers, because the Rehabilitation Act as amended requires consumer control, which is defined including having 51% of managers and 51% of other staff be people with disabilities.
  • Or the CIL is voluntarily using the information to benefit individuals with disabilities.
  • Employers may invite voluntary self-identification only if you are using the information to benefit individuals with disabilities.
  • You must state clearly on any written questionnaire, application or in your employment advertising, or state clearly orally, that the information requested is used solely in connection with affirmative action obligations.
  • You must state clearly that providing this information is voluntary, will be kept confidential as required by the ADA, and that if they refuse to answer they will not be subject to any adverse treatment. I suggest that you add that you may in some cases be choosing a person with a disability over a non-disabled applicant.

May I add a personal note? I didn’t know anything about Independent Living when I wrote a grant back in 1979. Fortunately Lex Frieden at ILRU provided all of the ten newly funded centers with training, and veterans Marca Bristo and Max Starkloff, who directed two of the other centers, knew what IL was all about. Due to their influence I looked around and told the board, “we really need a director with a visible disability”, and I am pleased that they have kept true to that goal in the hiring of the next few directors as well. (My disability isn’t always evident.) Even when a center is big enough that other managers can meet the 51% requirement, I feel that the message to the community is unmistakable when the leader has a visible disability, or has an invisible disability and is willing to talk about it and to show clear consumer control at the local level.

Is my CIL required to report to the SILC? Why? How?

Every state is required to develop and implement a State Plan for Independent Living (SPIL), developed jointly by all the Centers for Independent Living (CILs) in the state (signed by a majority of them) and the Council. Your Statewide Independent Living Council (SILC) is then responsible for monitoring and evaluating the progress your state is making regarding its state plan. This means that your SILC somehow tracks the progress being made on the specific plan goals. If the goals are related to service provision, the reporting will have to come from the CILs because the SILC is not allowed to provide direct services.

Young dark-haired man in a suit working with calculator and computer. The back of a wheelchair is visible at the edge of the photo.

As far as a center not reporting to the SILC on the SPIL goals and objectives – there isn’t a requirement that they do so on the SILC’s timeline, but they “gave their word”, so to speak, when they agreed to the SPIL. If the SPIL clearly identified those outcomes by CILs, they should be prepared to report. If you haven’t already, take the time at the next revision or development of a plan to be very clear on desired outcomes and how they will be measured, so that the centers are clear on what reporting is expected from the CILs.

Let me repeat this point, though – CILs are not required to report according to the SILC’s requirements, and there is no compliance process to force it. It is voluntary so you need to build on the agreement to the SPIL and negotiate if necessary. A lot of states find a way to have a single report with the Designated State Entity (DSE) shared by the SILC to reduce duplication.

That said, let me clarify that the SPIL applies to both Part B and Part C (Independent Living Program, ILP and CIL) funds, and reporting on the SPIL outcomes should include the full network for IL, including CIL services funded by both Part B and Part C. Both are federal funds, and reporting applies to both. Part B funds are not state funds, as some have mistakenly stated, but pass through the Designated State Entity to the CILs as directed in the SPIL. Part C funds are direct grants to CILs, but are still part of the statewide plan. In the past some SILCs have depended on the information submitted in the Program Performance Report (PPR – formerly the 704 report) which CILs are required to submit to the SILC as well as to ACL, but this year that report has been delayed by the Administration for Community Living (ACL), leaving the SILCs to request the data from a draft document since the official upload directions have not yet come out.

Let me clarify a related point. It is NOT the role of the SILC to monitor the Center itself. The DSE may monitor CILs receiving state or ILS Part B funds, as they are subgrantees of the DSE. The SILC, however, does not have compliance responsibilities with the centers. Sometimes the SILC is pressured by the DSE to monitor the Centers. I have even seen corrective action plans for a couple of SILCs where the DSE cited the SILC’s failure to monitor the CILs as a deficiency. Remember that each center is required to provide the SILC with the PPR and with progress on the SPIL. Any more can be negotiated by the IL network but is not required in federal regulations.

What can the DSE keep in administrative fees for distributing our Part B, Independent Living Services grants?

The regulations are clear on this. 45 CFR 1329.12 Role of the designated State entity states:

(a) A DSE that applies for and receives assistance must:

(1) Receive, account for, and disburse funds received by the State under Part B and Part C in a State under section 723 of the Act based on the State plan;

(2) Provide administrative support services for a program under Part B, as directed by the approved State plan, and for CILs under Part C when administered by the State under section 723 of the Act, 29 U.S.C. 796f-2;

(3) Keep such records and afford such access to such records as the Administrator finds to be necessary with respect to the programs;

(4) Submit such additional information or provide such assurances as the Administrator may require with respect to the programs; and

(5) Retain not more than 5 percent of the funds received by the State for any fiscal year under Part B, for the performance of the services outlined in paragraphs (a)(1) through (4) of this section. For purposes of these regulations, the 5 percent cap on funds for administrative expenses applies only to the Part B funds allocated to the State and to the State’s required 10 percent Part B match. It does not apply to other program income funds, including, but not limited to, payments provided to a State from the Social Security Administration for assisting Social Security beneficiaries and recipients to achieve employment outcomes, any other federal funds, or to other funds allocated by the State for IL purposes.