4Thought Blog

What can nonprofit organizations expect in 2021 and beyond? One recent report, "11 Trends in Philanthropy for 2021," offers some answers. Produced by the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University, the 32-page report pinpoints trends such as the growth of social justice funding and new opportunities to build public trust.

We look at five of the trends that are most likely to affect your nonprofit's fiscal health. We also explain how these developments could provide opportunities to build greater resilience and efficacy.

Contractors trying to keep their construction companies financially healthy face two intrinsic challenges: the seasonal nature of construction work and the unpredictability of an invoice-based business.

Both can disrupt cash flow and make collecting and paying bills challenging. With positive cash flow, your balance sheet is better able to handle the industry's typical ups and downs plus any curve balls thrown by outside forces — such as the COVID-19 pandemic.

Here's how to promote a freer flow of cash.

Good news - business taxpayers may still be able to take actions to lower their federal income tax liabilities for 2020, as well as for future years.

Consider these ideas before you file last year's return.

The federal government has announced new rules for Paycheck Protection Program loans intended to help more small businesses obtain them.

Starting Wednesday, only businesses with 20 or fewer employees can apply for PPP loans during a two-week period. The 14-day exclusive application period will allow lenders to focus on serving small businesses, President Biden’s administration announced.

The administration also announced plans to assist sole proprietors, independent contractors, and self-employed individuals receive more financial support. Many were structurally excluded from the PPP or were approved for as little as $1 because of how PPP loans are calculated.

The IRS is warning taxpayers about a current prevalent scam involving identify theft and unemployment benefits.

Some taxpayers are reporting that they have received 1099-G forms falsely stating they received unemployment benefits in 2020. This is likely a case of scammers using stolen personal information to file claims and should be reported, the IRS says.

Unemployment benefits are taxable, and taxpayers could potentially pay federal and state tax on that unreceived benefit if they don’t act to correct the record.

From equipment theft to padded time to cyberattacks, contractors are vulnerable to a variety of fraud schemes. According to the Association of Certified Fraud Examiners, the median loss due to internal fraud is $200,000 for construction companies — significantly higher than the $125,000 for all industries.

Many factors make businesses in the sector rife for fraud — and owners may not be able to control all of them. For example, no one person can physically monitor multiple job sites, particularly if they're geographically distant.

What you can do is establish and enforce antifraud policies and procedures that make theft difficult, if not impossible. Your internal controls should address the following issues.

Pennsylvania has approved legislation clarifying tax rules on PPP loans and also providing $912 million in COVID relief aid.

The legislation, approved Friday, clarifies that Paycheck Protection Program loans that are forgiven are not taxable in Pennsylvania and that businesses may deduct eligible expenses paid with PPP loan proceeds. This aligns Pennsylvania’s PPP rules with federal rules approved in December and is very beneficial to businesses and individuals with PPP loans.

The sweeping second federal stimulus included two extended provisions nonprofits should pay particular attention to: a tax break for donors of smaller charitable gifts and one that will be advantageous to big donors. The new law also extends tax breaks for corporate donors. 

This is good news for some nonprofits that have struggled financially over the past year. But you can't assume that your supporters know about these changes in the law. Educate them about tax benefits as you solicit new donations.

The Consolidated Appropriations Act (CAA) — the massive spending package passed in December 2020 — includes many provisions designed to help small businesses that have been struggling during the COVID-19 pandemic.

Specifically, the new law contains the following seven tax-related provisions that may be of particular interest to manufacturers.

Restaurants have struggled mightily during the COVID-19 pandemic.

Thankfully, they're specifically targeted for a new tax relief measure found in the massive Consolidated Appropriations Act (CAA), which became law on December 27, 2020. The new provision creates a temporary but meaningful tax incentive to spend more on business-related food and beverage costs.

Preexisting tax breaks for certain food and beverage and entertainment costs are available in other limited circumstances. Here are the details.