In 2023, Fidelity Charitable, the largest grant maker in the US, distributed a record-setting $11.8B to nonprofits according to an article from the Associated Press.  Given the increased use of donor advised funds (DAFs), the IRS is proposing new regulations that could potentially include a 20% excise tax on donations that provide a significant benefit to the donor.

Recently, nearly one million donor records were discovered in an unprotected online database owned by DonorView, a cloud-based donor management tool used by more than 200,000 nonprofit organizations. A cybersecurity researcher discovered the exposed data and reported to DonorView in early October and, although the data was secured several days later, it is unclear how long the information was openly available. 

The data included non-password-protected Excel, CSV, and PDF files and contained detailed information on donors, including contact information, amounts donated, payment methods, and donation history. The exposed database also contained email templates used to communicate with donors, which would provide bad actors with templates for conducting phishing scams.

If your organization uses DonorView, consider contacting to your donors and advising them of a potential exposure. You may suggest for donors to change passwords to financial sites and monitor their accounts for signs of fraud.

The SECURE Act 2.0 that was passed at the end of 2022 included a requirement that catch-up contributions for employees age 50 and older who have a prior-year compensation over $145,000 must be made on a Roth basis rather than a pre-tax basis. This requirement was previously set to take effect as of January 1, 2024; however, on August 25, 2023, the IRS issued guidance delaying the implementation of this requirement until January 1, 2026. 

Beginning July 1, 2023, nonprofits that have operations in Florida should be aware of the new requirements imposed under Florida State Senate Bill 1718 which requires entities with more than 25 employees to verify employment eligibility for each employee using E-Verify, a federal website that uses Form I-9 to determine a worker's employment eligibility. Employers must keep all documentation confirming employment eligibility verification for at least three years.

According to the bill, in the future, employers will need to certify compliance with this new law annually on their first quarterly return of each year. It is expected that the Florida Department of Economic Opportunity (DEO) will provide additional guidance on this requirement. 

Starting in 2024, DEO will send out notifications to employers that have failed to use E-Verify. Entities that are deemed noncompliant will have 30 days to become compliant or face penalties, interest, and/or possible employer license suspension.

For small plan filers, the general rule is that retirement contributions withheld from employees' paychecks must be remitted to the employee's retirement plan within seven (7) business days from the payroll check date.  However, for those instances when an organization misses the 7-day mark, they must calculate any lost earnings that the employees experienced due to the late remittance and include that amount in the remittance.

To help assist in this calculation, the Department of Labor (DOL) publishes, through their Voluntary Fiduciary Correction Program (VFCP), a calculator to determine any lost earnings. 

Keep in mind that the late deposit/lost earnings rule only applies to employee contributions and loan repayments. Organizations should exclude any employer match in the calculation. 

Organizations should work with their retirement plan administrator to ensure the calculation is completed correctly and to assist in filing the proper forms to the Department of Labor showing that the proper steps were taken through the Voluntary Correction procedure. 

For tax years 2020 and 2021, U.S. tax filers were allowed to take an "above-the-line" deduction for charitable contributions up to $300 (or $600 if married and filing jointly). This was in addition to the standard deduction.

The ability to claim charitable contributions in this manner allowed filers who do not itemize their return to lower their taxable income. However, starting with tax year 2022, this "above-the-line" deduction expired.

The IRS recently announced an increase in the optional flat mileage rate deduction for use on business travel that occurs between July 1, 2022 and December 31, 2022. The flat rate was increased from US$0.585 per mile to US$0.625 per mile. The decision to raise the flat rate was a result of rising gasoline prices.  

For the business use of an automobile, an individual can either deduct actual operating costs or the actual milage traveled using the flat mileage rate as described above. Although individuals who elect to use the flat mileage rate cannot deduct actual auto expenses on a tax return, tolls and parking fees are allowed in conjunction with the flat mileage rate.

For nonprofit volunteers, the cost of using a personal car to provide charitable volunteer services may be deducted. Volunteers may either use actual expenses or the flat charity mileage rate; however, this rate is different from the rate outlined above. The charity mileage rate is US$0.14 per mile, and this rate was not affected by the recent IRS change.

New York recently updated the requirements for public charities filing form CHAR 500 (the annual financial report) to the New York Attorney General’s Charities Bureau which went into effect on March 16, 2022.  Under the new regulations, charities and other CHAR 500 filers (with the exception of private foundations, see below) are no longer required to disclose the names and street addresses of donors.  Instead, such organizations can 1) provide a redacted IRS Form 990 Schedule B without the names and street addresses but including the amounts of the donations and the states from which the donations were received or 2) provide a statement of the gross amount of contributions received from individuals and entities residing or domiciled in New York.  

Organizations that do not file IRS Form 990 Schedule B may simply provide on form CHAR 500 the gross amount of contributions received from donors in New York.  

Private foundations, on the other hand, must continue to provide the foundation’s complete, unredacted IRS Form 990 Schedule B. 

The State of California signed into law Assembly Bill 488 with the goal of providing critical oversight by the California Department of Justice over charitable fundraising that occurs on internet platforms. Given the rise of charitable giving through internet platforms (such as those engaged in crowdfunding), the new law is designed to protect both donors and charities from deceptive or misleading solicitations by creating a framework that specifically defines online platform entities and requires them to register and report to the Attorney General’s Registry of Charitable Trusts.  

More information on the new law can be found at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220AB488.  

On May 4, 2021, the U.S. Small Business Administration (#SBA), which oversees the Paycheck Protection Program (#PPP), announced that the program has run out of funds. Outstanding loan applications will continue to be processed, but other than those applications already submitted and being processed, the website is closed to new applications.