Boy Scouts Legal Crisis and your Church

Because of the bankruptcy of the Boy Scouts of America and the rash of sexual abuse claims, I’m encouraging all churches that have ever been involved with Boy Scouts to file a Proof of Claim form with the bankruptcy court. The link is below. Filing this form will help provide resources in the event that a victim connected to your church ever comes forward. If the court doesn’t receive your form by November 16th, you will be barred from any support from the Boy Scouts of America.

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South Dakota Small Business Grants

The State of South Dakota recently announced that $40 million will be made available to Small Nonprofits that are seeing a large reduction in Cash Flow. If you’re a South Dakota church, AND your Net Operating Income is down, you should apply. This sounds like a great deal because there seem to be no strings attached (e.g. PPP Loan forgiveness).

They are talking about Net Operating Income so you’re going to have to exclude all the donor-restricted gifts and expenses (capital campaigns, mission of the month, memorials/bequests, youth fundraisers). Here’s the basic formula:

  • Net Operating Income (income – expenses) for March – August of 2019
  • LESS Net Operating Income from March – August of 2020
  • LESS PPP Loan Amount or similar Federal assistance
  • EQUALS Eligible Amount. Divide this amount by the Net Operating income from the first bullet. It should be more than 25%.

Even if it is not more than 25%, you are still encouraged to apply as leftover grant money will go to this second tier of nonprofits. Watch the video below for how to apply:

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Old Money, New Opportunities

How many times have you been at a church meeting where you are discussing a great ministry opportunity, but there’s no money available for it…except for the money in that one fund? Most churches have that pot of money whose purpose is not written down but is actually embodied by the committee that has historically controlled the money. That’s not healthy. It becomes a control issue instead of a stewardship issue.

Sheri Meister, Barb Brower, and I talk about how to properly setup funds and how to work with the church to rediscover the purpose of old funds. We believe the donor gave the money to bless the church…not divide the church. We hope this helps you find new opportunities for some old money.

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How to reimburse employee health costs…LEGALLY

For those of us that are a little older, we remember when the pastor was on the denomination’s health insurance, and the only other health benefit was if the church decided to reimburse an employee for premiums. And then Obamacare happened. Obamacare changed a lot of things. One of the negative changes is that these very informal reimbursement agreements became taxable. Soon after the election of President Trump, a loophole opened up that allows reimbursements in a very regulated way. This loophole is QSEHRA (I pronounce it Q-Sara).

Here’s the gist of it.

  • Almost all churches can use this.
  • Need to offer the same amount to all eligible employees (except can discriminated based on age and family status).
  • Need to adopt a Plan Document (template below in the links).

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CARES Act: Church paying Pastor’s Student Loans

During the first three months of the COVID crisis, the big concern was if churches were going to have enough money to keep operating…to pay their pastor, utilities, and mortgages. As time goes on, many churches are finding out that their finances are doing great all things considered. Now that they are able to catch their breath, they may want to thank their pastor with more than words or a card, or even a hot dish.

The CARES Act allows you to make payments toward your employees’ student loans (including your pastor’s) with tax-free money! I love the phrase “tax free.” This is only available during 2020. You still have to jump through some hoops, but it’s not too bad. The video will explain it.

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EZ PPP Forgiveness for Churches

I had been wringing my hands at how difficult the SBA made the first Paycheck Protection Program Loan (PPP) Forgiveness Application. It was like they had asked the IRS for advice. The EZ application cuts it down to only one page of numbers. Without a doubt, your bank will be asking you for more proof, but why would you make it so complicated to ask “How much of the loan did you spend?” That isn’t something that you need pages of worksheets to answer.

The vast majority of churches should qualify for the EZ application. I would also guess that the vast majority should choose the 24-week period instead of the 8-week to maximize forgiveness. Watch the video below for the walkthrough:

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Accountable Reimbursements

Another topic I regularly teach is Accountable Reimbursement Plans. I used to think of this as a pretty straight forward topic, but I’m an accountant. I think in accounting rules…debits, credits, etc. The best part of this presentation is that chart for figuring out if mileage is commuting or business. This would also be a good one for church treasurers to review as they also have the same questions.

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