News For Nonprofits

Congress ends UBIT on transportation benefits

When Congress passed its new spending package in December, it repealed a controversial tax on nonprofits created by the Tax Cuts and Jobs Act (TCJA). The TCJA generally required nonprofits to handle the expenses associated with “qualified transportation fringes” (QTFs), such as certain parking arrangements, van pools and transit passes, as unrelated business taxable income (UBIT). Such income is taxed at the corporate tax rate of 21%.

The tax became effective on January 1, 2018. A January 2019 survey commissioned by Independent Sector found that it would divert an average $12,000 per year from a nonprofit’s budget. But now organizations can redirect those funds toward their missions — including any taxes already paid on QTFs, which will be refunded. The repeal is retroactive for taxes paid or accrued after December 31, 2017.

How a new charity rating site assesses impact

Nonprofits have yet another rating to keep an eye on. ImpactMatters (impactmatters.org) rates organizations based on their cost-effectiveness. The service launched in November with ratings for more than 1,000 organizations.

ImpactMatters develops an equation to calculate the impact for different types of programs, such as veterans, hunger, clean water and homelessness. The equation combines data from a specific nonprofit (for example, the number of scholarships awarded) with social science research such as how a scholarship affects future earnings.

A nonprofit’s score is compared with common benchmarks. If an organization provides a meal for $2, and the benchmark cost in the geographic area is $4, the organization earns a higher rating than a similar group that provides a meal for $5.

Organizations fret about the sale of .org registry

The Internet Society’s (ISOC’s) fall announcement that it’s selling the rights to the .org registry to a private equity company has set off a wave of worry among organizations with .org addresses. The Public Interest Registry (PIR) has historically operated on a nonprofit basis, and organizations are concerned that the new owners might increase domain prices and censor site content. Long-standing price caps were removed earlier in 2019, which made the registry more appealing to private equity firms.

More than 500 organizations petitioned the ISOC to stop the sale of the PIR. In response, the Internet Corporation for Assigned Names and Numbers (ICANN), the group that oversees all domain names and must approve the transaction, has asked for additional information from the PIR. According to an agreement between the ICANN and PIR, ICANN promises to “thoughtfully and thoroughly evaluate the proposed acquisition to ensure that the .org registry remains secure, reliable and stable.”