LGT's Profit Sense

Do you qualify for the new family leave credit?

The new tax law creates a credit for eligible employers in 2018 and 2019 based on paid leave for up to 12 weeks, granted under the federal Family and Medical Leave Act ("FMLA"). Employers aren’t required to pay employees for FMLA leave, but — for 2018 and 2019 — those that do may qualify for a tax credit of 12.5% of the wages paid. That’s if the rate of payment under the leave program is at least 50% of employees’ regular rate.

The credit percentage rises incrementally as the rate of payment exceeds 50% of the regular rate. It maxes out at a 25% credit for full wages.

To qualify, an organization must allow all eligible full-time employees at least two weeks of annual paid family and medical leave and all eligible less-than-full-time employees a commensurate amount of leave on a prorated basis. Paid vacation, personal time, or other medical leave doesn’t qualify for the credit. Payment to employees earning more than $72,000 per year doesn’t, either.

Consider modifying your leave policies to take advantage of the credit and developing appropriate tools for tracking eligible employees and pay.

Not-for-profits join the impact investment game

Organizations, including the YWCA Metropolitan Chicago and the NAACP, are backing impact-themed exchange traded funds ("ETFs"), launched by not-for-profit start-up Impact Shares, that focus on their particular interests. An ETF is an investment fund that’s traded like a common stock on a stock exchange.

Impact-themed ETFs invest in socially responsible companies, with an eye toward influencing corporate behaviors. Individual investors who share a not-for-profit’s goals can buy shares of its ETF, and Impact Shares will donate the advisory fees those investors pay back to the not-for-profit. This allows investors to support the organization while pursuing an investment strategy that aligns with their values.

Study scrutinizes foundations’ investment performance

Foundation Source’s 2017 Private Foundation Investment Performance report examined the investment activities of private foundations with assets of less than $50 million, comparing data from 2016 to 2015. It found that the average asset balances of foundations with assets under $1 million fell 1.4%, while larger foundations’ average balances grew 5.6% to 6.8%.

Foundation Source, which provides support services to private foundations, said the drop in small foundations’ average assets could be attributed to smaller foundations distributing a greater percentage of their assets for grants and expenses than their larger counterparts. The report also found that, compared with the previous year, 2016 portfolio performance was more robust across all foundation sizes.

Find out more about not-for-profit news and information from one of our not-for-profit group professionals.