The 501 S(c)ene

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Shuttered Venue Operating Grant update

Many nonprofit arts and cultural organizations have recently received Shuttered Venue Operating Grant (SVOG) monies. Here are a few points to know relating to this funding.

  • The grantee must maintain advance payments in interest bearing accounts, and the limit on interest earned on grant fund deposits is $500 per year. Any amount greater than $500 must be remitted to the Department of Health & Human Services Payment Management System. (Note this is for “advance payments”, which appears to mean that you should put in a savings account until spent). 
  • In addition to ordinary and necessary business expenses (that are not reimbursed by another source), here are some of the other allowable uses of the funds:
    • To refund customers who are still holding tickets for cancelled performances.
    • Payments toward debts that were recorded prior to 2/15/20.
    • Payments on a line of credit balance for a balance that was in existence as of 2/15/20. If the line subsequently increased, only the portion of the payment related to the 2/15/20 balance is allowable.
    • Real estate and personal property taxes are allowable if the associated buildings and equipment are related to the SVOG program operations.
    • If the organization receives the Employee Retention Credit (ERC), only the uncredited portion of an employee’s salary can be charged to the SVOG.
    • Audit fees that relate specifically to the Single Audit are allowable.
    • Depreciation expense is allowable.
    • Wages paid back to employees to make them “whole” due to previous wage reductions are allowable.

Don’t miss: Notable IRS Regulations on UBTI

  • SVOG monies are subject to Single Audit (if more than $750,000 in combined Single Audit federal funds):
    • As part of this, the organization will need to comply with the administrative requirements in the Uniform Guidance (UG), such as having a written procurement policy that complies with the spending thresholds allowed under the UG.
    • The earliest period where the Single Audit will be required will be the period the award is received (the period the agreement was entered into), even though you may be charging expenses to the grant that were incurred in a prior fiscal year.
    • Grant funds can be used for allowable costs incurred between 3/1/20 and 12/31/21 for the initial phase of funding. Grant funds can be used for allowable costs incurred between 3/1/20 and 6/30/22 for the supplemental phase. Any unused funds must be returned.
  • The organization does not have to stick exactly to the budget that was submitted with the application. A final budget will need to be submitted upon close-out.
  • Grantees are required to maintain documentation demonstrating the use of funds and their compliance. We recommend that you track reimbursed expenses (through ERC, PPP, SVOG, other federal/state funding, etc.) against your total expenses so you are able to show that you have not applied the same cost to more than one funding source.
  • The SVOG should be classified as a conditional contribution which means that contribution income is recognized as the conditions are met (as the eligible costs are incurred).

If you have any questions regarding Shuttered Venue Operating Grant or other pandemic funding, please contact your Henry+Horne advisor.

Colette Kamps, CPA