For Virginia nonprofits that own real property, understanding the Commonwealth’s property tax exemption framework is essential. The Code of Virginia, specifically Title 58.1, Chapter 36, Article 3, provides classification exemptions for various types of nonprofit organizations, including religious, charitable, patriotic, historical, benevolent, cultural, and public park organizations. Under §58.1-3609, the real and personal property of an organization classified under §§58.1-3610 through 58.1-3622 and used for a qualifying purpose is exempt from taxation. Each classification has specific requirements. For example, churches and religious bodies are classified under §58.1-3617 as “religious and charitable organizations,” but the exemption only applies to property “used exclusively for charitable, religious or educational purposes” . If a church leases a portion of its property to a for-profit business, that portion may lose its exempt status. Similarly, other classifications include volunteer fire departments (§58.1-3610), Boys and Girls Clubs (§58.1-3611), SPCA organizations (§58.1-3613), the Boy Scouts and Girl Scouts (§58.1-3614), the American National Red Cross (§58.1-3616), college alumni associations (§58.1-3618), and Habitat for Humanity (§58.1-3622). A critical legal principle applies: property tax exemptions are to be “strictly construed” under Article X, §6(f) of the Constitution of Virginia . This means that if there is any ambiguity about whether property qualifies for an exemption, courts and tax authorities will generally rule against the exemption. Nonprofits must be meticulous in documenting that their property is used exclusively for the qualifying purpose. Significant new legislation has been enacted for 2026. SB388 (and its companion HB1279), which passed the General Assembly in March 2026 and received the Governor’s recommendation, allows for administrative approval of housing development on land owned by property tax-exempt religious organizations or certain nonprofit organizations . Zoning ordinances must allow by-right development and construction on such properties, subject to conditions including that at least 60% of the housing development’s total units be affordable for at least 30 years . The bill has a delayed effective date of January 1, 2027, and expires on January 1, 2031 . Critically, the bill provides that all such housing is subject to local real property taxation following completion, unless explicitly exempted by the locality . This means that while the nonprofit entity may retain its tax-exempt status on the portion of its campus used for exempt purposes, the housing units become taxable property, creating a mixed-use tax scenario. The legislation was contentious, with opponents arguing that it strips local zoning authority and undermines comprehensive planning by allowing administrative approval without public input . Supporters emphasized the need for affordable housing. Regardless of one’s view, nonprofits considering this pathway face complex accounting and compliance issues, including allocation of expenses between exempt and taxable uses, potential unrelated business income tax (UBIT) on rental income, and coordination with local tax assessors. At Nova Tax & Accounting Services, our Consulting team can help Virginia nonprofits navigate these complex property tax issues, including evaluating whether property currently qualifies for exemption, documenting exempt use, and understanding the accounting implications of mixed-use development projects under SB388.

For nonprofit organizations in Virginia and Washington DC that expend $750,000 or more in federal awards in a year, the Single Audit is a critical compliance milestone. As we move through 2026, expectations for Single Audit documentation and compliance continue to rise. Funders want stronger documentation, cleaner Schedules of Expenditures of Federal Awards (SEFA), and clearer time-and-effort support . The 2024 Uniform Guidance, which became fully effective for fiscal years beginning after October 1, 2025, introduced several changes affecting Single Audits. These include modifications to major program determination thresholds and updated procurement standards. For the 2026 audit season, auditors face stricter reporting expectations when they cannot quantify questioned costs, leading to potentially more findings and required corrective actions . Single Audit extensions, while available, are now generally granted only when tied to meaningful operational disruptions, not simply administrative delays. Practical steps for preparing for a Single Audit include creating an organized file for each grant, verifying that payroll allocations are properly documented, refreshing procurement and reimbursement procedures, and considering a “mini-checkup” before audit season . Grant dollars come with strings—an organization’s job is not to get tangled in them . The SEFA must be accurate and complete, with each federal award identified by CFDA number (now known as Assistance Listings number), amount expended, and pass-through entity information. Nonprofits receiving federal funds should also be aware of changes to procurement thresholds under the Uniform Guidance. The micro-purchase threshold increased from 10,000to10,000to50,000 effective late 2025, and the simplified acquisition threshold increased from 250,000to250,000to500,000. Organizations must update their procurement policies accordingly and ensure compliance with the new limits. At Nova Tax & Accounting Services, our Audit & Review and Assurance and Compliance for Nonprofits services include Single Audit support, helping organizations prepare accurate SEFAs and maintain the documentation required by federal award terms.

For many nonprofits—healthcare systems, colleges and universities, cultural institutions, and community organizations—accessing the bond market through public conduit debt is a common financing strategy. However, a trip to the bond market can come with an accounting surprise: some nonprofits that issue certain public debt can find themselves swept into public-entity reporting rules under U.S. GAAP, triggering earlier adoption dates, broader disclosures, and added compliance costs . According to testimony at a March 2026 meeting of the Financial Accounting Standards Board’s Not-for-Profit Advisory Committee, “there is some confusion out there” about this distinction . Nonprofits are generally excluded from the definition of a public business entity under U.S. GAAP. However, depending on whether their securities are available to the general public or trade publicly, some nonprofits can still be treated as public entities for certain reporting purposes . For organizations issuing debt for the first time, “the research component is a bit overwhelmingly administrative” . Auditors report that they still spend substantial time walking clients through these distinctions. “There is confusion because of the closeness in public business entity and public entity,” noted Dawn Stark, a partner at Plante Moran . Nonprofits with conduit debt can struggle to determine which effective date applies when standards use different terminology, leaving some organizations on faster adoption timelines than otherwise similar peers . For users of financial statements, the issue is less about whether adoption comes sooner or later than whether it happens consistently. Robert Dobbins, managing director at S&P Global Ratings, emphasized that comparability suffers when similar issuers adopt standards on different schedules: “The more often everyone is on the same timeframe in which they’re adopting the changes, the better” . Some committee members have urged FASB to simplify the framework, suggesting perhaps all nonprofits should be scoped out of the definition regardless of what type of debt they issue . For nonprofits considering bond financing, understanding these potential accounting consequences is essential. At Nova Tax & Accounting Services, our Audit & Review team can help healthcare, educational, and cultural organizations navigate these complex GAAP distinctions and ensure proper financial statement presentation.