Make a Difference
Now’s the Time
Congress must act swiftly to renew and revise many programs that have already expired or will in a few days. Charitable nonprofits have a stake in many of the issues discussed throughout this edition of Nonprofit Advocacy Matters. Action is needed on the bipartisan nonprofit reforms outlined in the new Nonprofit Community Letter signed by nearly 4,000 organizations from all 50 states and shaped in large part by input from frontline nonprofits willing to raise their voices and share their expertise.
Now is the time to tell your Representatives and Senators where you stand on the issues they should be addressing this week. Here are just a few of the actions you can take now and in the coming days to make a difference:
The Next COVID Bill
All of Washington awaits the promised release this afternoon of the Senate Republican bill to address immediate health and economic needs due to the pandemic while adopting policies and incentives to support reopening. Once introduced, negotiations can commence in earnest with Democrats who will use the HEROES Act the House passed in May as their core priorities in the negotiations. Neither bill is expected to be enacted in its original form. Several big-ticket items (discussed below) are likely to generate the most attention. Nonprofits are closely following additional potential provisions, including increased funding for emergency support programs, a second round of Paycheck Protection Program loans, creation of forgivable loans for mid-size nonprofits left out of the CARES Act, expanded charitable giving incentives, and full relief for self-insured employers from unemployment costs, many of which are detailed in the new Nonprofit Community Letter.
Big Ticket Items and Why They Matter to Nonprofits
While not uniquely nonprofit oriented, the following subjects must be resolved if Congress is going to enact a bill that could include bipartisan nonprofit reforms. Further, nonprofits will be affected – whether directly or indirectly – by the outcome of the negotiations:
- Unemployment: The CARES Act unemployment enhanced payment of $600 per week expired over the weekend. Forbes summarizes that most Republicans want to reduce the unemployment benefit and Democrats want to extend these enhanced unemployment benefits at the current rate of $600 a week. Impact on Nonprofits: Nonprofits of all mission areas, not just human service providers, are affected when a large share of the workforce is unemployed and unable pay for basic needs. In the time it will take for partisans to come together on how to extend unemployment benefits, tens or hundreds of thousands of nonprofits will be forced to incur additional costs of providing services to a greater number of people. And, depending on the outcome, nonprofits may be forced to curtail other mission-critical operations for many months more to address the needs of unemployed workers who can’t make ends meet.
- Eviction Prohibitions: The CARES Act instituted a temporary moratorium on certain evictions for the non-payment of rent from a covered dwelling for a period of 120 days, which expired July 24. National Economic Council Director Larry Kudlow said over the weekend, “We will lengthen the eviction” moratorium, but tenants will begin to get eviction notices unless and until Congress acts. Impact on Nonprofits: Charitable organizations, and particularly houses of worship, may see rapid increases in requests for assistance in the form of rent supports or emergency housing. Habitat for Humanity is recommending that Congress adopt mortgage forbearance for families, grants to nonprofit lenders to enable payment forbearance, a national moratorium on foreclosures and evictions, and more.
- Liability Protections: The Senate Republican stimulus bill reportedly will seek to create an exclusive federal cause of action against businesses, nonprofits, schools, and others for claims arising from COVID. Plaintiffs would be required to show (1) gross negligence or willful misconduct and (2) failure to follow state/local public health guidelines. Simple negligence would not be sufficient and damages would be capped. Speaker Pelosi said on “Face the Nation” July 26 that Democrats will not support liability protections for employers of "essential workers" in the next coronavirus relief bill, arguing that such a measure would fail to make employers responsible for ensuring workplaces are safe while also providing no recourse for workers who do get sick. Impact on Nonprofits: A nonprofit state association leader said it best, that on workplace issues, “nonprofits tend to experience moral support and operational anxiety.” We care about people and about the bottom line. Nonprofits have the opportunity to recognize and highlight the wisdom and shortcomings of both sides of this argument, and to help build consensus on a fair and workable plan.
- State/Local Funding: The House-passed HEROES Act would provide about $1 trillion in new funds for state and local governments to cover COVID-related costs and replace tax and other revenues lost due to the pandemic. The Senate Republican position reportedly is to offer no new resources to these governments but to allow them to repurpose previously appropriated CARES Act funds. Impact on Nonprofits: Past recessions have shown that some state and local governments seek to balance their budgets by reducing payments owed to nonprofit grantees and contractors and seeking to impose taxes, fees, and payments in lieu of taxes on tax-exempt organizations. Further, the closure of government-run program causes residents to turn to nonprofits for assistance, thus increasing demand for nonprofit services as resources diminish.
Nonprofits Await Signing of Partial UI Fix, Seek More Support for Self-Insured Nonprofits
With impressive speed earlier this month, the Senate and House passed Protecting Nonprofits from Catastrophic Cash Flow Strain Act (S.4209), the bill to override the Labor Department interpretation of the CARES Act that requires self-insured nonprofits to pay 100 percent of unemployment benefits costs upfront and get repaid half by their states later. The bill is on the President’s desk and he has 10 days, or until August 3, to sign or veto the bill, or allow it to go into law without his signature. The bill is called a partial UI fix because it only corrects the misinterpretation of the CARES Act by the Department of Labor. As explained in the new Nonprofit Community Letter, nonprofits are asking Congress to increase the federal unemployment insurance reimbursement for self-insured (reimbursing) employers to 100 percent of costs. This policy enjoys broad bipartisan support among Senators and Representatives, and has been endorsed by the National Governors Association and the U.S. Chamber of Commerce.
- Census and Undocumented Immigrants: The President signed a memorandum instructing the Commerce Secretary to exclude undocumented immigrants from congressional apportionment that is based on the 2020 Census. The news was met with swift opposition. Vanita Gupta, president and CEO of The Leadership Conference on Civil and Human Rights, said in a news release, “This xenophobic action is unconstitutional. Undocumented immigrants live, work, and go to school in every state and they are part of our communities.” Representative Carolyn Maloney (D-NY), Chair of the Committee on Oversight and Reform, said in a statement, “Taking this step right in the middle of the ongoing Census is particularly egregious and sinister because it appears purposefully designed to depress the count, deter people from filling out their forms, and corrupt the Democratic processes on which our nation is founded.” The Oversight Committee is conducting a hearing on the matter on July 29.
- Loan Program Available for Some Nonprofits: The Federal Reserve published its final rules governing the Main Street Lending Program for nonprofit organizations “such as educational institutions, hospitals, and social service organizations.” Nonprofits are eligible if they have at least 10 employees, non-donation revenues of 60 percent or more, operating margins of at least two percent, at least 60 days of cash on hand, and current “debt repayment capacity” of greater than 55 percent. Loans of up to $300 million are available, but the interest rate and repayment terms are considered too severe for most nonprofits. See the Fed’s Frequently Asked Questions. On July 21, a nonprofit coalition issued a statement expressing appreciation but dissatisfaction because the new loan terms “retain numerous financial restrictions that make the loan program unworkable to most organizations that are targeted for support.” It continues, “We now call on Congress to include provisions in the next COVID-19 relief package that ensure mid-sized nonprofit organizations have access to forgivable loans.”
- Reopening Tax Credits on the Table: Half a dozen bipartisan bills in Congress propose tax credits to employers, including nonprofits, to reduce the costs incurred for COVID-19 testing, personal protective equipment (PPE), disinfecting, extra cleaning, and reconfiguring workspaces. Most of the bills would provide refundable payroll credits, meaning that nonprofits would be able to claim the credit against taxes they do pay (as opposed to income tax credits) and they would receive money back from the government when their credit exceeds payroll tax liability. A business coalition letter to congressional leaders this month raised the profile of the issue with policymakers. Treasury Secretary Mnuchin spoke on the subject last week, saying, "We'll have tax credits that incentivize businesses to bring people back to work. We'll have tax credits for PPE for safe work environments.”
Self-Insuring Nonprofits Face Disparate Treatment Under State Unemployment Laws
The pandemic is turning what has normally been deemed the smart business decision – self-insuring rather than contributing unemployment tax payments to subsidize other employers – into a fiscal nightmare. Ordinarily, nonprofits that take the self-insurance option pay to their state 100 percent of the costs of unemployment benefits the state provided to laid-off or furloughed employees. Historically low turnover in the nonprofit sector made self-insuring the best choice. These are not normal times, however, and thousands of nonprofits across the country have been forced to reduce staff because of government-ordered shutdowns and health concerns. The resulting massive layoffs, in turn, are generating substantial invoices from state unemployment offices that are 10 to 25 times greater than in previous years. Nonprofit advocates are promoting federal coverage of the full amount of these unemployment costs, but state laws are complicating the ability of nonprofits to cope with the immediate challenges.
Nonprofits and other employers that self-insure under their state’s unemployment compensation system are discovering numerous quirks, anomalies, and disparate treatment under state law as they confront enormous bills due to COVID-related layoffs. For example, Colorado requires self-insured nonprofits to pay their bills upfront, but doesn’t charge the accounts of other employers when layoffs are due to COVID-19. Similarly, an executive order from the Ohio Governor provides that contributing employers won’t suffer adverse consequences because of the increase in unemployment claims, but expressly excludes self-insured employers from this exemption.
However, not all the treatment of nonprofits in the states is unfair. Montana, New Mexico, and North Carolina have relieved all employers – for-profit and nonprofit; contributing and reimbursing – of any liability for layoffs related to COVID-19. Massachusetts and Texas, recognizing that the federal government is best able to solve this problem, have delayed the due dates for payments by self-insured employers with the expectation that Congress will cover 100 percent of the costs, a significant policy objective of the nonprofit community.
New York Short-Changing Nonprofits
Governments are starting to shift their financial burdens onto nonprofits again, prompting a coalition of New York nonprofits to send a letter to Governor Cuomo calling for a reversal of an executive order suspending prompt payment laws and delaying payments to nonprofits. The letter requests the state take five additional actions: fully implement recommendations by the State Comptroller to improve relationships between the state and nonprofits; register all pending contracts and not impose retroactive cuts; end the policy of financially penalizing nonprofits that secured Payroll Protection Program loans; streamline the approval process; and create a Nonprofit COVID-19 Recovery Advisory Committee and reinstall a nonprofit representative agency as co-chair. The New York Council of Nonprofits, a state association of nonprofits and leader of the letter, stated, “We urge the State of New York to recognize that community-based nonprofits are not merely vendors or contracting organizations, but are genuine partners serving the public interest. The nonprofit sector can bring tremendous talent, knowledge, innovative thinking, community connections and resources to the table. If we truly are all in this together, then it is imperative that the State of New York honor its responsibility to its residents by working very closely with our sector in developing and implementing the effective strategies that are in this crisis to rebuild our communities.”
Some States Including Nonprofits in COVID-19 Grants Programs
In recent weeks, several additional states have created COVID-19 grants programs for businesses, including charitable nonprofits. Tennessee Governor Lee announced $150 million in Coronavirus Relief Funds will be made available to nonprofits in the state to assist efforts to address the ongoing health and economic impacts of COVID-19. “The COVID-19 pandemic has placed enormous strain on all aspects of our society, and nonprofit organizations are no different. Nonprofits play a vital role in ensuring Tennesseans’ needs are met in times of crisis, and it’s imperative these organizations receive financial support to continue their work,” said the Governor. “The Tennessee Community CARES Program will help alleviate the duress nonprofits are under and ensure they continue to support their communities.”
After strong advocacy by the Wyoming Nonprofit Network, Wyoming nonprofits are included in two new COVID-19-related grant programs. The Relief Fund is for nonprofit and for-profit employers with up to 100 employees that have lost revenue due to public health orders and/or have incurred COVID-19 related expenses. Applicants can apply for up to $300,000. The Mitigation Fund is for nonprofits and for-profits that have incurred employee and customer health and safety expenses directly related to COVID-19. Maine's Economic Recovery Committee, which includes the Maine Association of Nonprofits, delivered to the Governor its recommendations for urgent economic support and stabilization measures in response to the pandemic. Among the recommendations is $50 million for investment in nonprofits, stating, “Right now, cities and states are relying on nonprofit partners as a buffer against the worst impacts of the outbreak. However, nonprofits are facing costs and losses incurred as a direct result of COVID-19.”
Validated: The Power of Sign-On Letters
On Friday afternoon, July 24, the power and value of sign-on letters became gloriously apparent. Senate Democratic Leader Chuck Schumer (D-NY) informed nearly 1,000 nonprofits on a statewide call about a letter he had received from a bipartisan group of 30 Senators urging action on nonprofit priorities in the next COVID-19 stimulus bill. That same afternoon, the New York Times posted an article that referenced the new Nonprofit Community Letter, signed by more than 3,800 nonprofits, laying out the same policy priorities. Over the course of a few hours that day, nonprofits saw validation of advocacy tactics that took perhaps thousands of hours of engagement through many networks, mission areas, and communities.
- Lankford/King Letter
The bipartisan letter Senator Schumer referred to called on Senate leaders to expand the Paycheck Protection Program to extend forgivable loans to nonprofits with up to 10,000 employees, provide 100 percent federal payment for the unemployment costs of self-insured nonprofits, and expand the universal (above-the-line) charitable deduction in the next stimulus bill. The Lankford/King letter is actually a modified version of a bipartisan letter signed by 144 Representatives delivered to House leadership in April.
Neither letter reflects a spontaneous coming together of like-minded officials, but the outcome of years of relationship building by local nonprofits with their elected officials, direct advocacy and trust-building – again, over many years – by state- and DC-based advocates, and community good will. When local nonprofits asked their Senators to sign onto the Lankford-King letter, they had already set the stage for support by demonstrating – through word and deed – their value in their communities.
It is also worth noting that this past week, Senators Lankford and King authored an op-ed in The Hill newspaper that relied heavily on the text of their sign-on letter. The article, Supporting nonprofits is investing in our nation, describes how much individuals and communities rely on the work of charitable organizations. They wrote, “Just as we need our nation’s nonprofits, they need our help now too.” Regarding negotiations over what goes into the COVID-19 stimulus bill currently being negotiated, they observed, “Now, maybe more than ever, we should ensure that our nation’s nonprofits can access the same government assistance opportunities available to private businesses since charities still must pay their employees, cover utility bills, and pay rent.” In backing up their policy proposals, the Senators reference the sign-on letter: “We were joined in this request by dozens of senators from both sides of the aisle — an important example of how the work of nonprofits transcends partisan politics.”
- New Nonprofit Community Letter
The other sign-on letter that was recognized in the New York Times article, the new Nonprofit Community Letter, is actually the third mutual expression of nonprofit priorities since the pandemic arose. The first letter, signed by several dozen national nonprofits, helped influence substantive provisions in the CARES Act as it was being negotiated. The next iteration, the original Nonprofit Community Letter, ultimately signed by 450+ national nonprofit organizations, served as a unifying agenda for the broad nonprofit community that helped to organize and target advocacy activities.
The newest letter, now signed by nearly 4,000 nonprofits from all 50 states, is the product of years of network weaving, advocacy training, and effective communications informed by experiences in advocacy at the federal and state levels. State associations of nonprofits are attuned to the need for credibility when activating grassroots appeals; the turnout of their members reflects the trust they have earned. National nonprofits similarly must build network cohesion in order to activate effectively when the times demand it. Notable among the signers on the new Nonprofit Community Letter are the more than 225 YMCAs, 175 United Ways, and several dozen local operations of Girl Scouts of the USA, Habitat for Humanity International, The Arc of the United States, and YWCA USA.
Finally, the letter reflects the conscious decision of hundreds of organizations to set aside their brands and egos and work together for the common good. The substance of the letter reflects the highest common denominator of policy priorities among America’s charitable nonprofits at this time of great national crisis.
It’s gratifying that the work of bringing together of the nonprofit community and elected officials received high-profile recognition. It shows that the efforts haven’t been in vain and that the messages are resonating. It also shows that nonprofits that continue to engage, to advocate, to insist on support for the nonprofit priorities in the next stimulus bill can prevail. So let’s get to it.
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a regular feature of Nonprofit Advocacy Matters.