House Passes American Rescue Plan Act,
Senate Action This Week
Early Saturday morning, the House passed the American Rescue Plan Act, the bill to enact President Biden’s $1.9 trillion set of proposals to address the health and economic effects of the coronavirus pandemic.
The bill now goes to the Senate using the “budget reconciliation process” that enables the Democratic majority to avoid a filibuster and pass the measure by a simple majority vote. Senate Majority Leader Schumer (D-NY) has said he plans to pass the bill this week, if possible, giving it time to go back to the House and then to the President’s desk for signature before the unemployment benefits for 18 million individuals expire on March 14.
In this Special Edition, we provide overviews of the legislation and how it would affect charitable nonprofits and their work providing COVID relief and recovery. Because the American Rescue Plan Act still has to pass the Senate, we start with actions nonprofits can take RIGHT NOW to improve the legislation.
Action Items Up Front
Tell the Senate: More Changes Are Needed
The COVID relief bill that passed the House has many provisions that nonprofits support, but it does not fully address three critical reforms important to the wellbeing of nonprofits and the people they serve. The Senate can now improve the bill further as it revises, debates, and votes on its version of the American Rescue Plan Act. These three issues need immediate attention:
- Federal Unemployment Coverage for Reimbursing Employers. The House-passed bill would extend through August 29, 2021 various federal benefits for unemployed workers, including coverage for self-employed workers and staff of religious and very small nonprofits. The legislation includes language improving the federal coverage of the unemployment costs of reimbursing nonprofits from 50% to 75% prospectively during the period April 1 through August 29. The Senate must provide 100% unemployment benefit reimbursement, retroactive to the beginning of the pandemic, to nonprofits that self-insure these benefits.
- PPP Second Draw 25% Gross Receipts Decline Requirement. Many charitable nonprofits are discovering that they are not eligible for Second Draw loans under the Paycheck Protection Program (PPP) because their gross receipts did not decline by 25% in any one quarter, as required in the COVID relief law enacted at the end of 2020. Unlike many for-profit businesses, most charitable organizations continued advancing their missions at enormous additional expenses that have far exceeded normal revenues. As a result, gross receipts may have declined less significantly or remained level, but the organizations are now facing dire economic challenges due to the cost increases that are not recognized by the Second Draw
eligibility rules. The Senate needs to repeal for charitable nonprofits the PPP Second Draw requirement that gross receipts decline by 25%.
- PPP Application Deadline. The year-end COVID relief law extended the Paycheck Protection Program to more applicants, created the Second Draw process, and established the Shuttered Venue Operator Grants (SVOG) program, yet it also set a very quick deadline of March 31 for applying for PPP loans. The American Rescue Plan Act, if enacted, will further expand eligibility for forgivable loans and add additional funds to the PPP and SVOG programs. But employers will have, at best, fewer than three weeks to apply for these loans unless Congress extends the application period. To assure that all qualifying nonprofits and businesses can access needed PPP relief, the Senate
should extend the PPP application deadline through the end of the year.
If any one, two, or three of these issues is important to your organization, send an email to your two Senators right away – this morning if possible – and tell them the American Rescue Plan Act must be improved to address these important needs. Find your Senators’ email addresses.
What’s in the American Rescue Plan Act?
The nearly 800-page bill would provide additional funding for COVID-19 vaccines, treatment, and testing; approve $1,400 stimulus checks for most taxpayers; extend unemployment benefits; increase the child tax credit and earned income tax credit; and extend the tax credit for nonprofits and other employers that provide paid sick leave and paid family and medical leave through September 30, 2021 (it is currently set to expire on March 31). Further, the measure would provide more funding for the Paycheck Protection Program and the Shuttered Venue Operator Grant program, childcare providers, the Corporation for National and Community Service, arts and humanities organizations, food assistance, housing and homelessness prevention,
and nonprofits providing services to survivors of domestic violence and sexual assault.
The Senate version of the bill will not include an increase in the federal minimum wage to $15/hour. The Senate Parliamentarian determined that the minimum-wage language in the House-passed bill must be removed due to Senate budget reconciliation rules. Senate Finance Committee Chair Wyden (D-OR) had announced a possible workaround solution to tax larger employers that didn't pay certain wage levels and provide an income tax credit to smaller employers to increase pay. That approach reportedly has been scrapped for now as too complex for fast-moving legislation.
What’s in the Legislation for Nonprofits
Below is a breakdown of the progress on some of the policy priorities identified in the nonprofit coalition letter to congressional leaders:
- Expand Access to Paycheck Protection Program (PPP) Loans. The bill would allow some larger nonprofits to apply for PPP loans for the first time by expanding eligibility to nonprofits with more than 500 employees that operate at multiple locations as long as no more than 500 employees work at any one location. It also would remove a rule that makes some nonprofits ineligible for PPP loans if they are affiliates of national organizations.
- Extend and Enhance Federal Unemployment Coverage. The COVID relief package would extend through August 29, 2021 various federal benefits for unemployed workers, including coverage for self-employed workers and staff of religious and very small nonprofits, as well as an increase in the per week supplemental federal payments from $300 to $400. Currently, these benefits are scheduled to expire on March 14. Notably for nonprofits, the bill would prospectively improve the federal coverage of the unemployment costs of reimbursing nonprofits from 50% to 75% during the period April 1 through August 29.
- Provide $350 Billion in Aid to State, Local, Tribal, and Territorial Governments.
Beyond the American Rescue Plan Act
Even as Senators are finalizing the text of their version of the American Rescue Plan Act for floor action this week, they are looking ahead to the next major legislative push: a large infrastructure bill to fulfill President’s “Build Back Better” agenda. While important provisions like broadband expansion are already on the to-do list for that bill, nonprofit advocates are working to ensure additional relief for charitable organizations is also included. This infrastructure bill could also be the vehicle to make any legislative improvements to the unemployment and forgivable loan programs discussed at the outset of this newsletter.
This week, Senator Klobuchar (D-MN) is expected to introduce an updated version of her WORK NOW Act (S. 3747 in the last Congress) that would create a grant program at the local, state, and federal levels to help nonprofits employ more people to advance their missions in communities. A bipartisan group of Senators led by Senator Lankford (R-OK) is promoting support for a bill they will reintroduce that will seek to expand the universal charitable deduction, a very high priority for the nonprofit community.
REMINDER: Nonprofits with Fewer than 20 Employees
Act Fast – Now Is the Best Time to Apply for a PPP Loan
Starting last week and running through Tuesday, March 9, the Small Business Administration and Paycheck Protection Program lenders are processing loan applications ONLY from nonprofits and for-profit businesses with fewer than 20 employees. This exclusive small-employer PPP processing window is designed to provide more equitable relief by “targeting the PPP to the smallest businesses and those that have been left behind in previous relief efforts” to ensure that lenders give smaller employers the attention they need to work their way through the application process. If you think your nonprofit
may be eligible for an initial PPP loan or a second draw loan that Congress authorized at the end of 2020, now is the best time to contact a lender and find out how much relief may be available. Learn more at SBA.gov.