We stand in solidarity with our sisters and brothers who identify as Asians, Asian Americans, and Pacific Islanders, expressing our sorrow and our outrage at the slaying of seven women and one man – six of whom were of Asian descent – last week in Atlanta. We offer our comfort and support.
The offer is genuine. Yet obviously it is not enough to stand together in moral solidarity during times of tragedies. The increasing number of violent verbal and physical attacks against AAPI – nearly four thousand reported attacks last year (and, undoubtedly, many more that were not reported) – show that more is needed. And not just with and for AAPI, but for every part of our richly diverse human family. Please read To End the Cycle of Hate, Begin With Love for Others.
Immediate Priority – Action Needed
Congress Must Extend the PPP Before It Expires on March 31
The American Rescue Plan Act enacted earlier this month added an additional $7.25 billion to the Paycheck Protection Plan but did not extend the program’s shut-down date beyond its statutory sunset of March 31, 2021. Last week the House overwhelmingly passed a bill, H.R. 1799, the PPP Extension Act, to extend the deadline for applying for PPP loans through May and give the Small Business Administration (SBA) an additional 30 days to complete processing of the applications. However, conflicting bills in the Senate appear to be injecting last-minute partisanship into a fix that PPP borrowers –
nonprofits and for-profit businesses alike – desperately need. One bill (S. 723) sponsored by Senator Collins (R-ME) is identical to the House-passed bill. An alternative version (S. 815), introduced last week by Senator Rubio (R-FL) and cosponsored by Senator Collins, would condition the two-month extension on a mandate that the Biden Administration refrain from prioritizing loan processing for any group of borrowers, such as the recent special processing windows for smaller employers and those
with limited access to capital.
Take Action – Senators: Enact the PPP Extension Bill NOW
Join nonprofits throughout the country in advocating for the passage of the House-passed bill, H.R. 1799, the PPP Extension Act of 2021, extending the PPP application deadline to May 31. The House passed the bill overwhelmingly by a vote of 415-3 on March 16 and now the Senate should act swiftly to pass this clean, bipartisan extension. You can help by emailing your Senators this simple message: “I write to ask you to take immediate action to extend the application deadline for PPP loans. The current
deadline expires on March 31, which is much too soon for nonprofits and other small businesses to apply. Last week the House passed a bill, the PPP Extension Act of 2021, with overwhelmingly bipartisan support (415-3) to extend the PPP deadline through May 31. We’re counting on you to help nonprofits and your other constituents so we don’t get shut out of the PPP unfairly.”
More Legislative Priorities
On the same day that President Biden signed the $1.9 trillion American Rescue Plan Act, Senators and Representatives introduced major legislation that are high priorities of the nonprofit community.
WORK NOW Act: Senators and Representatives reintroduced the Work Opportunities and Resources to Keep Nonprofit Organizations Well Act (WORK NOW Act) (S. 740 and H.R. 1987), legislation designed to inject $50 billion into frontline nonprofits to generate employment for laid off workers and to address the skyrocketing needs in communities for COVID-19 relief and recovery. The grants program would help nonprofit organizations retain their employees to continue to
serve growing public needs, scale their service delivery, and hire more workers to meet these critical needs. The Senate version of the WORK NOW Act is sponsored by Senator Klobuchar (D-MN) and cosponsored by 12 Democratic Senators. Representative Sanchez (D-CA) is the House sponsor. See the Senate news release, the House news release, and letter in support of the WORK NOW Act to House and Senate leadership.
Universal Charitable Deduction: A bipartisan, bicameral group of lawmakers introduced the Universal Giving Pandemic Response and Recovery Act (S. 618 and H.R 1704). The legislation would raise the $300/$600 cap on the universal charitable deduction in the year-end COVID relief law to roughly $4,000 for individuals/$8,000 for couples, extend the availability of the deduction through the 2022 tax year, and eliminate the current exclusion of donations to donor advised funds. The Charitable
Giving Coalition has set up a sign-on endorsement form to enable nonprofits to express support for the legislation. The deadline to sign on is March 26, 2021.
- Charitable Giving Update: The small charitable giving deduction in the CARES Act appears to have had a positive impact on donations targeted by the temporary incentive, according to new data from Fundraising Effectiveness Project (FEP). The Quarterly Fundraising Report found that giving had increased 10.6 percent in 2020 compared to 2019. Notably, the greatest increase in giving occurred in donations of $250 or less, which reflected a 15.3 percent jump from 2019. The FEP Chair explained that “one
factor that may have helped the increase in smaller gifts was the universal charitable deduction,” noting that there was a 28 percent increase in donations of $300 on December 31, the last day for claiming the deduction for 2020.
- SVO Grants Program Nears Opening: The SBA reports that the Shuttered Venue Operators (SVO) Grant program application process is slated to open April 8, 2021. The program was established in the year-end COVID law and amended by the American Rescue Plan Act to provide over $16 billion in economic relief to nonprofits and for-profit venue operators. Although the program has not formally opened, SBA web resources now include updates to both the application checklist (March 11, 2021) and the Frequently Asked Questions (March 12, 2021).
- Individual Tax Filing Deadline Delayed: The Treasury Department and Internal Revenue Service announced last week that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. This extension is for individual taxpayers only; it does not delay the due date for Form 990s for nonprofits nor tax filings for other businesses. Also, the federal tax filing deadline postponement to May 17, 2021 does not apply to state tax payments or deposits or payments of any other type of federal tax. House tax leaders expressed their strong support for the delay.
- NEA Strategic Plan: The National Endowment for the Arts is soliciting ideas and insights from the general public to help inform its FY 2022-2026 strategic plan. The agency specifically seeks the public’s input on the following elements: Mission, Vision, and Strategic Goals and Objectives. The NEA asks interested persons to email their comments to NEAstrategicplanninggroup@arts.gov before March 31, 2021.
News You Can Use
SBA Updates Paycheck Protection Program Resources
The SBA has updated several parts of its previous guidance and loan application forms to implement changes to the Paycheck Protection Program (PPP) enacted as part of the American Rescue Plan Act. A new interim final rule makes clear that loan eligibility expands to “a tax-exempt nonprofit organization described in section 501(c)(3) of the Internal Revenue Code that employs not more than 500 employees per physical location of the organization.” The guidance further clarifies that eligibility for Second Draw loans
extends to a nonprofit employing no more than 300 per physical location. This means that the new multilocation rule for larger employers applies both to First Draw and Second Draw loans, although the number of employees per location is different under each. And nonprofit applicants for Second Draw loans still must show the 25% decline in gross receipts. Newly released applications for First Draw loans and Second Draw loans reflect these changes.
The new guidance from SBA clarifies that applicants seeking Shuttered Venue Operators (SVO) Grants may also apply for PPP loans, a prohibition that was altered in the American Rescue Plan Act. Now, SBA states: “If you receive a PPP loan after December 27, 2021 and you are subsequently approved for an SVO grant, the amount of the SVO grant received will be reduced by the amount of a First Draw or Second Draw PPP Loan.” It also makes clear that “a PPP loan received before December 27, 2020 will not reduce the amount of the SVO grant.” PPP applicants must still certify, however, that they have not been
approved for an SVO grant as of the time of the application. Finally, the revised rule adjusts the language regarding loan forgiveness to confirm that payroll costs taken into account in determining Employee Retention Tax Credit and others such as disaster credit or COBRA continuation are not eligible for loan forgiveness.
State and Local Budgets Split, Federal Aid Expected to Fill Gaps
More than half of the states and 700 cities had budget shortfalls in 2020 despite quick reactions to the coronavirus pandemic by their policymakers and budget officials. Cities experienced an aggregate shortfall of $90 billion due to lower property tax receipts and lack of any aid federal relief under the CARES Act, according to an analysis by the National League of Cities. Reports from other jurisdictions paint a rosier picture: that tax revenues were up $3.2 billion in 2020 from 2019, and overall, revenues were down by less than .2 percent, after some adjustments. However, the aggregate data hide large disparities, particularly among states that rely on energy revenues and tourism dollars. Revenues fell by 10 percent or more in Alaska, Florida, Hawai`i, North Dakota, Oregon, and Texas.
State and local governments may use American Rescue Plan Act funds to fill budget shortfalls, restore vacant or cut positions and programs, or provide state stimulus funding and direct relief to taxpayers and nonprofits. Some local governments are looking to use those funds to support their communities through expenditures for vaccine distribution, small businesses and the work of nonprofits, broadband expansion, food
and housing assistance, and more. Several states (Arkansas, Georgia, Iowa, Louisiana, Mississippi, Missouri, Oklahoma, Utah) had already announced or made headway on tax cuts and tax reform, which the Treasury Department stated must be offset with their own funds to avoid conflict with the American Rescue Plan. See related article below.
ARPA, Constitutional Questions, and Nonprofit Relief
The American Rescue Plan Act (ARPA) sets aside $350 billion in additional aid to state, local, Tribal, and territorial governments to be used for things like grants to nonprofits and for-profit businesses, replacing lost revenues due to the pandemic, and returning public employees to their jobs. A provision added in the Senate bans states and localities from using such funds to pay for tax cuts calls into question whether the federal aid can be used to shore up state unemployment insurance (UI) trust funds. Specifically, the ARPA provision prohibits states from “directly or indirectly” offsetting a reduction in net
tax revenue or taking an action that “delays the imposition of any tax or tax increase.” This matters to nonprofits and other contributing employers because many are facing automatic unemployment tax increases if their states’ trust funds remain underfunded.
Several state Attorneys General are objecting to the restriction on tax cuts. Twenty-one joined in a letter to Treasury Secretary Yellen last week calling the prohibition “unconstitutional” and “the greatest attempted invasion of state sovereignty by Congress in the history of our Republic.” Ohio’s Attorney General has already filed a lawsuit in federal court to overturn the provision. While many believe that the “plus up” of state UI funds may not fall within the category of
proscribed uses of the Federal monies, some states may be reluctant to allocate funds this way absent further guidance from the Treasury Department, further delaying relief from exorbitant unemployment costs. Resolution of concerns may need to await formal guidance from the Treasury Department, but a Department spokesperson clarified, “states are free to make policy decisions to cut taxes – they just cannot use the pandemic relief funds to pay for those tax cuts.”
Government Grants and Contracting Reforms
- Maryland: A bill that has passed the Maryland Senate would increase loan amounts under the Nonprofit Interest-Free Micro Bridge Loan (NIMBL) by five percent in 2022. NIMBL was enacted to help nonprofits cover expenses when experiencing delays in payments from governments.
- Massachusetts: A pending Massachusetts House bill would align state payments on grants and contracts with nonprofits with the federal OMB Uniform Guidance by requiring reimbursement of the nonprofit’s indirect costs. The bill expressly sets the indirect cost rate as the federally negotiated rate or, if one has not been negotiated, then 15 percent of modified total direct costs. Importantly, the requirement would apply regardless of whether funds were awarded directly to the nonprofit by the state or
through a third party. The legislation defines “indirect costs” to be the same as the OMB Uniform Guidance.
Turning Outrage into Advocacy
The murders of six Asian women in Atlanta was not an isolated event; there have been nearly 3,800 reported incidents of anti-Asian discrimination in the past year. A colleague of Asian descent recently wrote that the killing of six Asian women in Atlanta caused “many Asians feel traumatized, invisible, and incredibly fearful.” The many expressions of outrage at the violence against Asian people throughout the country may signal a broader awareness of the discrimination directed at Asian Americans and Pacific Islanders.
Nonprofits throughout the country have voiced their outrage, solidarity, and empathy. Carmen C. Marshall of Maryland Nonprofits wrote in a statewide message, “When I have reached out to my friends and colleagues of the Asian, Asian American, and Pacific Islander communities, I have grappled with how to simply ask, ‘How are you?’” She observes that as a Black woman, she has “sat many times on the other side of that question as it was posed to me.” To answer the question in the past, she writes, “I’d have to call the ancestral roll to give voice to the generations of peoples ravaged by racism, hatred, persecution, and death. No doubt members of Native American,
Indigenous, Black, Latino and Latinx, and LGBTQIA communities – and many others – would know what I’m talking about.”
Colleagues at Nonprofit New York recently expressed its heartfelt solidarity with Asian New Yorkers and Asian American communities across the country. Going farther, the association posted Ways to support Asian New Yorkers amidst violence targeting Asian Communities, which includes self-education tips, action items for engaging with elected officials, and additional resources. As a starting point, please see the statements of Asian American Federation, Coalition for Asian American Children and Families, and the Atlanta-based Asian Americans Advancing Justice for more education on this crisis.
The President & CEO of the Michigan Nonprofit Association, Donna Murray-Brown, pledged in a statement of support, “We will remain vigilant in our fight against injustice. And we will not be silent. Because this isn’t just an Asian American issue – this is an American problem. We must do our part to speak up and call out racism and violence.” She continued, “We urge anyone who has witnessed or experienced a hate crime to report it.”
Similarly, Alaska’s The Foraker Group stated, “We stand with the Asian and Pacific Islander community and condemn these hate crimes and all acts of hatred and violence.” Going farther, the state association issued a call to action: “It is up to all of us to stop hate in its tracks. We encourage you to not miss this moment, to ask what you need to take with you and what can you leave behind that perpetuates inequity in our communities. Foraker has and will continue to ask these questions and to stand beside Alaska’s nonprofits and community leaders to move forward.”
Speaking out, identifying policy solutions, and taking action are things that nonprofits are good at. This crisis deserves the attention and skills of all of us to overcome.