Nonprofits – Doing Our Part
Let’s End This Pandemic ASAP
Our nation is at a crossroads. Down one path is the end of this pandemic, brought nearer by three highly-effective vaccines. Down the other are further lockdowns, as we are seeing in other countries, as dangerous variants spread quickly.
The public trusts charitable nonprofits more than government, media, and other institutions, meaning we have an important part to play in ending the COVID-19 pandemic by helping the communities we serve get vaccinated. The National Council of Nonprofits is delighted to host two free national webinars this week to provide up-to-date information from experts and nonprofit success stories that demonstrate what individual nonprofits can do to help the people we serve go down the path to a better future:
- How every nonprofit can play a role in helping the communities we serve get vaccinated
Hear from a respected medical expert, a representative from the White House, and three frontline nonprofits that are helping people in their communities overcome obstacles of trust in or access to the coronavirus vaccine. Attend and learn how you can defeat COVID-19.
Wednesday, April 7 | 3pm Eastern
- What nonprofits need to know as staff and volunteers return from remote to in-person operations
Hear from experts in law, volunteerism, and messaging about key considerations as we prepare to return to in-person operations. This webinar is made possible by Your Part-Time Controller.
Friday, April 9 | 3pm Eastern
NOTE: You will need to register for each webinar separately.
President Promotes Infrastructure Plan
Last week, President Biden released an outline of his American Jobs Plan, an infrastructure proposal calling for spending $2 trillion on transportation, water, housing, broadband, job training, and much more. It would be paid for by increasing corporate taxes. The plan would provide $400 billion for health care and $100 billion for “workforce development,” including job training presumably provided in part by nonprofits. The proposal would also inject $140 billion for research and development for advanced technologies, $35 billion for climate change research, and a new tax credit for solar power. The plan calls for
a growing priority among nonprofits: $100 billion to “bring affordable, reliable, high-speed broadband to every American, including the more than 35 percent of rural Americans who lack access to broadband at minimally acceptable speeds.” This initial draft of the American Jobs Plan does not include other nonprofit priorities, such as the WORK NOW Act nonprofit jobs program, improved unemployment reimbursement, and increased charitable giving incentives. The President reportedly will soon announce an additional $1 trillion-plus bill focused on “human infrastructure” that is expected to include provisions like an expanded child tax credit program and healthcare insurance subsidies.
Paycheck Protection Program Extended. Apply Now!
On an impressive bipartisan basis, Congress passed and President Biden signed the PPP Extension Act, H.R. 1799, giving nonprofits and other eligible borrowers until May 31 to submit their applications for First Draw and Second Draw PPP loans. At a congressional hearing last month, SBA officials acknowledged that the money appropriated for the program may run out earlier than the new expiration date, perhaps as soon as
mid-April. As reported previously, a new interim final rule from the Small Business Administration 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 employees 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 for one quarter of 2020 compared to the same quarter in 2019.
Supreme Court Donor Secrecy Cases Draw Widely Disparate Views, Agendas
Over the past month, nonprofits, scholars, special interest groups, state Attorneys General, and politicians have weighed on two cases before the U.S. Supreme Court that – depending how the Court rules – could impact the law and operations of charitable nonprofits for decades to come. At issue is the requirement by California and other states that charitable organizations file a copy of the Schedule B (or its equivalent) of their IRS Form 990 on a confidential, non-public basis when filing their
charitable solicitation registration forms. State Attorneys General use Schedule B to deter and detect fraud and misuse of charitable assets. Two organizations – Americans for Prosperity Foundation and Thomas More Law Center – refused to file their Schedule B with the California Attorney General and instead filed separate lawsuits to stop any enforcement against them. Both claimed that the First Amendment’s right of freedom of association allowed them to shield the identity of their major donors from state law enforcement officials – even on a confidential, non-public basis. Interested parties filed more than 80 amicus curiae (friend of the court) briefs in support of or opposition to various legal theories
in the cases. The National Council of Nonprofits wrote an amicus curiae brief to inform the Court about critical concerns of charitable nonprofits and urge it to be very careful when writing the opinion to avoid harming the work of organizations on which tens of millions people rely every day. Continue reading this article by Tim Delaney for the background on the cases, what is happening at the Court, and why we filed our brief.
- Shuttered Venue Operators Program Opens April 8: The Small Business Administration announced that the Shuttered Venue Operators Grant (SVOG) program application process will open on April 8, 2021. The program, created as part of the year-end COVID relief bill and modified in the American Rescue Plan Act, will provide grants of up to $10 million for performance venues, independent movie theaters, and cultural institutions. The League of American Orchestras provides a status update on the SVOG and a recap of a recent webinar on the Shuttered Venues program hosted by the SBA.
- Using the Employee Retention Credit: The IRS on Friday issued guidance (Notice 2021-23) for employers on how to calculate and claim the Employee Retention Tax Credit (ERTC) for the first two calendar quarters of 2021. The revisions to previous guidance are needed due to improvements in the law enacted in the year-end COVID relief law. The guidance explains the increase in the maximum credit amount – up to $7,000 per employee per quarter – and changes to the gross-receipts test and definition of
qualified wages, among other issues. The IRS announced that it will be issuing additional guidance covering the third and fourth calendar quarters of 2021 that will reflect additional changes to the ERTC enacted as part of the American Rescue Plan Act. For more on claiming the ERTC for 2020, go to Nonprofits, Don’t Overlook Your Potential Refund Under the Employee Retention Tax Credit.
- DOL Guidance, Confusion Over Unemployment Costs: The U.S. Labor Department issued updated guidance (UIPL No. 18-20, Change 2) that seeks to reduce questions about federal coverage of the unemployment costs of reimbursing employers, but created greater confusion. As a result of the American Rescue Plan Act, the federal government is scheduled to start covering 75% of the reimbursers’ unemployment costs starting April 1, up from 50% coverage paid since approved in the CARES Act in March 2020. The new guidance fixes a previous error that appeared to create a one- to two-week gap between the 50% federal
coverage and 75% federal coverage of these costs. There will be no gap. However, the updated guidance now suggests that states filling the shortfall in federal coverage by paying 50% of the costs of reimbursing nonprofits may need to amend their statutes or executive orders to switch the 50% to 25% or the Labor Department will reduce payments to the states by 25%. In 2020, the Department of Labor made a similar draconian interpretation of the law that required Congress to enact corrective legislation last August.
- Economic Injury Disaster Loan (EIDL) Loan Limits: The Small Business Administration has increased the limits for Economic Injury Disaster Loan (EIDL) loans, according to an SBA news release. Starting April 6, 2021, the SBA is raising the loan limit for the COVID-19 EIDL program from 6-months of economic injury with a maximum loan amount of $150,000, the amount set by the previous Administration, to up to 24-months of economic injury with a maximum loan amount of $500,000. The SBA news release stated that “this new relief builds on SBA’s previous March 12, 2021 announcement that the agency would
extend deferment periods for all disaster loans, including COVID-19 EIDLs, until 2022 to offer more time for businesses to build back.”
- Eviction Ban Extended Through June: The Centers for Disease and Prevention Director signed an extension of the eviction moratorium through June 30, 2021, further preventing the eviction of tenants who are unable to make rental payments. In a statement, the CDC explained its public-health rationale for the moratorium: “The COVID-19 pandemic has presented a historic threat to the nation’s public health. Keeping people in their homes and out of crowded or congregate settings — like homeless shelters — by preventing evictions is a key step in helping to stop the spread of
States Begin Allocating Federal Funds and State Surpluses
Governors and legislatures are beginning to approve spending federal monies for various priorities affecting nonprofits, such as additional stimulus, unemployment insurance, and broadband. Some states are focusing on providing quick stimulus relief for qualifying residents by way of direct payments (California, Colorado, District of Columbia, and Maryland) and providing additional relief to businesses and some nonprofits (California, Nevada,
New Mexico, Pennsylvania, and Washington State). Legislation for small business and nonprofit grants is pending in Arizona and Utah. Legislators in Hawai`i passed a bill allocating $700 million for unemployment insurance costs, including repaying the U.S. Department of Labor for UI
loans and replenishing the state’s trust fund. Missouri Governor Parson transferred $300 million in federal Coronavirus Relief Funds from the state treasury to the unemployment trust fund to avoid tax rate increases for contributing employers. Last month Michigan and North Carolina lawmakers enacted appropriations for nonprofit schools and programs, including food assistance, education, libraries, and rental assistance.
States Challenge Restrictions on ARPA Funds
Attorneys General representing 16 states have filed separate lawsuits in federal courts challenging the so call “Tax Mandate” in the American Rescue Plan Act (ARPA). The first was filed by the Ohio Attorney General, and two weeks later 13 states filed suit in Alabama. Since then, Arizona and Missouri have filed their own lawsuits. The ARPA allocates $350 billion for state, local, Tribal, and territorial governments, and authorizes them to use the funds for a wide variety of purposes, including aiding nonprofits. The law, however, provides that states cannot use the ARPA funds from federal taxpayers to “either directly or indirectly offset a reduction in the net tax revenue… or delay the imposition of any tax or tax increase.” The 16 states challenge this restriction, calling it a violation of the Spending Clause of the U.S. Constitution and states’ rights under the
Tenth Amendment, and an affront to their sovereign authority to set tax policy for their states. The suits follow a letter by 21 attorneys general to the U.S. Treasury challenging the provision. The Treasury Department responded to the letter by stating that the ARPA “simply provides that funding received under [ARPA] may not be used to offset a reduction in net tax revenue resulting from certain changes in state law.” The Department is expected to issue guidance to clarify which state spending and tax actions are appropriate and which violate the ARPA limitation.
The resolution of the dispute may affect the ability of the states to provide relief to nonprofits. Ohio’s lawsuit asserts, “Money is fungible, so any revenue lost from a tax credit, deduction, rebate, or decrease that Ohio legislators or executive officers may implement would be ‘indirectly’ offset by the $5.5 billion the State expects to receive.…” Nonprofits may benefit from some proposed tax credits like a bill pending in West Virginia that would extend the Neighborhood Investment Tax Credit to promote charitable giving. Other examples of proposals put in doubt
are the Endow Illinois Tax Credit (HB 1761/SB 2052), tax credits for certain donations to homeless shelters and food banks in Michigan, and tax credit for charitable gifts to nonprofits in North Dakota.
Respect Through Data
It can be a sincere statement or a meaningless throwaway line when a politician tells a nonprofit audience that local charities are valued and appreciated. But when policymakers cite a statistic about nonprofit reach or impact, that’s when you know they are paying attention. (See, e.g., Senator Schumer’s quote in sidebar.) That’s a key reason why state associations of nonprofits and others put so much effort into economic reports and why we regularly bring them to readers’ attention through this newsletter. They demonstrate and accelerate advocacy in action.
Earlier this year, the Montana Nonprofit Association published the 2021 Montana Nonprofit Economic Report, the organization’s biennial study of the economic impact of the charitable nonprofit sector in Montana. The subtitle of this latest report sums up the advocacy
potential of the data quite nicely: “501(c)(3) charitable nonprofit organizations drive the economy, keep government lean, bring efficiencies and resources to communities, and are essential to Montana’s vitality and prosperity.”
Among other findings, the report shares that, prior to the pandemic, Montana's charitable nonprofits employed 51,719 people, which is 11.4% of the state’s workforce. Nonprofits paid those employees just over $2.4 billion in wages. employ. Charitable organizations generated nearly $10.5 billion in revenue, which was returned back to Montana through mission-driven work. The report breaks down the nonprofit data by
each of the state’s 56 counties, detailing the number of nonprofits and income generated, allowing lawmakers to see the local impact for their constituents.
The report concludes by observing, “Charitable nonprofit organizations are efficiently and effectively operating in every county and in all Tribal nations in Montana in partnership with the business sector and government.” It adds, “Nonprofits are providing essential services, supporting Montana’s quality of life, and serving as our state’s social safety net.” The report continues, “Nonprofits are frontline workers, guardians of community well-being, employers, and economic drivers.” And finally, the call to action for policymakers: “As we all work to reinvigorate Montana’s economy, the nonprofit sector will be an essential part of the equation, bringing
community-based, resourceful, people-centered solutions.”
The Montana report is only the latest example of organizations going the extra mile to generate data that tell the nonprofit story. Regular readers of this newsletter have already seen reports this year on new data from the Delaware Alliance for Nonprofit Advancement, the Center for Non-Profits in New Jersey, and Momentum Nonprofit Partners in Memphis, Tennessee, as well as the report in
today’s sidebar from Together SC, the state association of nonprofits in South Carolina.
The point? Data can tell a story that anecdotes and relationships can’t convey. And when repeated by politicians, they can indicate that advocacy efforts are sinking in.
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Updates.