Policy Responses to the Coronavirus Pandemic
This special edition of Nonprofit Advocacy Matters contains information nonprofit professionals need to adjust operations, advocate for practical policy solutions, and do what nonprofits do best – take actions in their communities for the public good. The articles provide updates on federal legislative and administrative responses, news of state and local policy matters, and examples of nonprofit engagement to strengthen decisions that affect the lives of people in their communities. As for inspiring ideas on what each reader can do to make a difference, we encourage you to watch How We Can Support Each Other and Our Communities During the Coronavirus Crisis, a video blog posting by Tiffany Gourley Carter, Policy Counsel at the National Council of Nonprofits.
House Passes Coronavirus Response Bill
Early Saturday morning, the House passed H.R. 6201, the Families First Coronavirus Response Act, a bill that expands social support programs, mandates that employers provide paid leave for many affected workers, and protects nonprofits (see summary). The measure, negotiated between House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin, passed by a vote of 363 to 40. Some technical problems with the fast-moving bill will require the House to amend and re-pass, but that is expected to happen on Monday. The Senate is then expected to take up and pass the bill early this week. President Trump has tweeted he will sign it.
The legislation provides free testing for COVID-19, $2 billion in unemployment assistance, $1 billion in food aid, and increased federal funding for Medicaid. It also suspends the SNAP work requirements and grants greater waiver authority to the states during the crisis. The bill includes a complex set of temporary paid leave mandates and employer reimbursement provisions, detailed here:
Importance of the Refundable Payroll Tax Credit
Typically, Congress enacts income tax credits for employers, which are incentives that tax-exempt employers are not able to redeem since they don’t pay income taxes. The new provisions in the bill regarding payroll taxes ensure that all types of employers (with fewer than 500 employees) are able to recoup the costs of these paid leave mandates related to coronavirus. Tim Delaney, President and CEO of the National Council of Nonprofits explained the significance in a statement: “Too often in the past, Congress has touted help for employers in the form of income tax credits that could be applied only to taxes that nonprofits do not pay, thus leaving employers of 12.3 million Americans without access to much-needed relief. We’re glad that’s not the case this time.”
Emergency Paid Sick Leave: The bill (at Sec. 5102) would require employers with fewer than 500 employees (including nonprofits) to provide their employees two weeks of paid sick leave, paid at the employee’s regular rate, to quarantine or seek a diagnosis or preventive care for the coronavirus. It also requires payment at two-thirds the employee’s regular rate to care for a family member for those purposes or to care for a child whose school has closed or child care provider is unavailable due to the coronavirus. A separate section of the legislation (Section 7001) provides those employers a refundable tax credit equal to 100 percent of qualified sick leave wages paid, up to certain limits. The tax credit is allowed against the employer portion of payroll taxes, and any paid leave costs that exceed the amount of payroll taxes owed will be refundable to the employer at the end of each quarter. These provisions would expire at the end of December 2020.
Emergency Family and Medical Leave Expansion: The bill (at Section 3102) would also expand the number of workers who can take up to 12 weeks of job-protected leave under the Family and Medical Leave Act for coronavirus-related reasons. After the two weeks of emergency paid leave (above), employees of employers with fewer than 500 employees will be eligible to receive at least two-thirds of each employee’s usual pay. The qualifying reasons for the emergency paid leave are a current diagnosis of COVID-19, self-quarantine, caring for another person with the disease or who is under quarantine, or caring for a child due to COVID-19 related closing of school, or other care facility. Section 7003 of the bill provides a refundable tax credit equal to 100 percent of qualified family leave wages paid by an employer for each calendar quarter, allowed against the employer portion of payroll taxes. These provisions would also expire at the end of 2020.
President Declares National Emergency
President Trump declared a national emergency over the coronavirus pandemic Friday, activating several extraordinary powers and protocols to curb the spread and address immediate needs. “The action I am taking will open up access to up to $50 billion of very important and a large amount of money for states and territories and localities.” Among other things, the declaration activates disaster response powers under the Stafford Disaster Relief and Emergency Assistance Act, allows the Secretary of Health and Human Services to temporarily waive or modify certain requirements of the Medicare, Medicaid, and State Children’s Health Insurance programs, lets the Treasury Department extend tax filing deadlines, and empowers the Federal Emergency Management Administration (FEMA) to coordinate activities with the state and local governments to activate their Emergency Operations Centers.
- Nonprofit Access to Small Business Disaster Loans: The Small Business Administration announced last week that it is extending disaster relief loans to small businesses, including nonprofits, to help alleviate economic injury caused by COVID-19. Working with state officials, SBA will be offering loans of up to $2 million through the Economic Injury Disaster Loan program. As SBA explains, “These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.” Learn more about the Economic Injury Disaster Loan Program.
- Federal Grants Flexibility: The federal Office of Management and Budget has posted instructions allowing federal agencies to issue exceptions to the grants rules in the OMB Uniform Guidance to remove administrative impediments on services necessary to carry out the emergency response related to COVID-19. The Memo (M-20-11) encourages flexibility in processing renewals of grants, allows looser reimbursement and purchasing standards, and more.
State and Local Governments Activate Against Coronavirus
A majority of state and local governments and health departments have taken steps to prepare, and in many places, start providing health care, funding, and resources to residents – with several doing so while simultaneously closing their doors to protect the public, staff, and public officials. Governors and mayors in several states have ordered closures of bars and restaurants except for take-out and deliveries, and New Jersey’s Governor has urged residents to not leave their homes between 8 pm and 5 am. Six states (Alabama, Arizona, Massachusetts, Maryland, Minnesota, and New York) have passed spending measures ranging from $95,000 to $55 million for coronavirus preparedness, monitoring, prevention, containment, treatment, and response. Six more have bills pending. Eleven states so far have enacted, and an additional five plus the District of Columbia are considering, legislation to encourage their respective governors, residents, and public officials to take actions regarding public health practices (e.g., avoiding handshaking, sharing best practices, and posting information), workforce protections (e.g. extended insurance coverage, compensation for parents caring for children, shared leave programs, and substitute teacher benefits), and healthcare coverage (e.g., extended coverage for pregnant women, waived fees, and Medicaid extensions).
Many state legislatures have recessed, halted, hastened, or delayed legislative business during the crisis, which is likely to disrupt decision-making and funding streams to aid in emergency relief. Some further relief and clarification are afforded in twelve states and Washington DC, which have paid sick leave. Courts in many jurisdictions, including the U.S. Supreme Court, have suspended in-person matters, including oral arguments and jury trials. As of this this writing, 49 states and the District of Columbia have announced states of emergency. For further breakdowns of legislation and actions, see the National Conference of State Legislatures coronavirus webpage.
Nonprofit Advocacy in the States
State associations of nonprofits are also stepping in, calling on governors and funders to provide needed resources, capacity, funding, and general help and protections for the nonprofit sector. State associations in Connecticut, Illinois, Minnesota, Montana, and Washington State have all sent letters to their chief executives thanking them for their leadership and imploring them to consult nonprofit leaders as we take on this crisis together. Specifically, these and other nonprofit leaders are calling on policymakers to adjust contracts and grants in light of service realities (see below), include nonprofits in unemployment insurance solutions, ensure that nonprofits are able to utilize business tax incentives, and engage nonprofits in identifying challenges and proper responses in their states. The Hawai`i Alliance of Nonprofit Organizations secured a seat at the table for nonprofits when the Speaker of the House convened a special committee of legislators, for-profit business leaders, and public officials on COVID-19 Economic and Financial Preparedness.
Performing Under Government Grants & Contracts in Times of Shutdown
What’s a nonprofit to do when the facility where it performs services on behalf of governments – whether a senior living center, a school, or other location – is shut down completely because of COVID-19? Government grants and contracts typically demand performance and pay nonprofits based on a certain number of units or other metrics. State associations of nonprofits are engaging with public officials to demand relief. CalNonprofits has written urging government agencies “to pay on contracts and grants with nonprofits if they are underperforming due to temporary organizations or side closures or suspensions of services.” They explain, “To keep their staff and facilities going, they need temporary relief from contract deliverables that cannot be met due to new COVID-19 related directives and mandates." Similarly, on Saturday, the Minnesota Council of Nonprofits wrote calling on lawmakers to enact legislation “requiring that, if a nonprofit cannot fulfill its deliverables on a state contract due to the circumstances related to the pandemic, then the contract will be based on intended deliverables without penalty for inability to meet deliverables.”
Some governments are starting to respond. As reported above, the federal Office of Management and Budget has already instructed federal agencies to provide some flexibility in administering the OMB Uniform Guidance and granting waivers to help grantees comply when impacted due to the pandemic. On Sunday, New York City Comptroller Springer wrote the Mayor’s office expressing concern for the financial stability of nonprofits with grants and contracts that will be unable to meet service requirements due to closures of many operations where nonprofits perform their work. He urged the City government to ensure that nonprofits “be held harmless for missed contract deliverables if they are directly attributable to COVID-19.”
The Census Has Started
Fill It Out Now to Help Census Workers, Nonprofits
Last week the Census Bureau began sending letters to every household in the U.S. inviting them to complete the 2020 Census. While we are in the midst of the coronavirus pandemic, it is paramount that everyone fill out the census as soon as you receive the invitation. Forms can be completed online or by phone, and you can also request a paper questionnaire if you prefer. It takes less than 10 minutes to answer basic questions about who lives in your residence, including their name, sex, age, date of birth, relationship, race, and whether of Hispanic, Latino, or Spanish origin, and race. Instructions are included in the packet in 12 languages, in addition to English, and telephone assistance is available seven days a week from 7:00 a.m. to 2:00 am Eastern. Filling out the questionnaire quickly and via these options reduces burdens on Census Bureau workers to follow-up in person and on nonprofits working to get out the count. Plus, these options allow for social distancing and quarantine measures to remain intact. Be counted now!
In a Crisis, Nonprofits Speak Up So They Can Serve Others
The inclusion of a refundable payroll tax credit in the Families First Coronavirus Response Act was not an accident, but the result of years of advocacy. And one well-timed communication from the nonprofit community. While the House was drafting legislation to deal with the personal and economic effects of the COVID-19 pandemic, nonprofit leaders knew a bold statement was needed. Something needed to be said to ensure that charitable and philanthropic organizations must be recognized for the economic and social forces they are, and must be treated fairly in the emerging legislative response to the national crisis rather than left out as in the past.
That bold statement came in the form of a document, Why Nonprofits Must Be Included in a COVID-19 Relief and Economic Stimulus Package, sent to all congressional offices last week. The message, ultimately signed by 40 national organizations, explained why nonprofits can’t be taken for granted or forgotten during this crisis. It points out that nonprofits are significant employers, employing 12.3 million people, paying employment taxes. It also reminds lawmakers that 92 percent of charitable organizations are small and operating with revenues of less than $1 million per year.
The letter further laid out a sampling of nonprofits on the frontlines of the coronavirus epidemic in local communities, ranging from hospitals and community health centers, to Meals on Wheels operations, shelters of all types, and early care and educational centers. An additional point that needed to be stressed is the reality that closures of events heavily impact nonprofit bottom lines, while also dampening local economies that rely on nonprofit activities to generate downstream business. Finally, the message to Congress laid out the day-to-day reality that nonprofits operate in every community in America – every day – making them the logical and trusted agents for community solutions, and yet they need resources to be the problem solvers that they are.
With each of the points made, the letter offered specific policy solutions for elected officials to consider. Those range from applying tax credits to the taxes that nonprofits pay (which is what happens in the Families First Coronavirus Response Act), to increasing spending on programs that rely on nonprofits to provide services, and enacting a temporary, targeted giving incentive that enables all taxpayers, whether or not they claim an itemized deduction, to receive a tax benefit for contributing to efforts by nonprofits to curb the devastation of COVID-19.
The message clearly struck a chord. The Chronicle of Philanthropy and The NonProfit Times both ran articles, and the editors of the Nonprofit Quarterly reprinted the document in full. It likewise generated considerable attention on Capitol Hill and in state legislative bodies. Which reminds us all that “speaking truth to power” is always appropriate and necessary.
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