REMINDER: Nonprofits with Fewer than 20 Employees
Now Is the Best Time to Apply for a PPP Loan
Act by Tuesday, March 9
Through tomorrow, March 9, the Small Business Administration and Paycheck Protection Program lenders are processing loan applications ONLY from --
- Nonprofits with fewer than 20 employees;
- For-profit businesses with fewer than 20 employees, including “those that have been left behind in previous relief efforts,” like businesses owned by sole proprietors, independent contractors, and self-employed individuals – many of which are owned by women and people of color, non-citizen lawful residents, and individuals with delinquent federal student loans.
This exclusive small-employer PPP processing window is designed to provide more equitable relief 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, immediately contact a lender. Learn more at SBA.gov. You can still apply after March 9, but you have special access through tomorrow.
Senate Passes $1.9 Trillion COVID Relief Legislation
The Senate passed a revised version of H.R. 1319, the American Rescue Plan Act, by a party-line vote of 50 to 49. The final vote came on Saturday after a 27-hour straight marathon series of votes on amendments and motions. The Senate rejected most of the 35 amendments, including one by Senator Sanders (I-VT) to raise the federal minimum wage to $15/hour, and another by Senator Paul (R-KY) to strip language in the bill (Section 5001) that expands nonprofit access to Paycheck Protection Program loans. The Senate-passed bill now goes back to the House for quick passage, which is expected on Tuesday. Democratic leaders hope to have the bill on the President’s desk before unemployment benefits for 18 million individuals expire on March 14.
Big Picture Details in the American Rescue Plan Act
The Senate-passed version of the American Rescue Plan Act would, among other things, provide additional funding for COVID-19 vaccines, treatment, and testing; approve $1,400 stimulus checks for most taxpayers; 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 (the credits are currently set to expire on March 31). The Senate measure also retains House language providing 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 assistance for nonprofits providing services to survivors of domestic violence and sexual assault.
As for changes the Senate made to the House-passed version, the increase in the federal minimum wage was removed because it violated the Senate budget rules that enabled the Democratic majority to pass the bill by a simple majority. Another major change is that the Senate bill extends unemployment compensation benefits (including relief for reimbursing employers) through Sept. 6, maintains supplemental payments at $300/week (down from $400/week in the House-passed bill), and exempts the first $10,200 in unemployment benefits from income taxes for individuals with total earnings of less than $150,000 per year.
Treatment of Nonprofit Priorities
Below is an updated breakdown of the progress on some of the policy priorities identified in the nonprofit coalition letter to congressional leaders:
- Paycheck Protection Program (PPP) Loans. The bill would add $7.25 billion to the program and 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. In a win for performing arts nonprofits, the bill would allow them to apply for funds under both the PPP and Shuttered Venue Operators Grants program, although the combined amounts would be limited. Due to Senate rules, Senators were required remove a repeal of a rule that makes some nonprofits ineligible for PPP loans if they are affiliates of national organizations, although the impact on nonprofits is seen as minimal. The bill makes no changes to the PPP Second Draw requirement that gross receipts decline by 25%; nonprofits have sought the repeal of this restriction. The PPP application deadline is still set at March 31; nonprofit organizations, business groups, and accounting professionals continue to press for extending the sunset for several more months to give employers more time to apply.
- Federal Unemployment Coverage. The COVID relief package would extend through September 6, 2021 various federal benefits for unemployed workers, including a provision that would prospectively increase the federal coverage of the unemployment costs of reimbursing nonprofits from 50% to 75%. The bill also provides continued coverage for self-employed workers and staff of religious and very small nonprofits. Currently, all of these benefits are scheduled to expire on March 14.
- Aid to State, Local, Tribal, and Territorial Governments. The Senate bill would provide $350 billion in aid, but impose new restrictions on how governments may spend the funds. Permissible uses include providing “assistance to households, small businesses, and nonprofits, or aid to impacted industries,” funding government services that were cut due to declines in revenue brought on by the pandemic, and making “necessary investments” in water, sewer, or broadband infrastructure.
- Charitable Giving Incentives. Neither the House nor Senate bill includes expansion of charitable deductions, but lawmakers in the House and Senate are planning to introduce legislation this week to increase giving incentives for taxpayers using the standard deduction to financially support the work of charitable organizations in their communities.
- Voting Access Executive Order: On Sunday, President Biden signed an Executive Order promoting voting access intended to leverage the resources of the federal government to “expand citizens’ opportunities to register to vote and to obtain information about, and participate in, the electoral process.” The order instructs all federal departments and agencies to identify ways they can increase access to voter registration, work with the states to expand voter access through the National Voter Registration Act, improve and modernize the federal website Vote.gov, and expand federal employee leave for voting and volunteering as nonpartisan poll workers. It also instructs the Commerce Department to analyze barriers to private and independent voting for people with disabilities, directs the Defense Department to increase voting access for active duty military and overseas voters, and establishes a Native American voting rights steering group. The Executive Order was signed on the 56th anniversary of “Bloody Sunday,” the date in 1965 that civil rights marchers were beaten in Selma, Alabama as they marched in support of voting rights. See White House fact sheet.
- PPP FAQs: The U.S. Treasury Department last week posted an updated set of “frequently asked questions” (FAQs) concerning the Paycheck Protection Program as administered by the Small Business Administration. In addition to updating existing answers to FAQs to reflect changes made by the year-end COVID relief law, the new document includes eight new FAQs, numbers 57 through 65. These deal with trade associations, lobbying expenses, bankruptcy, Second Draw eligibility and partial forgiveness of first draw loans, and the interplay of the PPP and Employee Retention Tax Credit. Paycheck Protection Program Frequently Asked Questions, Small Business Administration and Treasury Department, updated Mar. 3, 2021. See also, Updated FAQs on PPP loans; guidance on second draw PPP loans, KPMG, Mar. 3, 2021.
- Employee Retention Tax Credit Guidance: The Internal Revenue Service issued guidance last week to provide greater clarity for employers claiming the employee retention tax credit for calendar quarters in 2020, as established under the CARES Act and modified by the year-end COVID relief bill. Notice 2021-20 describes retroactive changes under the new law applicable to 2020, primarily relating to expanded eligibility for the credit. The IRS makes clear that eligible employers that received PPP loans are permitted to claim the employee retention tax credit, although the same wages cannot be counted both for seeking forgiveness of the PPP loan and calculating the employee retention credit. The Notice also provides answers to many technical questions such as: who is an eligible employer; what constitutes full or partial suspension of trade or business operations; what is a significant decline in gross receipts; how much is the maximum amount of an eligible employer's employee retention credit; what are qualified wages; how does an eligible employer claim the employee retention credit; and how does an eligible employer substantiate the claim for the credit. The new guidance only applies to expenses incurred in 2020.
Nonprofit Property Tax Exemptions At Risk
Lawmakers in the Northeast are considering an array of legislation affecting nonprofit property tax exemptions. A bill pending in Maine would permit municipalities to impose an “impact fee” on property owners unless a so-called payment in lieu of taxes agreement has already been made with the charitable organization. The impact fee would be at least 50 percent of the assessed property tax value, but organizations with an annual budget of less than $50,000 would be excluded. Legislators in neighboring New Hampshire may consider a bill to create a commission to study payments in lieu of taxes.
Nearly a dozen bills in New York would affect property tax exemptions for nonprofits depending on whether the property is leased for commercial purposes (A.4534); proven to be eligibile for the exemption annually (A.145/S.1954); used in good faith for exempt purposes (S.1952); broken down by use of each acre (S.1951); unimproved (A.278/S.1638); or in violation of local zoning laws (A.2011/S.3965). An additional bill (S.1202), approved by the Senate last week, calls for a study on high concentrations of tax-exempt properties in municipalities and the financial impact of the exemptions. In New Jersey, a law recently signed by the Governor reinstates hospital property tax exemptions while also imposing a community service contribution rate based on the number of beds. The new law also prevents third parties from challenging a nonprofit’s property tax exemption. Rounding out the tri-state area, legislators in Connecticut are attempting to impose stormwater property fees on nonprofits. Nonprofits are currently exempt because the fees can only be imposed on an owner’s “taxable” interest in real property, which does not apply to charitable nonprofits that are exempt from property taxes.
Further west, a proposed ballot measure in Arizona would amend the state constitution to repeal property tax exemptions for educational, charitable, or religious associations or institutions and instead add language permitting the state Legislature to provide the exemption.
Remote Governance and Nonprofit Regulations
As the pandemic continues, lawmakers in several states are seeking to extend or rewrite laws that regulate how nonprofits can conduct business. Legislation moving in Idaho would permit nonprofit boards to conduct their meetings and voting remotely. In New York, policymakers are looking to extend authorization of remote meetings until the end of the current disaster emergency or Dec. 31, 2021, whichever is later. A bill in Washington State would modernize the Nonprofit Corporation Act to permit electronic communications for meetings, among other things. However, proposed legislation in North Carolina would allow for-profit businesses, but not nonprofits, to use remote communications for their meetings. The North Carolina Center for Nonprofits is leading advocacy efforts to ensure nonprofits have equal access. They urge the General Assembly to update nonprofit laws to make “common sense changes to allow nonprofits to use technology to … meet and vote remotely.” One recommendation is to change the “opt in” laws on use of email for votes by unanimous written consent to “opt out” rules.
Government Grants and Contracting Reforms
- California: Two positive bills seek to improve grants and contracting with nonprofits. The first would allow nonprofits with state contracts for "non-essential" services to continue to receive payment during emergencies despite changes to contract performance due to the emergency. The other measure would require the designation of a nonprofit liaison at each state agency that does significant business with or has policies that affect nonprofits. That liaison would be a point of contact to address nonprofit complaints, provide technical assistance on agency policy compliance, develop innovative contracting policies, and report nonprofit concerns to agency leadership.
- New York: Legislation in both chambers (1582 / A.1247) would create a nonprofit entity to run a five-year pilot program providing “affordable levels of general and excess liability insurance coverage to small and MWBE contractors who participate in safety training and satisfy the Group's safety compliance rules.”
Lessons for Making Sure Everyone Still Counts
Nonprofits led outreach efforts for the 2020 Census to ensure every person was counted because every person counts. Now, state associations of nonprofits are sharing what they learned from the 2020 Census to raise voices of underrepresented populations and guarantee lessons learned are aggressively applied in the future.
Michigan Nonprofit Association is utilizing insights from its census campaign to promote racial equity so communities of color have greater voice and more equitable representation in elections. The association recognized that the census has historically and disproportionately missed people of color, immigrant communities, and low-income populations, which led to inequality in political power, government funding, and private-sector investment for these communities. MNA’s new Independent Citizens Redistricting Commission (ICRC) campaign builds on work by Michigan’s nonprofits during the 2020 Census that helped historically uncounted and undercounted populations get counted.
“MNA is now mobilizing nonprofits again using this same model to transparently achieve fair and impartial district maps for Michigan, specifically to promote racial equity so that communities of color have a voice and are not locked out of the important decision-making that occurs at the local, state, and federal levels,” according to the ICRC. The campaign will push to mobilize nonprofits and help them understand how the redistricting commission works, what is at stake, and ways communities can participate.
Also looking to build on what was learned from the 2020 Census, Forefront, the state association of nonprofits in Illinois, recently issued a report on get out the count efforts for the 2020 Census and how to make 2030 even more of a success in the state. The IL Count Me In 2020 Executive Summary and Recommendations for 2030 shares initial findings, challenges faced in receiving an accurate count, and recommendations for a successful 2030 Census count and beyond. Collaboration and concerted efforts by Forefront and a diverse group of partners resulted in “the highest self-response rate of the ten most populous states in the country.”
The Forefront report celebrates how “continually changing and adjusting tactics at the local and national level” allowed the Illinois census coalition, one of the largest private/public partnerships in the country, to be powerful and resilient. The report shares learnings from myriad challenges: the citizenship question, timeline changes, exclusion of undocumented residents, the COVID-19 pandemic, spread of misinformation, and cross-sector coordination. For 2030, Forefront recommends creating a backbone organization, starting planning earlier, providing adequate and flexible funding, maintaining consistent engagement with collaborators, and creating effective and inclusive messaging.
Looking to the past allows for a clearer future. Nonprofits are building upon these lessons so all can be counted and represented equitably in political representation and government funding going forward. Because everyone still counts.
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