American Rescue Plan Act
President Biden signed the American Rescue Plan Act yesterday, enacting one of the largest economic relief programs in U.S. history. It is now up to charitable nonprofits to utilize provisions of this new law that are designed to help their organizations and the people they serve survive and recover. In this special edition, we recap the substance of the legislation, both the overarching portions and then focusing on nonprofit priorities. We also highlight at the end several ACTION ITEMS that nonprofits can be taking now for their own benefit and to ensure that this and future legislation live up to the needs of the nonprofit community.
Big Picture Details
Big Ticket Items
The $1.9 trillion American Rescue Plan Act allocates funds through various programmatic areas, including:
|Individual/Corporate Tax Credits
|Vaccines & Testing
The American Rescue Plan Act, among other things, provides an additional $125 billion in funding for COVID-19 vaccines, treatment, and testing; approves $1,400 stimulus checks per person for most individuals and families; extends additional federal unemployment benefits into September and exempts more than $10,000 in these benefits from federal income taxation; increases the child tax credit and earned income tax credit; and extends the tax credit for nonprofits and other employers that voluntarily provide paid sick leave and paid family and medical leave through September 30, 2021. The law also provides more funding for food assistance, housing and homelessness prevention, the Paycheck Protection Program and the Shuttered Venue Operator Grant program, childcare providers, arts and humanities organizations, the Corporation for National and Community Service, and assistance for nonprofits providing services to survivors of domestic violence and sexual assault.
Treatment of Nonprofit Priorities
With tens of millions more individuals and families turning to charitable nonprofits for help surviving the pandemic, the nonprofit community came together and advocated forcefully to be included in federal relief legislation. Here are some of the priorities that nonprofit advocacy secured in the American Rescue Plan Act:
- Paycheck Protection Program (PPP) Loans. The law adds $7.25 billion to the program and expands 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 allows them to apply for funds under both the PPP and Shuttered Venue Operators Grants (SVOG) program, although a SVOG grant would have to be reduced by the amount of any PPP loan. Although Congress just added billions for more PPP loans, it did not extend the March 31 deadline for submitting loan applications. Join nonprofits and for-profits across the country to tell Congress it must extend the deadline, as explained below.
- Federal Unemployment Coverage. This latest COVID relief package extends various federal benefits for unemployed workers through September 6, 2021, including a provision that increases from 50% to 75% the federal coverage of the unemployment costs of reimbursing nonprofits. The new law also provides continued coverage for self-employed workers and staff of religious and very small nonprofits.
- Aid to State, Local, Tribal, and Territorial Governments. The law provides $350 billion in aid but imposes 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 services that governments cut due to declines in revenue brought on by the pandemic, and making “necessary investments” in water, sewer, or broadband infrastructure. The money may not be used to subsidize tax cuts or pay public pension obligations.
- Charitable Giving Incentives. The new law does not expand incentives for charitable giving, but on Tuesday, March 9, Senators and Representatives introduced the Universal Giving Pandemic Response and Recovery Act, 618 and H.R 1704. If enacted, the legislation would allow taxpayers who claim the standard deduction, rather than itemizing deductions, on their tax returns to take a deduction for charitable giving valued at up to one-third of the standard deduction (around $4,000 for an individual filer and $8,000 for married joint filers). This added giving incentive would be available for tax years 2021 and 2022.
Now What? We’re Glad You Asked
The American Rescue Act provides hundreds of ways that charitable organizations can tap resources, restore or expand operations, and serve their communities. Some require nonprofits to take immediate action. Others involve further legislative and administrative advocacy to secure better outcomes. Here are several items to put on your immediate to-do list:
Apply for a PPP Loan. Now!
The American Rescue Plan Act expands eligibility – for the first time – to larger nonprofits that operate at multiple locations and employ not more than 500 employees per physical location. The SBA still has to issue a new loan application and guidance. The law also repeals a prohibition on applications for PPP loans by organizations that are seeking Shuttered Venues Operators Grants. And anyone else who has been procrastinating – time is running out. Some banks have already stopped accepting new applications, so don’t wait until the official deadline of March 31 expires, because that will be too late.
Advocate to Extend the PPP Application Deadline
On the same day that President Biden signed the American Rescue Plan Act, lawmakers in the House introduced the bipartisan PPP Extension Act of 2021, a bill to extend the PPP application deadline to May 31 to give borrowers more time to get through the process. A Senate version will be introduced in the coming days. Read more about the legislation.
- What You Can Do Now: Advocate for swift passage of the PPP Extension Act of 2021 by emailing your Representative and two Senators with this simple message: “I write to ask that you 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. We need you to take action to ensure we don’t get shut out of the PPP unfairly. Cosponsor and demand quick passage of the PPP Extension Act of 2021 to extend the PPP deadline through May 31. We’re counting on you to help nonprofits and your constituents.”
Take Advantage of the ERTC Refund
Nonprofits and other employers can claim both PPP loan forgiveness and the employee retention tax credit (ERTC) for 2020. This means that employers may qualify for the refundable payroll tax credit with respect to wages that are not paid for with forgiven PPP proceeds.
Make Sure State & Local Governments Spend Their Aid on Nonprofits
The $350 billion in aid to state, local, Tribal, and territorial governments comes with limits on how that money may be spent. Permissible uses include providing “assistance to households, small businesses, and nonprofits, or aid to impacted industries. These uses are permissible; lawmakers may favor many other groups unless nonprofits speak up.
- What You Can Do Now: Advocate to demand that your state and local governments use these funds to establish grants programs for nonprofits, reduce unemployment costs, and fulfill the government's grants and contracts with nonprofits for services. Many states have done so already. Contact your state association of nonprofit to get involved.