Nonprofit Track Reforms to the CARES Act
Dear Speaker Pelosi, Leader McConnell, Leader McCarthy, and Leader Schumer,
The charitable nonprofit community appreciates that several key relief programs in the CARES Act were modified to include nonprofit eligibility. This approach recognizes the significant role that charitable nonprofits play as the third largest employer in our nation’s economy and as valued problem solvers. We are grateful that Congress recognized that every dollar granted, donated, or earned goes back into the community immediately to address clear and present challenges. However, implementation challenges have arisen with federal agencies and private entities that undermine Congressional intent to provide economic relief for nonprofit organizations.
As you work to build on the CARES Act, the charitable nonprofit sector requests a Nonprofit Track to ensure that charitable nonprofits are supported in their service on the front lines of responding to the COVID-19 crisis. Specifically, we urge Congress to include the following clarifications and provisions:
- Expand Nonprofit Access to Credit by designating funding exclusively for nonprofits within the two principal loan programs established in the CARES Act to ensure that the organizations dedicated to addressing immediate pandemic-related problems are included in relief efforts and not excluded or pushed to the back of the line. The following additional improvements are needed to expedite relief:
- Paycheck Protection Program: Provide incentives to private lenders to prioritize processing of applications of small nonprofits and expand the eligibility for nonprofits to participate in the Paycheck Protection Program by modifying the current 500-employee cap or by other means.
- Mid-Size Business Loan Program: Adjust CARES Act Section 4003(c)(3)(D) to implement a program to support nonprofit employers with between 500 and 10,000 employees, including loan-forgiveness and other provisions. The legislation should direct the Treasury Department to have this program operational no later than 15 days after enactment.
- Strengthen Charitable Giving Incentives to encourage all Americans to help their communities through charitable donations during these challenging times. The following modifications will generate immediate results:
- Applicable to 2019 Tax Filings: Encourage donations to the work of charitable organizations in their communities today by enabling taxpayers making donations on and after March 13 (date of national emergency declaration) and before July 16 to claim the deductions on their 2019 tax filings. This retroactive application should apply to itemized and above-the-line deductions during this critical period.
- Improve the Above-the-Line Deduction in CARES Act by increasing the $300/person cap and extending the effective date of the incentive.
- Treat Self-Funded Nonprofits Fairly by increasing the federal unemployment insurance reimbursement for self-funded nonprofits to 100% of costs. As currently written Section 2103 of the CARES Act will subject nonprofits throughout the country to crippling payments to their state unemployment systems later this year, while other employers will likely experience little or no additional costs resulting from mass COVID-19-related layoffs.
- Increase Emergency Funding by appropriating funds for targeted state formula grants and programs that can provide a rapid infusion of cash to nonprofit organizations that are partnering with state and local governments to protect vulnerable families and frontline responders. Charitable nonprofits are on the frontlines of providing relief, support, and care now, while the pandemic rages, and going forward as America will struggle to recover. Organizations need the resources now to provide vital services essential to individual and community wellbeing.
We thank you, once again, for your leadership in crafting and passing the CARES Act. It was a critical first step. We hope that nonprofits can count on your continued leadership, and your insistence that the needs of nonprofits, and the indispensable role they play, are at the center of this relief legislation. And we count on your active engagement with the president to make sure that charitable nonprofits can continue to fulfill their missions, especially in times such as this of unique challenge to our nation.
NOTE: More than 200 national organizations quickly signed this nonprofit community letter before it was delivered to Congress on April 8, 2020. State and local organizations are encouraged to contact their congressional delegations to take action. National organizations wanting to support this effort can sign onto the Nonprofit Community Letter here.
