In This Week's Edition of Snapshot...
Draft Arnold/Madoff Proposal Released
Earlier this week, philanthropist John Arnold and Boston College law professor Ray Madoff released a draft policy proposal that would make significant changes to federal law with the purpose of increasing the payout of funds from both donor-advised funds and private foundations, as well as modifications to a charitable deduction for non-itemizers. The authors noted in their draft policy proposal – and have told us – that they intend to continue to talk with foundation leaders, especially community foundations, about possible changes.
Over the past few months, the Council has been engaged in conversations with the authors of this proposal, our members, our Public Policy Advisory Committee, and PSO partners about the impact these provisions will have on foundations’ ability to meet the challenges of today and tomorrow. During these conversations, we heard from some private foundation members in support of the proposal, some of whom have joined the coalition. We have also heard from other members, especially community foundation leaders, with strong concerns especially around the provisions on donor-advised funds. As this draft policy proposal moves forward, the Council will continue to elevate the concerns, experiences, and perspectives of our diverse membership and work toward advancing solutions that are in the best interest of the sector.
Federal Funding Expires December 11, 2020
As Congress sprints to complete their work in the final couple weeks of the 116th Congress, the focus once again is on preventing a federal government shutdown. Federal funding ends on December 11, 2020 unless Congress passes and the President signs legislation extending it. The federal government has been funded by a continuing resolution (CR) since the end of September when the federal fiscal year ended.
Just before the Thanksgiving break, Congressional leaders announced a deal on the top line spending number of $1.4 trillion. While Appropriations members, leadership, and their staff have signaled progress finalizing the 12-appropraitions bills that would comprise an “omnibus” bill, it appears that they may need some additional time to get everything worked out. Senate Appropriations Committee Chair Richard Shelby (R-AL) told reporters that they have until December 9th to complete a package to get it through both chambers before the December 11 deadline, or will need to pass a “Continuing Resolution” (CR). If negotiations are close, the CR may only need to be a week or so, but some lawmakers are already talking about needing a CR that would continue funding until late February or early March.
Senate Appropriations Committee Chair Richard Shelby (R-AL) told reporters they have until December 9th to complete a package in order to get it through both chambers before the December 11 deadline, or will need to pass a continuing resolution. If negotiations are close, the CR may only need to be a week or so, but some lawmakers are already talking about possibly needing a longer CR that would continue funding until late February or early March.
COVID-19 Relief Negotiations
As communities, businesses, and the health care system experienced additional strain this week from the escalating number of COVID-19 cases, lawmakers were once again focused on passing a deal before the end of the year. It is unclear if any of the proposals have enough support to become law, but with a “must pass” funding bill expected next week to avoid a federal government shutdown, talks of attaching something to that legislation have renewed.
Senate Majority Leader McConnell Proposal: Leader McConnell (R-KY) shared his new COVID-relief proposal. Similar to an earlier GOP $500 billion proposal that Senate Democrats have already blocked twice, this version includes liability limitations for businesses, additional funding for small businesses assistance, and funding for testing and contract tracing. In addition, the proposal would increase the above-the-line charitable deduction included in the CARES Act for 2020 from $300 to $600 for individuals and $1,200 for couples filing jointly.
Bipartisan, Bicameral Proposal: A bipartisan group of Senators announced a framework for a relief package totaling $908 billion. The group of 16 lawmakers from both the House and Senate – 8 Republican, 7 Democrats, and 1 Independent – released what they said could create a pathway toward final legislation that could pass both chambers. Throughout the week, additional lawmakers spoke out in support of the proposal, some saying it should be passed as a starting point and that Congress could return in 2021 to pass additional relief. In addition, Senate Minority Leader Schumer and Speaker Pelosi said in a joint statement that the bipartisan framework should be used “as the basis for immediate bipartisan, bicameral negotiations.”
Government Accountability Office
Thirteen states have allowed unemployment benefits to fall below the poverty level of $245 a week, or $12,760 a year, according to a study released on November 30 by the Government Accountability Office (GAO). The change has occurred since the end of July, when a federal program providing $600 in supplemental weekly benefits expired. The CARES Act signed into law in March provided the weekly $600 payments to all unemployment benefit recipients. The amount was an attempt to bridge the difference between average weekly payments that came in at $333 per week and median income.
Department of Education
Office of Career, Technical, and Adult Education
OCTAE is soliciting ideas and information from a broad array of stakeholders, including philanthropic organizations, on strategies and approaches to expand work-based learning opportunities (WBL) for high school students ages 16 or 17. These opportunities may include paid internships, work study, cooperative education, apprenticeships, and pre-apprenticeships. The Department is interested in learning about successful approaches to expanding WBL opportunities for youth from states, tribes, state and local educational agencies, community-based and other nonprofit organizations, employers, industry associations, philanthropic organizations, faith-based organizations, researchers, and other interested individuals and entities. Learn more about the components of work-based learning in OCTAE’s WBL Tool kit. Submissions must be received by Jan. 13, 2021.
Department of Health and Human Services
Centers for Medicare & Medicaid Services
The CMS Innovation Center has announced the Geographic Direct Contracting Model (“Geo”) that tests a geographic-based approach to improve health and reduce costs in set regions across the country. Geo will enable Direct Contracting Entities (DCEs) to build more integrated relationships with healthcare providers and community organizations in a region to better coordinate care for Medicare beneficiaries. CMS will host a webinar on the model on December 8. Stakeholders can contact the Geo model team with questions and comments at DCGEO@cms.hhs.gov.
Centers for Disease Control
- On December 1, CDC published an update of the science of COVID-19.
- New guidance related to the reduction of quarantine time for people exposed to Covid-19 from 14 days to 10 days was released on December 2.
- The Centers also issued interim guidance on December 3 related to the initial allocation of COVID-19 vaccine supplies. Health care personnel and residents of long-term care facilities will be offered the vaccine in the initial phase of the national vaccination program.
Department of Homeland Security
Federal Emergency Management Agency
- The application period for FEMA’s fiscal year 2020 Hazard Mitigation Assistance (HMA) grants under the Flood Mitigation Assistance (FMA)and new Building Resilient Infrastructure and Communities (BRIC) programs is now open. HMA grant applications will be accepted in FEMA GO through 3 pm EST on January 29, 2021. Check out the application information for both programs here.
- The Natural Hazards Center, in partnership with the Federal Emergency Management Agency, hosts the Making Mitigation Work webinar series. These free one-hour webinars feature innovative speakers and highlight recent progress in mitigation policy, practice, and research. Get information on topics and how to register.
Small Business Administration
POLITICO reports that the Small Business Administration will comply with a recent court order requiring it to release the names of borrowers and loan amounts under the Paycheck Protection Program and the Economic Injury Disaster loan program. On December 2, the SBA released the identities of the businesses that received loans through the Paycheck Protection Plan (PPP) and said the agency will soon make the data available on its website. The SBA previously released records related to loans of more than $150,000 but withheld specific amounts and reported the amounts in ranges.
Department of Transportation
On December 1, DOT announced that it has revised its Air Carrier Access Act (ACAA) rules on the transportation of service animals by air to ensure a safe and accessible air transportation system. The final rule –Traveling by Air with Service Animals – no longer considers animal companions used by travelers on commercial flights for emotional support as “service animals”. Passengers who wish to bring their emotional support animals with them when they travel will now have to check them as baggage or leave them at home entirely. The new rule updates the definition of a service animal to “a dog that is individually trained to do work or perform tasks for the benefit of a person with a disability.”
Department of Treasury
Internal Revenue Service
Early guidance issued by the IRS informed Paycheck Protection Program (PPP) borrowers that they may not claim a deduction for expenses that result in the tax-free forgiveness of their loan. In late November, the IRS expanded this guidance to address when a PPP loan has not yet been forgiven by the end of the tax year in which such expenses were incurred. Under this new IRS guidance, a calendar year borrower who received a PPP loan in 2020 which has not been forgiven by the end of 2020 may not deduct expenses incurred with PPP loan proceeds if (i) the expenses are qualifying expenses under the PPP rules (i.e., qualifying payroll costs, mortgage interest, utility payments and rent) and (ii) the borrower reasonably expects that its loan will be forgiven. This rule applies even if the borrower has not yet submitted an application for forgiveness in 2020, so long as the borrower intends to submit an application in 2021 and reasonably expects forgiveness.
The IRS has also released a related safe harbor that provides flexibility for borrowers who forgo forgiveness, or who are denied forgiveness, in their 2021 tax year (either in whole or in part). In such cases, the borrower may elect to deduct the previously non-deductible expenses on its federal income tax return for either its 2020 or 2021 tax year. Borrowers that undergo a change in beneficial ownership in 2020 or 2021 should be especially mindful of the electivity of the IRS’s new safe harbor.
Department of Veterans Affairs
- The VA has posted information about the new rates for 2021 for compensation benefits for veterans receiving disability benefits. The rate increased by 1.3% on December 1. The VA is required by law to match the percentage of cost-of-living adjustments made to Social Security benefits.
- Since 2005, Trees for Troops has provided almost 244,000 free, farm-grown Christmas trees to troops and military families in the U.S. and overseas. This year, 14,500 trees will be delivered to 79 military bases between November 30 and December 11. View the Trees for Troops Fact Sheet.
Exclusive from our colleagues at the National Council of Nonprofits.
States Convene Special Sessions to Address Pandemic-Related Needs
States are convening special legislative sessions to adopt pandemic-related solutions while they also seek assistance from the federal government. In Colorado, lawmakers convened this week to address seven action items laid out by Governor Polis: small business relief, child care, housing and rental assistance, broadband access, food insecurity, utility assistance, and public health response. “While legislative actions during the special session will provide immediately needed resources to help Coloradans weather the pandemic, many needs in our communities will go unmet in the long run without broad-based relief to help nonprofits keep their employees working and doors open,” stated Mark Turner of the Colorado Nonprofit Association. In Minnesota, Governor Walz has suggested charitable tax credits for food donations that may become spoiled or discarded by businesses as part of a larger package to be considered soon. Other proposals on the table include sales tax forgiveness for food and beverages, waiver of regulatory fees, direct relief for individual workers, and elimination of the COVID-19 Minnesota fund expiration date.
Just before Thanksgiving, New Mexico Governor Grisham signed a COVID relief package spending more than $300 million of federal aid for direct unemployment assistance, a small business grant program, emergency housing assistance, food bank services, and administration costs. Both nonprofits and for-profit businesses are eligible to participate in the $100 million program providing grants of up to $50,000 each. According to Tsiporah Nephesh of New Mexico Thrives, making nonprofits eligible is vital because the previously available funding “could only help a small portion of nonprofits” because “some of the local governments were requesting business licenses or GRT reports as a part of the application. This effectively barred access to nonprofits seeking funding.”
State and local governments continue to advocate for significant aid from Washington, DC. “The failure of Congress to reach a compromise on a new coronavirus relief package imperils the ability of state and local governments to maintain sound operations and critical services for residents, and puts jobs further at risk for the 15 million public servants carrying out services on the ground ranging from health care to education to public safety,” seven government associations wrote. That pressure has only increased in recent weeks with the issuance of strong statements and research, such as the recent report from the National League of Cities, The Human Costs of Local Fiscal Crises During COVID-19.
Spending Down CARES Act Funds
Lawmakers are racing to disburse hundreds of millions of dollars in Coronavirus Relief Fund (CRF) monies by December 30 to avoid having to return the unspent funds to the federal government. While some state legislatures have convened special sessions to approve appropriations (see article above), governors in many states, including Colorado, Minnesota, New Mexico, Oregon, and Washington, have used the federal aid to pay for unemployment benefits and grants to nonprofits and small businesses. Other governors have used both state and federal funds for relief. Maryland Governor Hogan has approved $250 million out of the state’s Rainy Day Fund for for-profit businesses and arts organizations. In Massachusetts, Governor Baker announced $774 million for businesses and renters. Ohio Governor DeWine plans to spend $420 million for grants, housing assistance, and aid for hospitals and colleges. In Alabama, a group of 82 nonprofit organizations sent a letter to Governor Ivey imploring her to spend the approximately $1 billion remaining CRF money to alleviate hunger, address evictions and homelessness, support vulnerable populations, and keep quality childcare available.
The North Dakota Emergency Commission reallocated $35 million, including $800,000 in grants for nonprofits that have been negatively impacted by the pandemic and are at risk of folding, and $2.65 million for unemployment insurance benefit costs of reimbursing employers, including nonprofits. Local officials in Colorado (Denver), Kansas (Sedgwick County), Michigan (Oakland County), New Mexico (Santa Fe), and Oklahoma (Oklahoma County) have also started grant programs using federal funding to aid nonprofit organizations serving their communities. Funds can be tracked by state and category through a new database by the National Conference of State Legislatures, which provides up-to-date, real time information on actions.