On May 14, 2020, the Council sent a letter to Congressional Leaders with some priorities for the next COVID-19 response package important for philanthropy and the nonprofit community. The letter asks Congress to prioritize policies that will enhance charitable giving, expand nonprofits access to relief and support, and increase aid to state and local governments.
Since the Coronavirus was introduced into the United States over two months ago, Congress has passed three separate packages to address a wide variety of issues and support the health care sector, businesses, individuals and families. While a majority of the relief will target businesses, individuals, families and health care, certain provisions in each bill have relevance to the charitable sector. We summarized each bill and highlighted the specific provisions that may impact the charitable sector.
We summarized four aspects of the CARES Act that can benefit nonprofits—Paycheck Protection Program, Economic Injury Disaster Loans Employee Retention Credit, and Delay of Payroll Tax Remittance.
Update on Coronavirus Aid, Relief, and Economic Security (CARES) Act
On March 25, the Senate passed a $2 trillion stimulus package to help American workers and businesses mitigate the devastating economic effects of the coronavirus outbreak.
The House passed the bill and the President signed it into law on Friday, March 27.
Highlights from the Deal
- Extension and expansion of unemployment benefits for workers who are laid off. They will be eligible to receive an additional $600 per week and an extended four months of compensation. Workers are protected because the bill creates a temporary Pandemic Unemployment Assistance program through December 31, 2020, to provide payment to those not traditionally eligible for unemployment benefits, including those who are self-employed or work in the gig economy
- Cash payments to individuals and families up to $1,200 for individuals earning up to $99,000 annually and $500 per child
- $10 billion in Small Business Administration emergency grants up to $10,000 in immediate relief for small business operating costs, $17 billion to cover six months of payments for small businesses with existing loans, and loans for small businesses, including rent, mortgage and utility costs eligible for SBA loan forgiveness
- A $500 billion Department of Treasury Exchange Stabilization Fund for loans, loan guarantees and other investments that save airline industry jobs and safeguards industries essential to national security but prohibits airlines from stock buybacks and CEO bonuses; and provides a Treasury Department Special Inspector General for Pandemic Recovery to provide oversight of Treasury loans
- $55 billion in increased aid to health care systems in addition to the $8.3 billion emergency coronavirus funding package passed on March 5
- Payments to municipalities and hospitals, including $150 billion for state, tribal and local Coronavirus Relief Funds
- Employee retention tax credit up to 50% of wages paid to encourage businesses to keep workers on payroll during the crisis
- A $30 billion Disaster Relief Fund to provide financial assistance to state, local, tribal and territorial governments as well as private nonprofits providing critical and essential services
- Income tax exclusion for people who are receiving assistance from their employer to repay their student loans
- $400 million to help states administer elections
- Delay of payment for employer payroll taxes that permits employers and self-employed individuals to defer payment of the employer share of the Social Security tax to be paid over 2021-2022
- $30.75 billion to provide emergency support to local school systems and higher education institutions to continue to provide educational services to their students and support the on-going functionality of school districts and institutions
- $25 billion in aid to our nation’s transit systems to help protect public health and safety to ensure people have access to jobs, medical treatment, food and other essential services.
Provisions that Support the Philanthropic Sector
The bill would also establish a temporary universal charitable deduction provision for gifts up to $300 and the temporary suspension of percentage of AGI limitation for cash charitable contributions by individuals (as well as an increase in the limit for corporations). Additionally, the bill “provides payment to states to reimburse nonprofits, government agencies and Native American tribes for half of the costs they incur through December 31, 2020 to pay unemployment benefits.”
The next big challenge for the federal government will be to get the money out and into people’s pockets as soon as possible. Top lawmakers have also acknowledged it's likely they will have to enact at least one more relief package to stabilize an economy stricken by the coronavirus.
Other Government Actions
Two bills have been passed by Congress and signed by President Trump to address the national response to the COVID-19 public health crisis.
The first bill contained $8.3 billion to increase the availability of tests, support public and private efforts toward developing a vaccine, and assistance for small businesses. The second bill ensures free testing, emergency paid leave, and support and flexibility for small businesses.
- Congress passed the first legislation on COVID-19 on March 5, focusing on funding to build national public health capacity. The $8.3 billion emergency coronavirus package:
- funds the development of new treatments
- boosts funding to purchase medical supplies
- provides more than $400 million in grants to states and localities for preparedness within 30 days.
- The President signed the second major legislation on March 18, H.R. 6201, Families First Coronavirus Response Act, that provides:
- free testing for COVID-19
- $2 billion in unemployment assistance
- $1 billion in food aid
- increased federal funding for Medicaid
- temporary paid leave mandates and employer reimbursement provisions.
support for small businesses
Also, the Treasury Department provided further guidance on their work to allow taxpayers to defer tax payments due to the novel coronavirus.
- On the nonprofit and philanthropy advocacy front, the Council is working with national organizations to propose relief efforts for nonprofits and increase charitable giving:
- A coalition representing philanthropy and nonprofits sent a letter to the Ways and Means and Senate Finance Committee on March 18 urging enactment of a temporary universal charitable deduction as part of an emergency COVID-19 response package
- Representatives Chris Smith (R-NJ) and Henry Cuellar (D-TX) sent a letter to Treasury Secretary Steve Mnuchin urging the Administration to include a temporary universal charitable deduction in the next COVID-19 stimulus package. Their letter calls for temporary provisions based on the Charitable Giving Tax Deduction Act (H.R. 651).
- A March 11 letter to Congress advocated that nonprofits be included in any economic stimulus package to combat the effects of the coronavirus, potentially through credits or deductions for unrelated business income taxes and incentives for donating to charitable nonprofits affected by the virus. It would appear that there is language in H.R. 6201 - Families First Coronavirus Response Act that states that “nonprofits and other employers with 50 or fewer employees would be subject to the paid leave requirement, but could receive dollar-for-dollar reimbursement.”
Call to Action
The Council recommends that:
- Council Members share letters from the national coalition with their Boards and grantees so they are aware of the national effort to advocate for nonprofit organizations’ needs during the pandemic:
- Inform your local and state civic leaders about the needs of nonprofits to maintain business continuity.
- Philanthropic orgainzations can increase grant support for their nonprofits operating costs, especially those on the front lines of the pandemic response. Sign the Pledge for Philanthropy's Commitment During COVID-19.
- Community Foundations can call or email their Congressional Representatives to voice support for federal or state coronavirus response legislation that will help the nonprofit organizations on the front lines responding to the public health crisis and or the resulting impacts on the workforce and the economy. The importance of business continuity and the operational needs of nonprofits is a message that needs volume RIGHT NOW. Contact your members of Congress this week to urge inclusion of nonprofit needs in the next federal stimulus legislation. Feel free to lift and adapt any of the language in the national letter to support nonprofits.
- Members can review the lobbying and advocacy rules for foundations, and consult the Council’s Legal Resource on Advocacy and Lobbying. If you have any questions, email firstname.lastname@example.org.