During these unprecedented and scary times, Forefront is committed to gathering, sharing, and advocating for the resources for our sector. Below you will find helpful information for your organizations.
Coronavirus Aid, Relief, and Economic Security Act CARES Act (Pub. L. 116-136)
On March 27, the House unanimously passed and President signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion economic stimulus law intended to provide immediate relief for individuals, nonprofits, businesses, and state and local governments. The CARES Act is the third law enacted in response to the COVID-19 pandemic.
The most anticipated provision of the CARES Act is the Paycheck Protection Plan. Last night, the Small Business Administration issued an Interim Final Rule explaining the details behind the Paycheck Protection Program set to start today (Friday, April 3). The application to apply for this loan is here. You can receive these loans through your financial institutions. Not all financial institutions are up and ready, so please continue to check with your bank.
Here are some fast facts about PPP:
- General Eligibility: Available to entities that existed on February 15, 2020 and had paid employees or paid independent contractors.
- Nonprofit Eligibility: Available for charitable nonprofits with 500 or fewer employees (counting each individual – full time or part time and not FTEs). The law does not disqualify nonprofits that are eligible for payments under Title XIX of the Social Security Act (Medicaid), but does require that employees of affiliated nonprofits may be counted toward the 500 employee cap, depending on the degree of control of the parent organization.
- No Personal Guarantee: No personal guarantee or collateral will be required in securing a loan.
- Loan Amount: The lesser of $10 million or 2.5 times the average total monthly payroll (including benefits) costs from the one-year period prior to the date of application.
- Loan Use: Loan funds can be used to make payroll and associated costs, including health and retirement benefits, facilities costs, and debt service.
- Loan Forgiveness: Employers that maintain employment for the eight weeks after the origination of the loan, or rehire employees by June 30, would be eligible to have their loans forgiven, essentially turning the loan into a grant. Section 1106.
Other Important Pieces for Nonprofits in the CARES Act:
- Economic Injury Disaster Loans (EIDL): Creates emergency grants for eligible nonprofits and other applicants with 500 or fewer employees enabling them to receive checks for $10,000 within three days. Section 1110.
- Self-Funded Nonprofits and Unemployment: Only reimburses self-funded nonprofits for half of the costs of benefits provided to their laid-off employees. This is explained in a recent blog article. Section 2103.
- Charitable Giving Incentive: Creates a new above-the-line deduction (universal or non-itemizer deduction that applies to all taxpayers) for total charitable contributions of up to $300. The incentive applies to cash contributions made in 2020 and can be claimed on tax forms next year. Section 2204. The law also lifts the existing cap on annual contributions for those who itemize, raising it from 60 percent of adjusted gross income to 100 percent. For corporations, the law raises the annual limit from 10 percent to 25 percent. Food donations from corporations would be available to 25 percent, up from the current 15 percent cap. Section 2205.
While these are important and necessary steps to stabilize our sector, Forefront continues to advocate with our federal and state officials.
What we’re currently working on:
Speaker Pelosi is currently working on the 4th Stimulus Package. Forefront and our partners are working together closely to advocate for the following:
- Coverage of the other half of Unemployment Insurance for self-insured nonprofits
- A larger financial investment in the nonprofit sector
- Extension of the Payroll Protection Program
- Extension of Unemployment Benefits
- Advocating for the inclusion of nonprofits who are not included in the Loan Programs to be included with key forgiveness provisions
We thank the National Council of Nonprofits for key analysis of all major disaster relief bills.
If there are any issues you are facing, please do not hesitate to contact our Director of Public Policy, Bryan Zarou, at firstname.lastname@example.org.
For more information, please visit these links:
· Information for Unemployment Insurance guidelines
· Click here for information leading to the press release of the new Department of Labor Guidelines.
· The Small Business Administration’s Interim Final Rule explaining the details behind the Paycheck Protection Program
· Application to apply for the Payroll Protection Program
· Small Business Administration’s summary of lending programs
· Click here for information regarding the Economic Injury Disaster Loan Emergency Advance up to $10,000.