The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (S. 748) provides significant funding for businesses, hospitals, schools, and social support programs, and more. Below are key nonprofit sector-wide issues which have been successfully advocated for and implemented. These are based on an initial analysis of a 1,000 page bill. More details may become apparent with more thorough analysis.

Emergency Small Business Loans (SBA 7(a))

Provides funding for special emergency loans of up to $10 million for eligible nonprofits and small businesses, permitting them to cover costs of payroll, operations, and debt service, and provides that the loans be forgiven in whole or in part under certain circumstances. Title I, Section 1102.

• General Eligibility: Available to entities that existed on March 1, 2020 and had paid employees.
  
• Nonprofit Eligibility: Available for charitable nonprofits with 500 or fewer employees (counting each individual – full time or part time and not FTEs). The final bill does not include a provision in earlier drafts that would have disqualified nonprofits that are eligible for payments under Title XIX of the Social Security Act (Medicaid).
  
• Loan Use: Loan funds could be used to make payroll and associated costs, including health insurance premiums, facilities costs, and debt service.
  
• Loan Forgiveness: Employers that maintain employment between March 1 and June 30 would be eligible to have their loans forgiven, essentially turning the loan into a grant. Section 1105.

To learn more about the SBA loans and how to apply, see our SBA loan fact sheet for nonprofits.

Economic Injury Disaster Loans (EIDL)

Eliminates creditworthiness requirements and appropriates an additional $10 billion to the EIDL program so that eligible nonprofits and other applicants can get 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.

Charitable Giving Incentive

Includes an 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 contributions made in 2020 and would be claimed on tax forms next year. Section 2204.

The bill 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 bill 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.

Employee Retention Payroll Tax Credit

Creates a refundable payroll tax credit of up to $5,000 for each employee on the payroll when certain conditions are met. The entity had to be an ongoing concern at the beginning of 2020 and have seen a drop in revenue of at least 50 percent in the first quarter compared to the first quarter of 2019. The availability of the credit would continue each quarter until the organization’s revenue exceeds 80 percent of the same quarter in 2019. For tax-exempt organizations, the entity’s whole operations must be taken into account when determining the decline in revenues. Notably, employers receiving emergency SBA 7(a) loans would not be eligible for these credits. Section 2301.

Other Significant Provisions

Direct Payments to adults of $1,200 or less and $500 per child ($3,400 for a family of four) to be sent out in weeks. The amount of the payments phases out based on earnings of between $75,000 and $99,000 ($150,000 / $198,000 for couples).

Expanded Unemployment Insurance

Includes coverage for workers who are furloughed, gig workers, and freelancers. Increases payments by $600 per week for four months on top of what state unemployment programs pay.

Amendments to the New Paid Leave Mandates

Lowers the amounts that employers must pay for paid sick and family leave under the Families First Coronavirus Response Act (enacted March 19) to the amounts covered by the refundable payroll tax credit – i.e., $511 per day for employee sick leave or $200 per day for family leave.

Significant Spending

The bill also calls for large infusions of cash to the following sectors:

• $150 billion for a state, tribal, and local Coronavirus Relief fund
• $130 billion for hospitals
• $30 billion for education
• $25 billion for transit systems

Legislative Summaries

• Unemployment Insurance and Tax Policy
• Health Policy
• Appropriations

For more information about Forefront’s policy work, visit our COVID-19 policy page.

To access webinars, reports, and other important resources for the sector, visit our COVID-19 resources page.