Nonprofit 411: Raising Your 501(c)(3)’s Voice in an Election Year without Risking Its Exempt Status

Nonprofit 411 HemBarr-minBy Dylan O’Sullivan* and Eleanor Evans, Esq., Hemenway & Barnes LLP

Nonprofits play an indispensable role in our nation’s civic discourse, engaging policymakers and the public on issues of moral, social, and economic concern.  For 501(c)(3) organizations, however, this role becomes more complicated during election season due to rules prohibiting them from supporting or opposing candidates for public office.

The Rule Against 501(c)(3) Campaign Intervention

Federal tax law permits 501(c)(3)s to educate and advocate around issues related to their mission, even if those issues are highlighted in political campaigns.  However, 501(c)(3)s that intervene in a campaign on behalf of, or in opposition to, any candidate for elected public office –federal, state or local – risk losing their tax-exempt status.

While 501(c)(3)s may communicate about policy issues related to their mission, they must avoid commenting positively or negatively on candidates, explicitly or implicitly, in writing, orally or online.  A message conveying a preference for or against a candidate violates this prohibition even if it does not expressly encourage voting for or against the candidate or specifically mention the candidate by name.  The line between a permissible and impermissible communication is ultimately a question of whether the communication is about an issue or about a candidate.  Navigating this line is a recurring challenge – one made more acute in a time when many policy issues have newfound partisan political undercurrents.  Despite this ambiguity, there are some factors that can guide 501(c)(3)s as they determine whether or how to weigh in on policy issues during an election.

Factors to Consider When Commenting on Policy Issues in an Election Season

A communication is more likely to be deemed a permissible issue statement if it:

  • Addresses an issue clearly within the scope of the organization’s mission;
  • Concerns an issue the organization regularly comments on outside of election season;
  • Is part of an ongoing series of similar communications on the same issue not related to the timing of any election;
  • Comments on incumbents’ official actions rather than their candidacy (and, preferably, refers to incumbents not up for election as well as those who are);
  • Shares information related to a non-electoral event, such as a vote on specific legislation;
  • Includes a disclaimer noting that, as a 501(c)(3), the organization does not endorse or oppose candidates for elected public office (however, a disclaimer alone is not determinative).

A communication is more likely to be deemed impermissible campaign intervention if it:

  • Identifies candidates (by name or otherwise) or voting in a specific upcoming election;
  • Expresses approval or disapproval of a candidate’s positions and/or actions or compares them to the organization’s views;
  • Is issued close in time to an election;
  • Addresses an issue that has been raised as distinguishing candidates for a particular office;
  • Represents an increase in the organization’s volume of commentary on incumbents as their reelection approaches;
  • Comments on a candidate’s qualifications, character or record, rather than focusing on the substance of a policy issue;
  • Disseminates election-related statements from political campaigns or partisan organizations that have endorsed candidates (e.g., by re-tweeting, liking or sharing social media posts or linking to campaign-related websites).

Commenting on political issues during an election requires 501(c)(3)s to carefully consider the content and context of their communications.  By understanding and applying these rules, 501(c)(3)s can raise their voices on important issues throughout election season without jeopardizing their tax-exempt status.

 

*Dylan O’Sullivan is a law student at Northeastern University School of Law. He is not a practicing attorney.

Our Shared Sector: Responding with empathy and understanding

By YW Boston

MNNJune2020-min

Right now, your organization, and the nonprofit sector as a whole, has an obligation to bolster its commitment to employees and constituents of color, especially Black employees and constituents. The last few months have been difficult for nonprofits, as our means of operating and much of our funding have been challenged due to COVID-19. In the face of a crisis, equity and inclusion work is too-often deprioritized and neglected. It is critical that nonprofits do not let commitment to DE&I waver. As employees and constituents navigate the COVID-19 pandemic, in addition to the existent crisis of systemic racism, it is important for nonprofits to lead with empathy and understanding.

First, this requires that nonprofits acknowledge the undue burden that racism is putting on Black colleagues and constituents. When it comes to COVID-19 outcomes, Black communities are experiencing three times the death rate as compared to White communities. This means that Black employees are more likely to be experiencing grief, fear, and anxiety due to structural inequities. Further, the news coming out daily about police brutality and state violence, enacted on innocent Black individuals and protesters in support of Black lives, can be especially exhausting and traumatizing to those who either fear or have experienced similar violence. Your Black colleagues may or may not speak about this during the workday, but it is the duty of employers to express increased empathy, regardless. Just as nonprofits regrouped to strategize how to support employees and constituents through a global pandemic, we should consider how we will support employees and constituents experiencing heightened stress, trauma, and risk due to ongoing racism and heightened police brutality.

One way to lead with empathy, for instance, is to be open and honest about the COVID-19 racial disparities we are witnessing, and how that directly impacts your staff and your mission as an organization. Do not fall back on tropes of “We are all in this together,” or “this pandemic is an equalizer,” because the data show that this notion is false. Particularly after high-profile racist events, such as the murder of George Floyd and ongoing police brutality against Black people, do not go about business as usual by prioritizing the work routine and ongoing projects over the wellbeing of your staff. In addition to making a public statement denouncing racism, demonstrate to your staff how you are committed to more equitable outcomes for your staff and communities. Provide optional space for staff wishing to have a conversation about recent events with colleagues. Prioritize mental health and let your employees know they can take time off if they wish to do so.

In addition to short-term responses, we must ensure we don’t “go back to normal” when COVID-19 and police brutality stop being front-page news. Inspect your Diversity, Equity, and Inclusion (DE&I) strategies to determine areas for growth. Take an intersectionalapproach by considering the ways in which all forms of discrimination–such as racism, sexism, classism, or ableism – interact. One of the most important things your organization can do is reach out for help when you need it. Whether your organization has never openly spoken about race before, or you wish to deepen your existent commitment, make an intentional investment in addressing inequities within your organization and in our broader communities.

Remember, our country has hundreds of years of racism in its history. It is not enough to denounce racism, but instead continuously work towards eliminating it. All of us in the nonprofit sector have the responsibility to our staff and to our constituents to keep learning and evolving–and most importantly, to take action.

About YW Boston

As the first YWCA in the nation, YW Boston has been at the forefront of advancing equity for over 150 years. Through our DE&I services—InclusionBostonand LeadBoston—as well as our advocacy work and youth programming, we help individuals and organizations change policies, practices, attitudes, and behaviors with a goal of creating more inclusive environments where women, people of color, and especially women of color can succeed.

As part of that work, we are helping organizations prioritize Diversity, Equity & Inclusion and become socially connected while staying physically distant. During this time, YW Boston is providing organizations with digital workshops and resources to help them better understand the challenges faced by their employees. For more information, please contact Sheera Bornstein at sbornstein@ywboston.org.

Nonprofit 411: 7 Important Factors of Maintaining Internal Control in a Remote World

Nonprofit 411 BerryDunn-minby Preston Kinney, BerryDunn

In a matter of weeks, our world and our workplaces have changed. With stay-at-home orders in effect, we need to consider how to keep our organizations safe as we work remotely from our homes. The following are seven internal controls that will help organizations maintain consistent and reliable controls now and into the future.

  1. Accounts payable and check signing

Your accounts payable and cash disbursement process will likely be upended as a result of your new remote environment. Some have designated certain personnel responsible for checking mail on an infrequent basis. Bills received through the mail will need to be scanned to the accounts payable clerk for entry into the accounting system.

Check signing may also prove to be a challenge as blank check stock may be inaccessible. Electronic approval of invoices and signing of checks, as well as the use of wire and ACH transfers, are feasible solutions.

  1. Segregation of duties

Segregation of duties may become difficult as employees shift to alternative work schedules or have other responsibilities. Maintaining segregation of duties should be a top priority and is something that should be reassessed as circumstances change. Challenging times may force you to get creative by requesting that employees perform duties they are not otherwise accustomed to performing.

  1. Digital sign-offs

Control owners should be cautious about the integrity of an employee’s initials simply typed onto a digital document, as any employee can perform this task. Digital signatures, which require an employee to enter credentials prior to signing, enhance the integrity of a sign-off and are often time stamped. Digital signatures may also “lock down” the document, prohibiting any changes to the signed document.

  1. Timely review

Preparation and review may take longer than usual. If additional time is granted for the preparation and review of documents, consider the implications this has on the transaction class. The longer it takes to complete a control, the greater the consequences may be if you identify an error. For example, the impact of incorrect billing can be substantial if not identified timely.

  1. Information and communication

If you have moved from a paper to a digital environment, sharing of information may not be an issue. For those still operating primarily in a paper environment, performing tasks and sharing information with team members may prove to be difficult. Further, those without the ability to scan and send documents from home could compromise a specific internal control altogether. Being forced to work remotely may be the perfect excuse to move paper processes to digital.

  1. Monitoring

Monitoring your internal control environment is of utmost importance given these significant changes. Frequent conversations should be had with control owners to ensure changes to processes do not render controls ineffective. Identified gaps in internal controls should be addressed proactively. Control owners should discuss changes to control processes with departmental stakeholders so these departments can consider the impact of changes on internal control. This also gives these departments the opportunity to cover any resulting gaps.

  1. Permanent changes

Once the remote work mandates end, the effects of working in such an environment will not. There are benefits and efficiencies to be found in working remotely. As people have been forced to work in such an environment, they will be more comfortable doing so. Therefore, let’s take this opportunity to revise processes and internal controls to be “remote workplace” compatible. This could provide a long-lasting impact to your organization beyond the pandemic.

If you have questions about these 7 important factors, or if you have specific questions about maintaining your organization’s internal controls in a remote environment, please reach out to Preston Kinney at pkinney@berrydunn.com, who is based in our Waltham, Massachusetts office. We’re here to help.

Nonprofit 411: Strategic Planning…Now?

Nonprofit 411 Pear Associates-min-minBy Alison Glisten Gray, Pear Associates

When COVID-19 entered our lives, many of us reacted with panic and uncertainty. Immediately, nonprofit organizations were faced with some big questions: How will this shift from the business-as-usual impact our clients, our employees, our donors? Will we still be able to deliver quality programs and services? How will this impact our bottom line? All of these are legitimate questions nonprofits are asking themselves, and the answers have resulted in a significant shift in the way many organizations are now operating and delivering services.

I would suggest this is also the time to consider some new questions: what can we learn about how we develop and deliver services? How can this situation make us more efficient and more effective? Can we be more strategic about the ways we meet our greatest community needs?

Right before the COVID-19 pandemic, I worked with English at Large of Woburn to create a strategic plan. According to Maureen Willis, Executive Director, “this helped put us in a position of strength as we plan for the impact of the pandemic. The process brought clarity to our strengths and priorities and gave us a strong vision for what we want to achieve in the future.”

Perhaps the idea of embarking on a strategic planning process amid such ambiguity about our economic and social future seems futile. However, this may just be the perfect time to prioritize how your organization will have the greatest impact. As my client, Lara Quiroga, Director of Strategic Initiatives for Children at Amoskeag Health in Manchester, NH, says “now is the right time to focus on strategic planning, for both the short and long-term…this has helped provide clarity on the work that needs to happen, especially during a time of crisis when it’s difficult to focus on the future and easy to mission-drift.”

For those who have strategic plans in place, I encourage you to review your goals and objectives for the coming year and make the changes now to reflect how you want to deliver quality services after the crisis is over. If you are considering embarking on a planning process, I suggest you revisit the mission and vision of your organization and let that guide your future. Use this time to explore how you can innovate and be creative as you respond to the current landscape and changing future. Working with your Board and staff to create a clear path forward could be one positive outcome for your organization in this challenging time.

At the beginning of 2020, before COVID was part of our daily vocabulary, I worked with the National Ice Cream Retailers Association (NICRA) to create a 12-month action plan while they were experiencing incredible growth. NICRA’s Executive Director, Steve Christensen, asserts, “having a plan… allowed us to continue on our planned path without being distracted by media reports and many other influences.”

He also shares, “COVID-19 took us off our strategic plan highway a little, but we knew exactly how to get back in on the on-ramp to pick up where we left off.” 

With some thoughtful planning, your organization can also be successful in staying on track to meet community needs while adjusting to unexpected change.

 

Nonprofit 411: Emergency Law Provides Governance Flexibility for Massachusetts Nonprofits

Nonprofit 411 Hemenway & Barnes-min-min-minBy Brad Bedingfield and Eleanor Evans, Hemenway & Barnes

On April 3, 2020, Governor Baker signed Chapter 53 of the Acts of 2020, which includes an emergency provision (Section 16) intended to make it easier for nonprofits incorporated in Massachusetts to function remotely during the COVID-19 crisis. During the governor’s state of emergency (declared on March 10, 2020) and for 60 days thereafter, a nonprofit board may take certain actions regardless of what the nonprofit’s bylaws may say, so long as the nonprofit’s Articles of Organization do not expressly forbid it. Specifically, the board may:

Service of Directors and Officers:

  • Allow directors and officers to continue to serve beyond their designated terms during the state of emergency and until their successors are elected and take office.
  • Appoint successors to any officers or directors (as well as employees or agents), even if the bylaws do not otherwise provide for that.

Board Meetings:

  • Provide notice of board meetings in whatever manner is practicable under the circumstances, and to whichever directors it is practicable to reach.
  • Allow directors to participate in board meetings through the use of any means of communication by which all directors participating are able to communicate simultaneously, even if they cannot all hear each other simultaneously. Directors who participate in a board meeting held according to Section 16 are deemed to constitute a quorum, regardless of what the bylaws say.

Member Meetings:

  • Cancel a meeting of the members with notice given in any practicable manner.
  • Permit members to vote in person or by proxy, even if the bylaws do not allow proxy voting. Any member voting by proxy shall be considered present for purposes of meeting a quorum.
  • Allow members to participate in a members’ meeting by remote participation, even if not physically present at the meeting. Members will be treated as present for a remote meeting if:
    • Reasonable measures are implemented to verify that each participant is in fact a member (or the holder of a valid proxy);
    • Members are given a reasonable opportunity to participate in the meeting and to vote on matters submitted, including an opportunity to read or hear the proceedings of the meeting substantially currently with such proceedings, pose questions, and make comments, regardless of whether the members can simultaneously communicate with each other; and
    • Votes or other actions taken remotely are adequately documented and records retained.

To Note:

  • Boards Must Authorize Actions – This new law does not automatically provide this flexibility, but instead authorizes the board to permit it. Thus, for example, if the members of a nonprofit want to meet remotely, the board must first authorize that pursuant to Section 16 of Chapter 53 of the Acts of 2020. A nonprofit corporation with members must notify the members, as soon as reasonably practicable, of any actions taken by the board under Section 16.
  • Check the Articles of Organization – While Section 16 allows a board to override (temporarily) a nonprofit’s current bylaws, it does not allow a board to override the nonprofit’s Articles of Organization. Accordingly, it is important to confirm that nothing in the Articles would prevent what the board is seeking to authorize under Section 16.
  • Limited Time – The board may take the actions described above only during the current state of emergency and 60 days thereafter. If the board and/or the members are concerned about how they will operate effectively after that time, they should consider taking advantage of this opportunity to make structural changes to accommodate long-term remote participation, such as amending the bylaws to allow proxy voting by members and to confirm that directors may participate in board meetings by Zoom or teleconference.

Brad Bedingfield is Chair of the Nonprofit Group at Hemenway & Barnes LLP. Brad assists private foundations and public charities with navigating complex tax regulations and procedures, including receipt and disposition of complex charitable gifts and participation in innovative forms of impactful philanthropy.

Eleanor Evans is counsel at Hemenway & Barnes and a member of the firm’s Nonprofit Group.   She has over 20 years’ experience representing nonprofit organizations in a diverse range of legal, governance and compliance matters.

Policy Alert: Contact Congressional Representatives Today to Ensure that Nonprofits are Included in Next Round of Federal Relief

MNN calls on nonprofits to contact their Congressional representatives today and ask for their support of the nonprofit sector by including the following four clarifications and provisions in the next federal COVID-19 relief package:

  • expand nonprofit access to credit;
  • make permanent and significantly increase the federal universal charitable deduction;
  • recognize the significant financial burden on self-insured nonprofits; and
  • increase emergency funding.

Nonprofits can send this issue list along with a personal message about how their organizations have been impacted by COVID-19. Click the following links to find U.S. Senate and Representative contact information. Nonprofits can also send the below social media message to the appropriate congressional handles:

#Nonprofits call on Congress to 1) Designate funding exclusively for nonprofits, 2) Strengthen charitable giving incentives 3) Increase the unemployment insurance reimbursement for self-funded nonprofits and 4) Increase emergency funding #Relief4Charities. https://bit.ly/3cxIeOs

MNN Submits Comments on the New Federal Mid-Sized Loan Program

On Wednesday, April 15, MNN submitted comments to the Federal Reserve urging the Treasury and the Fed to ensure that the forthcoming mid-size loan program authorized by the CARES Act extends both eligibility and desirable loan terms to the nonprofit sector.

To date, nonprofits with 500 employees or more have not been eligible for the Small Business Administration Loan Programs.

Read MNN’s comments here.

Nonprofit 411: Engaging Major Donors During Coronavirus

Nonprofit 411 Roger Magnus-minBy Diane Remin, MajorDonors.com

Let’s start by considering what donors want under normal circumstances. In her landmark, research-based book, Donor-Centered Fundraising (2003), author Penelope Burk, lays it out for us on page 10:

  1. Prompt, personalized acknowledgement of their gifts
  2. Confirmation that their gifts have been set to work as intended
  3. Measurable results on their gifts at work prior to be asked for another contribution

Donors want to know what you are doing with their money—and, as time goes by, what their gift accomplished. Additionally, they want to be thanked right away and personally. That hasn’t changed!

What is happening now—and what are the implications?

  • Uncertainty has increased. Trustworthiness has never been more important.
  • Distraction has increased. Donors need to be reminded about why your work is important.
  • You can’t visit with donors in-person. In these times, use the phone and, preferably, videoconferencing (e.g. Zoom, Skype, FaceTime)
  • There may be financial issues. Listen carefully—don’t presume. Be prepared to be flexible, e.g., re-negotiate pledge schedules. Take care of your donors!

How to engage your major donors: permission-based conversations.

I always feel a bit silly when I talk about a permission-based approach. Why? Because it is so obvious once you hear it. You are literally asking the donor for permission to take each step. Absent permission, stop and set-up the next check-in.

Step 1: Pick up the phone and check-in: How is the donor doing? This question has new significance amidst Covid-19. How are they, their family, how are they dealing with staying home, etc. Listen, listen, listen. If the donor is not doing well, stop, help if you can, and agree on another call an appropriate time down the road.

Step 2: Get permission to discuss what your organization is doing in response to COVID-19. Literally, “Can we talk about what [nonprofit] is doing in response to COVID-19?” Make this a discussion by including the donor: How does that strike you? Is this making sense? Do you have any thoughts about this?

Step 3: If the donor is engaged, get permission to talk about the funding plan: “Would it be OK if I share the funding plan with you now?” You are getting permission to talk about money. For this part of the conversation, you’ll need a funding plan:

  • A dollar goal (think of this as a campaign)—On the phone, this sounds like: “We are looking to raise $X to [highlight key point or two most relevant to donor].”
  • A leadership giving chart with the number of gifts at each level. On the phone, simply describe a leadership giving range: “We are looking for leadership gifts in the $10,000 to $50,000 range.” Tip: Consider asking one or two top donors for lead, matching gift(s) that total 50% of the goal.
  • Gift impact examples tied to the various leadership giving levels. On the phone, you’ll mention one or two that coincide with the donor’s likely giving level.

Step 4: Give the donor the opportunity to help.

It is a myth that major donors won’t give or that you should leave your donors alone. Quite the contrary! Previous crises tell us that donors want to hear from you, know that you care, learn what you are doing, and help if they can.

Save Organizations that Serve (SOS) America Act

On March 27, Representatives Seth Moulton (D-MA) and Brian Fitzpatrick (R-PA) introduced the Save Organizations that Serve (SOS) America Act. The legislation would provide emergency funding for nonprofits and create a universal charitable deduction. The representatives are also advocating for nonprofits of any size to qualify for newly-expanded Small Business Administration (SBA) loans.

Specifically, the SOS America Act would:

  • Expressly provide charitable nonprofits with $60B for any emergency funding proposals. The bill provides for $60 billion in emergency support for charitable nonprofits and a mechanism to rapidly infuse cash to those organizations serving immediate needs in communities facing lost and declining revenue due to the pandemic.
  • Create a robust universal charitable deduction. Improve the proposed above-the-line charitable deduction of the CARES Act (which set a $300 cap) by significantly raising the cap and allowing all taxpayers to immediately claim the deduction on their 2019 taxes and beyond.

Once the CARES Act is enacted into law, Rep. Moulton and Rep. Fitzpatrick plan to amend the bill to ensure all nonprofits qualify for the newly created small business loans and remove the 500-employee caps. They also plan to clarify that charitable nonprofits of all sizes are able to participate in the emergency SBA loan program and remove the cap on the number of employees.

“Nonprofits are operating at a loss to help people manage the disruption coronavirus is causing. The YMCA is feeding kids who don’t have school lunches to count on. The YWCA is sheltering women who don’t have safe homes to quarantine in. Other groups are advocating for Americans with compromised immune systems in a health care system that’s being tested,” said Representative Moulton in a press release. 

“Despite this work, these groups and many others still face the same challenges small businesses are facing, and they need a hand from the government. I urge Congress to work with Rep. Fitzpatrick and me to provide one.”

How the Federal COVID-19 Economic Stimulus Bill Would Affect Nonprofits: Phase III of the Federal Response

from the National Council of Nonprofits

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

On March 25, Congressional and Administration negotiators reached agreement on the Phase 3 of the federal response to COVID-19: a $2 trillion stimulus package. The Senate passed the bill Wednesday evening, and there are plans for the House to pass it on Friday, and for the President to sign it swiftly. MNN is using the updates regarding federal relief to inform our state-level advocacy strategy moving forward. 

Below is an analysis of the elements of this landmark legislation that impact nonprofit organizations, compiled by our partners at the National Council on Nonprofits.

Note: for information on what the previous federal relief package did, see our previous blog post entitled “What the Families First Coronavirus Response Act Means to Nonprofits: Phase II of the Federal Response.”

 What’s in the Bill for Nonprofits

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (S. 748) provides significant funding for businesses, hospitals, schools, and social support programs, among many other things. Below are key nonprofit issues of sector-wide interest on which advocates have been most active. These are based on an initial analysis of the nearly 900-page bill. More details may become apparent with more thorough analysis. 

Emergency Small Business Loans (emergency SBA 7(a) loans): 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 1106.

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: 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: Includes 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 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 had 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.

Industry Stabilization Fund: Creates a loan and loan guarantee program for industries like airlines to keep them solvent through the crisis. It sets aside $425 billion for “eligible business” which is defined as “a United States business that has not otherwise received economic relief in the form of loans or loan guarantees provided under” the legislation. It is expected, but unclear, whether charitable nonprofits qualify under that definition for industry stabilization loans. Mid-sized businesses, including nonprofits, that have between 500 and 10,000 employees are expressly eligible for loans under this provision. Although there is no loan forgiveness provision in this section, the mid-size business loans would be charged an interest rate of no higher than two percent and  would not accrue interest or require repayments for the first six months. Nonprofits accepting the mid-size business loans must retain at least 90 percent of their staff at full compensation. Section 4003. 

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:

A section-by-section for appropriations