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

What the Families First Coronavirus Response Act Means to Nonprofits

by the National Council of Nonprofits

On March 19, the President signed into law, H.R. 6201, the Families First Coronavirus Response Act. The bill includes a complex set of temporary paid leave mandates and employer reimbursement provisions, as well as funding for free coronavirus testing, food nutrition security, and Unemployment extension.

Employment Provisions 

The Families First Coronavirus Response Act imposes new job protections for workers, paid leave mandates on employers, and a generous reimbursement scheme for employers that are designed to hold nonprofit and for-profit employers. The law provides two weeks of paid sick leave, a subsequent ten weeks of partially paid family leave for care of a child, and refundable tax credits in many cases will result in the Treasury Department writing checks to employers to cover some of the costs of the mandates.

Two Weeks of Emergency Paid Sick Leave: The law (at Sec. 5102) requires employers with fewer than 500 employees (including nonprofits) and government employers to provide their employees two weeks of paid sick leave, paid at the employee’s regular rate, to quarantine or seek a diagnosis or preventive care for the coronavirus. It also requires payment at two-thirds the employee’s regular rate to care for a family member for those purposes or to care for a child whose school has closed or child care provider is unavailable due to the coronavirus. These provisions expire at the end of December 2020.

The Secretary of Labor is authorized to exclude health care providers and emergency responders from the definition of employees allowed to take leave, exempt small businesses, including nonprofits, with fewer than 50 employees, and ensure consistency between paid family and paid sick standards and tax credits. In general, employees are entitled to 80 hours of paid sick time, and are immediately eligible for the leave under this bill.

Twelve Weeks of Emergency Family and Medical Leave: The law (at Section 3102) expands the number of workers who can take up to 12 weeks of job-protected leave under the Family and Medical Leave Act for coronavirus-related reasons. After the two weeks of emergency paid leave (above), employees of employers with fewer than 500 employees will be eligible to receive at least two-thirds of each employee’s usual pay. Employees must have been employed for at least 30 days to qualify and meet a “qualifying need related to a public health emergency.” The qualifying reasons for the emergency paid leave are caring for a child if the child’s school or childcare center is closed due to coronavirus. The provisions would also expire at the end of 2020. 

Generally, employees taking Emergency FMLA have job protection, but the bill provides an exception for employers with fewer than 25 employees if the position no longer exists following leave due to operation changes from the public health emergency. Health care providers and emergency responders are also excluded from the definition of employees allowed to take this leave, and the law exempts small businesses, including nonprofits, with fewer than 50 employees. 

Reimbursable Payroll Tax Credits Available: Employers paying for the mandated paid leave are entitled to claim a refundable tax credit. Specifically, the tax credit is allowed against the employer portion of payroll taxes, and any paid leave costs that exceed the amount of payroll taxes owed will be refundable to the employer at the end of each quarter. This means the federal government will cover all or a portion of the costs of these paid leave mandates. The amounts depend upon what the employee is doing. 

  • Under the Paid Sick Leave Mandate: Employers paying for employees who must self-isolate, obtain a diagnosis, or comply with self-isolation recommendation with respect to coronavirus may receive tax credits of up to $511 per day. Payments to employees caring for a family member or for a child whose school or child care center is closed, qualified sick leave wages are capped at $200 per day. Both types of wages are capped at 10 days in the aggregate. (Section 7001)
  • Paid Family and Medical Leave Mandate: The refundable tax credit for qualified family leave provision is capped at $200 per day and $10,000 each quarter. (Section 7003)                                                 

Other Major Provisions 

Supplemental Nutrition Assistance Program (SNAP): The legislation authorizes states to request a waiver for temporary, emergency CR-SNAP benefits to existing beneficiaries up to the maximum monthly allotment. The Secretary of Agriculture is given broad discretion to provide flexibility for state waivers and USDA guidance. All work and training requirements for SNAP benefits are suspended during the crisis. 

Child and Senior Food and Nutrition: A combined $900 million was appropriated for the Special Supplemental Nutrition Program for Women Infants and Children (WIC), which provides nutrition for low-income pregnant women and mothers with young children, and the Emergency Food Assistance Program (TEFAP) to assist local food banks to purchase food as well as storage and distribution. WIC requirements of physical presence for certification may be waived by the Secretary of Agriculture. The legislation also authorizes the Department of Agriculture to approve state plans for emergency Electronic Benefit Transfer (EBT) food assistance for households with children who receive free or reduced school meals if their school is closed for at least five consecutive days. A separate provision allows all child and adult care centers to operate as non-congregate and take food to go. The Secretary of Agriculture may waive nutrition requirements due to disruption in the supply. An additional $250 million is provided for the Senior Nutrition program for 25 million home-delivered and pre-packaged meals to low-income seniors.

Emergency Unemployment Insurance Stabilization and Access Act: The law establishes a new act (Section 4101) to provide $1 billion for emergency grants to states for processing and paying unemployment insurance (UI) benefits. Half of the funding would be for staffing, technology, systems, and other administrative costs for eligible workers. States must require employers to provide notification of potential UI eligibility to laid-off workers, ensure workers have at least two ways to apply, and notify applicants when an application is received and processed. If an application cannot be processed, the state must provide information on how to ensure successful processing. The other half of funding would be reserved for emergency grants to states with at least a 10 percent increase in unemployment, and these states would be able to receive 100 perfect federal funding for Extended Benefits under a separate provision (Section 4105), compared to the normal requirement that the state funds 50 percent of the benefit. Section 4103 provides states with access to interest-free loans to help pay regular UI benefits to the end of the year.

Coronavirus Testing: The law provides free testing for all Americans for COVID-19, regardless of insurance status or ability to pay. Private and public insurers (Medicare, Medicaid, CHIP, and other federal health programs) must cover COVID-19 diagnostic testing, including the cost of a provider, urgent care center, and emergency room visits.

Massachusetts Nonprofits Feeling Strained by COVID-19 Outbreak

Today, the Massachusetts Nonprofit Network (MNN) and Philanthropy Massachusetts released findings from their survey of nonprofit organizations on the anticipated and real impacts of the novel coronavirus (COVID-19) outbreak in the state’s nonprofit sector.

The results from the survey—which received over 950 responses from nonprofits of all sizes, fields, and from all regions of the state—underscored the enormity of the impact of the COVID-19 outbreak on nonprofits’ essential operations, programs, and services. Full results of the survey can be found here.

63% of nonprofit respondents indicated that they were experiencing, or anticipated, a loss in their annual revenues. In addition, 52% of respondents characterized the severity of impacts related to the COVID-19 outbreak as “high” (defined as “significant disruptions”) and 43% characterized the severity as “moderate” (defined as “minor disruptions”).

“The results from the poll reinforce what many nonprofits have been sharing with us in recent days: they are already feeling strained by the coronavirus as employers, conveners, and service providers—and it’s only just beginning,” said Jim Klocke, CEO of MNN, and Jeff Poulos, CEO of Philanthropy Massachusetts in a joint statement.

Nonprofits indicated a range of specific impacts to their organizations. 89% of respondents reported the cancellations of programs or events, 67% reported disruptions of services to clients and communities, and 60% reported anticipated budgetary implications related to strains on the economy. Additional impacts on nonprofits included increased and sustained staff and volunteer absences (28%) and increased demand for services from clients and communities (25%).

Additionally, nonprofits responded that they are working to respond, or anticipated responding to the COVID-19 outbreak in the following ways: rescheduling or canceling programs or events (e.g. fundraisers) (92%), staying informed via news and updates from government agencies such as the Centers for Disease Control (91%), encouraging proper hygiene and cleaning procedures (89%), and encouraging sick employees to stay home (87%). 

Finally, nonprofits responded that they need financial relief, more information and best practices, and remote work/work from home support to weather the crisis.

Between the survey’s opening last Wednesday and its close yesterday, many nonprofits have closed offices, instituted work-from-home policies, or paused operations altogether. “In the time period when responses were being collected, employer behaviors and practices were rapidly changing in response to new information being released. It is likely that the impacts of the COVID-19 outbreak on nonprofits are now even higher than what was reported in the poll,” said Klocke and Poulos.

Klocke and Poulos reaffirmed their organizations’ commitment to working with nonprofit, philanthropic, and government leaders to mitigate the impacts of the COVID-19 outbreak on the Massachusetts nonprofit sector. 

“We look forward to a collaborative, cross-sector approach that mitigates the impacts of COVID-19 on nonprofits and the communities they serve,” said Klocke and Poulos. “Nonprofits are essential to the immediate responses to the COVID-19 outbreak, and will play outsized roles in rebuilding our communities in the long term.”

Nonprofits’ Response to COVID-19, and Policy Remedies

As first responders, service providers, and employers, nonprofits are contributing to and impacted by the coronavirus response efforts in a number of ways. Federal and state governments are in the process of developing policy remedies to address immediate needs and determine longer-term recovery needs. MNN is in communication with public officials to coordinate a cross-sector approach, and ensure that nonprofits are included in government mitigation and relief efforts. Specifically, MNN is working to ensure that any forthcoming policy remedies acknowledge the following:

Nonprofits are significant employers in the Commonwealth. 

  • Any employer-focused relief should make sure that tax credits and deductions are applicable to the taxes nonprofits pay, such as unrelated business income taxes and payroll taxes. 
  • Unemployment insurance measures should consider the fact that a number of nonprofit employees work at organizations that self-insure, and look to remedies that relieve the unanticipated burden on self-insured organizations. 

Nonprofits are front-line service providers and economic generators in their communities.

  • Direct-service organizations that shifted operations to respond to the crisis should be included in any public recovery funds.  
  • Economic stimulus proposals targeted at adversely affected industries should recognize the impact of the coronavirus on the broad array of closed nonprofit services.  

Nonprofits rely heavily on donations and government grants to execute missions.

  • Massachusetts has restored its state charitable deduction at a critical time: when charitable donations are down, and service demands are up. Preserving this incentive is vitally important.
  • Government agencies should adopt policies recognizing that a nonprofit may not fulfill its deliverable on a state contract due to the COVID-19 pandemic. In addition, state grantmaking agencies should consider temporarily loosening government-wide grant and contract reporting, application, and renewal requirements.

MNN will continue to provide updates through our newsletter and main coronavirus page with new developments. Nonprofits with questions or input on policies that would be beneficial to their organizations should contact MNN’s Director of Government Affairs Danielle Fleury.

MNN Applauds Philanthropic and Government Action to Mitigate Coronavirus Impacts

Philanthropies and governments across Massachusetts are setting up funds to support organizations and communities that have been impacted by the coronavirus. The Boston Foundation, the Community Foundation of Western Massachusetts, the United Way of Central Massachusetts, and the United Way of Greater New Bedford, and the United Way of Massachusetts Bay and Merrimack Valley have announced rapid-response funds.

In addition, the City of Boston is expected to announce today a fund to support families hardest hit by the crisis.

Links to these funds can be found at MNN’s coronavirus webpage here.

MNN released this statement today from CEO Jim Klocke:

“MNN thanks the government, philanthropic and community leaders across Massachusetts who are working to mitigate the impacts of the coronavirus on nonprofits and the communities they serve.

The coronavirus has obvious impacts on nonprofits’ abilities and capacities to carry out their important missions. MNN has heard from many nonprofits about the anticipated and real impacts on their daily operations. Some of the anticipated and real impacts on nonprofits include widespread cancellations of programs and events and the corresponding loss of revenue, disruptions of service to clients and communities, workforce-related matters like employee paid leave and unemployment insurance, and budgetary implications related to strains on the economy.

This year, nonprofits will need unrestricted dollars more than ever. Charitable donations, in particular gifts from individuals, have always been the most important part of nonprofits’ unrestricted budgets which allows them to maneuver with some flexibility in times like these and keep their operations afloat.

We are committed to working with our partners to help everyone in Massachusetts—particularly nonprofits and the communities they serve—weather the crisis.”