Note: The North Carolina Center for Nonprofits typically provides Nonprofit Policy Update each week as a benefit to its nonprofit members. However, to help all North Carolina nonprofits respond to the COVID-19 pandemic, we're temporarily providing this newsletter to non-member nonprofits.
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Take 5 minutes today to tell Congress to enact COVID relief with nonprofit priorities
New tool can help your nonprofit take the lead in minimizing the spread of COVID-19
Annual Legal Compliance Checklist now available
What does the 2020 election mean for nonprofits?
Federal judge orders disclosure of smaller Paycheck Protection Program loans
IRS issues final rule on siloing of UBIT
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Take 5 Minutes Today to Tell Congress to Enact COVID Relief with Nonprofit Priorities |
North Carolina’s members of Congress need to push for a COVID-19 relief package that provides urgently needed relief for nonprofits, individuals, businesses, and communities. Reach out and tell your representatives in Washington to act now. Here are two simple actions you can take today:
Here is some additional background on provisions that nonprofits are asking Congress to include in the next COVID-19 relief legislation:
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Improve the Paycheck Protection Program (PPP). Many nonprofits would greatly benefit from a second round of forgivable PPP loans and simplification of the loan forgiveness process for borrowers.
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Strengthen the Universal Charitable Deduction. The CARES Act capped the temporary universal charitable deduction at $300 per taxpayer and only allows taxpayers to use this in 2020. The Center and other nonprofits continue to ask Congress to make meaningful improvements to the universal charitable deduction by significantly increasing the cap and extending it through 2021.
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Extend Unemployment Insurance (UI) Relief. The CARES Act only provides federal funds to cover 50% of self-insured nonprofits’ COVID-related UI costs (the state is covering the other 50% of these costs for self-insured nonprofits in North Carolina). Nonprofits are asking Congress to cover the other 50% and to extend this UI relief into 2021. Nonprofits are also seeking extension of the Pandemic Unemployment Assistance program – which provides UI benefits to self-employed individuals and laid-off or furloughed workers at small and religious nonprofits that are exempt from UI requirements – and restoration of the $600 per week supplemental UI benefits for most laid-off or furloughed workers.
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Expand the Employee Retention Tax Credit (ERTC). The CARES Act created the ERTC as a refundable tax credit for nonprofits and businesses that maintained their employees during the pandemic. Relatively few nonprofits have used the ERTC, since employers that received PPP loans were ineligible for this tax credit. It is quite possible, however, that Congress could strengthen the ERTC by significantly increasing the amount of the credit for each employee and by allowing nonprofits to use both the PPP and the ERTC for different periods. This could provide significant new relief for many nonprofits that have sustained financial losses during the pandemic.
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Provide Additional Aid for State and Local Governments. Nonprofits are asking Congress to provide more federal support for state and local governments. This additional funding is critical to help state and local governments continue to provide essential services despite growing revenue shortfalls. Thus far, the House has supported more funding for state and local governments, but the Senate has opposed it.
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Appropriate Federal Dollars to Help Nonprofits and Communities. Discussions around additional relief have included proposals for a wide range of appropriations, including increased funding for the Supplemental Nutrition Assistance Program (SNAP), food banks, arts and humanities nonprofits, domestic violence organizations, legal services nonprofits, hospitals, mental health service providers, and the Community Development Block Grant.
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New Tool Can Help Your Nonprofit Take the Lead in Minimizing the Spread of COVID-19 |
On Tuesday, North Carolina introduced a new COVID-19 County Alert System to pinpoint counties with the highest levels of viral spread and offer specific recommendations to bring numbers down. The system uses three colors (red, orange, and yellow) to show the level of community spread in each county and has specific steps that are recommended for individuals and for businesses and community organizations ( e.g. nonprofits) for counties in each category. The Center strongly encourages every nonprofit to become familiar with this alert system and to take the recommended steps to minimize the spread of COVID-19.
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Annual Legal Compliance Checklist Now Available |
The Center has released its 2020 Legal Compliance Checklist. Updated annually, the checklist is a comprehensive resource that outlines a wide variety of federal and state laws that affect North Carolina nonprofits’ governance, finances, advocacy, human resources, and fundraising. This year’s edition includes details on legal issues related to COVID-19, new state tax laws, and changes to employment laws.
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What Does the 2020 Election Mean for Nonprofits? |
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Federal Judge Orders Disclosure of Smaller Paycheck Protection Program Loans |
A federal judge has ordered the Small Business Administration (SBA) to release detailed information about nonprofits and small businesses that received Paycheck Protection Program loans. The SBA must release the names of borrowers, their addresses, and the amount of money the SBA loaned to them, among other information. Most of the data affected by the court order relates to loans of $150,000 or less. The SBA released the information for loans over $150,000 in the summer. |
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IRS Issues Final Rule on Siloing of UBIT |
Yesterday, the IRS released the text of its Final Rule on Unrelated Business Taxable Income Separately Computed for Each Trade or Business, which provides guidance on the new Section 512(a)(6) of the Internal Revenue Code on the siloing of nonprofits’ unrelated business income taxes (UBIT). This provision from the 2017 Tax Cuts and Jobs Act imposes higher effective tax rates on nonprofits than on for-profit businesses by requiring nonprofits to calculate each “trade or business” separately and pay federal income taxes on each separate business line. The final rule allows nonprofits to group their unrelated business income into 20 or so broad categories, or silos, based on the first two digits of NAICS codes. The final rule does not include a de minimis test that accountants had requested or provide any clarity on the allocation of expenses between exempt activities and unrelated business. |
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Nonprofit Policy Update is a weekly newsletter for current members of the North Carolina Center for Nonprofits. We track state and federal policy issues that affect all 501(c)(3) nonprofits. Learn about the Center's public policy priorities. For more information, contact David Heinen, Vice President for Public Policy and Advocacy.
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