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.
|
|
|
|
COVID-19 relief legislation signed into law
Paid leave mandates expire today but nonprofits can still get tax credits through March 31
Take action: Your nonprofit can help minimize spread of COVID-19
IRS decreases standard business mileage rate for 2021
|
|
COVID-19 Relief Legislation Signed into Law |
On Sunday, President Donald Trump signed into law a $2.3 trillion funding bill passed by Congress last week that includes a $900 billion COVID-19 relief package and funding for the federal government for the remainder of the current fiscal year (through September 30, 2021). Thanks to advocacy from the Center and many other nonprofits, the legislation includes several forms of relief for charitable nonprofits. Highlights of the bill for nonprofits include:
-
Expanding Nonprofit Access to Paycheck Protection Program (PPP) Loans. The bill creates a second round of PPP funding for nonprofits and businesses with fewer than 300 employees that had a 25% reduction in gross receipts in any quarter of 2020. The second round of funding would be available to eligible nonprofits that already received PPP loans this summer. It also expands the types of expenses that are allowable for PPP loans to include personal protective equipment, certain supplier costs, facilities modifications, and certain workplace protection expenses. It appropriates $284 billion in additional funding for new PPP loans. Nonprofits with more than 500 employees are still not eligible for PPP loans.
-
Improving Employee Retention Tax Credit (ERTC). The bill makes the ERTC available to more nonprofits by expanding it and changing eligibility requirements. Specifically, nonprofits that suffered a reduction in gross receipts of 20% or more in any quarter of 2020 are eligible for a 70% refundable tax credit covering wages of up to $10,000 per employee in each quarter (with a maximum of $14,000 per employee). For example, a nonprofit with 10 employees who each make $10,000 or more per quarter could qualify for a $70,000 refundable payroll tax credit (70% of $100,000). Nonprofits that received PPP loans can now qualify for the ERTC for wages not paid for by forgiven amounts of PPP loans.
-
Fixing Issues with Economic Injury Disaster Loan (EIDL) Advances. Under the CARES Act, nonprofits and businesses were eligible for advance payments (essentially grants) of up to $10,000 as part of the EIDL program. Because of the way the EIDL advances were administered by the Small Business Administration, many nonprofits didn’t receive the full $10,000 or had to reduce their forgivable PPP loans by the amount of the EIDL they received. The new COVID-19 relief bill fixes these issues by repealing the provision in the CARES Act requiring PPP borrowers to deduct the amount of their EIDL advance from the forgivable amount of their PPP loan and by providing additional EIDL advances for many nonprofits and businesses operating in low-income communities.
-
Strengthening Incentives for Charitable Giving. The bill extends the temporary universal charitable deduction through 2021. For 2021, it also expands the cap on this non-itemizer charitable deduction for married couples filing jointly from $300 to $600. Individual taxpayers who use the standard deduction will still be able to deduct up to $300 for their charitable contributions next year. In addition, the bill extends two temporary increases in charitable giving incentives through 2021. Specifically, for 2021, it increases the limits on deductible charitable contributions for corporations to 25% of taxable income (up from 10%) and it removes the 60% of adjusted gross income cap on deductible charitable contributions for individuals who itemize their deductions.
-
Increasing and Extending Federal Unemployment Insurance Reimbursement for Self-Insured Nonprofits. The bill extends federal funding to cover 50% of the COVID-related unemployment costs of self-insured nonprofits through March 14, 2021. North Carolina is covering the other half of these costs for nonprofits in our state.
-
Extending Unemployment Benefits. The bill extends the Pandemic Unemployment Assistance program – which provides unemployment benefits to self-employed individuals and laid-off or furloughed workers at small and religious nonprofits that are exempt from unemployment requirements – through March 14, 2021. It also provides $300 per week in supplemental federal unemployment benefits for individuals who are out of work due to the pandemic, through March 14, 2021. This spring and summer, individuals had received $600 per week in supplemental benefits if they had been furloughed or laid off due to COVID-19. The bill also extends other CARES Act unemployment benefits through March 14, 2021. Without this legislative action, all of these unemployment benefits would have expired on December 30, 2020. The U.S. Department of Labor clarified this week that workers should not lose benefits this week, despite President Trump’s delay in signing the bill.
-
Extending Coronavirus Relief Fund (CRF) Deadline. Under the CARES Act, all CRF expenditures – including many North Carolina appropriations and grants to nonprofits – were required to have been spent by today. Because of this deadline, the U.S. Treasury Department was requiring nonprofits and state agencies to submit final CRF reports by January 8, 2021. The new COVID-19 relief package extends the deadline for CRF expenditures through December 31, 2021, which should prevent nonprofits from having to return unspent funds to the federal government and make final grant reports in the next few weeks. The state COVID-19 relief bill that appropriates much of North Carolina’s CRF funds incorporates any future congressional extension of the deadline.
Some other highlights and omissions of the COVID-19 relief negotiations include:
- Additional economic stimulus payments of $600 per person for individuals with adjusted gross income up to $75,000 and married couples with adjusted gross income up to $150,000. President Trump and congressional Democrats tried unsuccessfully to increase the amounts of these payments to $2,000.
- A one-month extension of the Centers for Disease Control and Prevention eviction moratorium through January 31, 2021.
- A $15 billion “Save Our Stages” grant program that will provide support to many nonprofit performing arts organizations and museums.
- Expansion of the PPP program to 501(c)(6) trade associations.
- Simplification of PPP loan forgiveness applications for borrowers – including nonprofits – with loans of $150,000 or less.
- Allowance for individuals to carry over unused amounts of health and dependent care flexible spending arrangement (FSA) benefits from 2020 into 2021.
- No new direct aid for state and local governments.
- No liability protections against COVID-related claims for businesses, nonprofits, or individuals.
Thank you for your nonprofit’s advocacy over the past six months for Congress to provide COVID-19 relief for nonprofits and communities. Your calls, emails, texts, tweets, and personal conversations made a big difference!
|
|
Paid Leave Mandates Expire Today but Nonprofits Can Still Get Tax Credits through March 31 |
The COVID-19 relief bill did not extend the paid sick leave and paid family and medical leave requirements from the Families First Coronavirus Response Act (FFCRA). Under FFCRA, most employers (including most nonprofits) with fewer than 500 employees were required to provide up to 80 hours of paid sick leave (at worker’s full rate of pay) and up to 10 weeks of paid family and medical leave (at 60% of workers’ regular rate of pay) for any employees who were out of work due to COVID-19. These paid leave mandates expire today.
The new COVID-19 legislation does, however, allow nonprofits and other employers that had been covered by the FFCRA paid leave mandates to continue to receive refundable payroll tax credits if they provide paid sick leave and paid family and medical leave in a manner consistent with FFCRA mandates (if they were still in effect) between January 1, 2021 and March 31, 2021. The Brooks Pierce law firm has provided a helpful analysis of these new provisions and considerations for nonprofits and other employers as they decide whether to continue to offer paid sick leave and paid family and medical leave during the first quarter of 2021. |
|
Take Action: Your Nonprofit Can Help Minimize Spread of COVID-19 |
COVID-19 infections and hospitalizations remain at record high levels in North Carolina and across the nation, and community spread is expected to continue for the near future. As we face the most challenging days of the pandemic, it is essential for every nonprofit to remind their staff, boards, volunteers, clients, and communities to take steps to minimize the further spread of COVID-19.
Nonprofits are trusted messengers, and many North Carolinians are more likely to take important public health actions if the message comes from a familiar nonprofit organization rather than a government official. Your nonprofit can make a big difference in fighting the pandemic by spreading the word about the importance of avoiding large gatherings over the holidays and practicing the “three Ws”:
- Wear a cloth mask that covers your nose and mouth;
- Wait six feet apart to avoid close contact with people outside your household; and
- Wash your hands or use hand sanitizer.
Look for more tips from the Center in the coming weeks on ways that your nonprofit can provide clear and accurate information about COVID-19 vaccines and other important public health actions. |
|
IRS Decreases Standard Business Mileage Rate for 2021 |
The IRS has announced that the standard business mileage rate will decrease to 56 cents per mile in 2021 (down from 57.5 cents per mile in 2020). Many nonprofits use this rate when reimbursing their employees for work-related driving. The volunteer mileage rate – the amount that's tax-deductible when your nonprofit's volunteers drive on behalf of your organization – remains at 14 cents per mile and can only be changed by Congress. The Center continues to advocate for Congress to increase the volunteer mileage rate. |
|
|
|
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.
|
|
|
|
|
|
|
