April 3, 2020
Note: The North Carolina Center for Nonprofits typically provides Nonprofit Policy Matters each week as a benefit to its nonprofit members . However, to help all North Carolina nonprofits respond to the COVID-19 crisis, we're temporarily providing this newsletter to non-member nonprofits.
In this issue...
Paycheck Protection Program forgivable loans open to nonprofits today
Center asks federal and state government to hold nonprofits harmless for UI claims
Center provides input on state-specific COVID-19 relief solutions
DOL and IRS offer guidance on emergency paid leave
Recording available from yesterday’s virtual nonprofit town hall 
Census tip of the week
Secretary of State extends first quarter lobbying filing deadline to July 22
Paycheck Protection Program Forgivable Loans Open to Nonprofits Today
Beginning today, small businesses and 501(c)(3) nonprofits with fewer than 500 employees can begin applying for a new forgivable loan to help maintain operations during the COVID-19 crisis. Earlier this week, the U.S. Treasury Department published an information sheet on the new Paycheck Protection Program. This loan program, also known as the emergency SBA 7(a) loan program, was part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed into law last Friday. 

Last night, the Small Business Administration (SBA) issued interim regulations on how the program will work. The rule includes a five-step process (see page 8) for calculating payroll costs for the purpose of the loan. It also requires that, for the loans to be forgivable, at least 75% of each loan must be used to cover payroll expenses. The rule defines payroll costs as: “compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.” Notably, compensation in excess of $100,000, federal payroll taxes, and qualified paid leave under the Families First Coronavirus Response Act do not count as payroll costs for purposes of the loan.

The SBA also has released the application form that borrowers must use for the Paycheck Protection Program (SBA Form 2483). Note that the application form asks for the name of the business “owner.” Since nobody “owns” a nonprofit, 501(c)(3) organizations can leave this line blank or write “N/A” or “nonprofit.”

Paycheck Protection Program loans, which are fully forgivable for organizations that maintain staff on payroll through June 30 (or rehire staff who have been furloughed or laid-off), can be used to cover up to 2 ½ months of payroll, rent, mortgage, or utilities. Loans must be made through private financial institutions, not directly through the SBA. 

Nonprofits are encouraged to apply for emergency 7(a) loans as soon as possible. Although the deadline is June 30, the CARES Act only authorized a total of $349 billion in Payroll Protection Act loans, and many nonprofits and small businesses are interested in seeking these forgivable loans. It is possible, but not guaranteed, that Congress could appropriate additional funding if demand for these forgivable loans quickly exceeds the current cap of $349 billion.

Charitable nonprofits with fewer than 500 employees that are struggling to maintain operations during the COVID-19 pandemic also can apply for the low-interest emergency SBA Economic Injury Disaster Loan (EIDL), which is not forgivable but carries a 2.75% interest rate and long-term financing options. Nonprofits can apply for EIDL loans directly through the SBA. As part of the applications, nonprofits also may request an Emergency Economic Injury Grant of up to $10,000 that can be paid within three days (even if the organization ultimately does not qualify for an EIDL loan). Nonprofits may apply for both Paycheck Protection Act and EIDL loans (and are encouraged to apply for both as soon as possible) but may not use both loans to cover the same expenses. 

To help your nonprofit understand which of these loan programs is the best option to help maintain your operations and payroll during the COVID-19 crisis, check out the comparison chart from the National Council of Nonprofits.
Center Asks Federal and State Government to Hold Nonprofits Harmless for UI Claims
The CARES Act provides significant unemployment insurance (UI) relief to workers and to nonprofits. For self-insured nonprofits that reimburse North Carolina’s Unemployment Trust Fund for UI claims of their employees instead of paying state unemployment tax (SUTA), the CARES Act offers only partial relief. The new law provides federal funds to pay states for half of the cost of these benefits for COVID-19 related layoffs and furloughs. Without further federal or state support, many nonprofits will be responsible for paying for the other half of their employees’ UI benefits if they are out of work for reasons related to the COVID-19 pandemic. This could jeopardize the financial viability of many nonprofit organizations. The Center is asking the state and policymakers to help nonprofits in two ways:
  1. It is essential for the NC General Assembly to make necessary changes to its UI laws to ensure that North Carolina receives the federal funds to cover half of the COVID-19 UI claims of self-insured nonprofits. 
  2. Either Congress (in its next stimulus bill) or the General Assembly should fully hold harmless self-insured nonprofits by forgiving the entirety of their UI claims arising because of COVID-19. This would be equivalent to the treatment of nonprofits and for-profit businesses that pay SUTA, whose tax rates will not be affected by COVID-19 related UI claims, thanks to new federal funding and an executive order by Governor Roy Cooper.

The Center is also tracking the implementation of the new Pandemic Unemployment Assistance (PUA) program. This provision in the CARES Act extends UI benefits to self-employed workers and others who are typically not eligible for UI benefits from the state of North Carolina. Notably, this means that employees of churches, religious nonprofits, and small charitable nonprofits (fewer than four employees) who are out of work due to COVID-19 will be able to receive UI benefits under PUA. 

Last night, the U.S. Department of Labor issued guidance to state unemployment agencies about the implementation of the (partial) federal support for self-insured nonprofits and PUA. The Division of Employment Security at the NC Department of Commerce is expected to develop a process for PUA in North Carolina and recovery of federal funds for self-insured nonprofits in the coming weeks.
Center Provides Input on State-Specific COVID-19 Relief Solutions
The Center is continuing to work with legislators and the Governor’s Office to provide suggestions for state policy solutions that could help North Carolina nonprofits respond to the COVID-19 pandemic. The Center continues to refine and expand these suggestions for legislators and the Governor as we get additional information about the specific needs of nonprofits and those they serve. If you have additional suggestions for policy changes that would help nonprofits respond to the COVID-19 crisis, please share them with us.

If your nonprofit has other suggestions for ways the state can help your organization, your community, or those you serve, please share this input with the House’s four working groups through the House’s online comments portal. We also encourage you to share your input with the Center so we can help with your advocacy.
DOL and IRS Offer Guidance on Emergency Paid Leave
On Wednesday, the U.S. Department of Labor issued temporary rules on the new emergency paid sick leave and emergency Family and Medical Leave mandates under the Families First Coronavirus Response Act (FFCRA). Notably, the guidance provides that employees who are able to telework are not eligible for paid leave under FFCRA, but they may have flexibility with the hours that they work (e.g. parents with children at home may not work at regular eight-hour intervals). Also, the Internal Revenue Service provided some helpful guidance on how nonprofits and businesses can claim the refundable payroll tax credits if their employees use paid sick leave or paid FMLA for COVID-19 related absences from work.
Recording Available from Yesterday’s Virtual Nonprofit Town Hall
If you missed yesterday’s virtual nonprofit town hall meeting, you can still watch the recording and see the COVID-19 resources mentioned during the webinar. To keep up to date on these loan programs and a wide range of tools to help your nonprofit cope with the COVID-19 crisis, check out the Center’s ever-expanding COVID-19 resource page. The Center plans to offer additional virtual town halls in the coming weeks (details to come soon).
Census Tip of the Week
A complete and accurate count in the 2020 U.S. Census is important for nonprofits since it will help ensure that North Carolina has full representation in Congress and access to federal funding that supports the work of many nonprofits. Because nonprofits are trusted messengers that often serve hard-to-count communities, it is important for all nonprofit organizations to spread the word about the importance of completing the 2020 Census. To help your nonprofit better prepare for the Census, the Center is offering a tip (sometimes more) in this newsletter each week.
Census Tip of the Week
Census Day was this Wednesday, April 1 and many nonprofits organized (virtual) events to celebrate and encourage complete counts in their communities. It’s definitely not too late for your nonprofit to come up with creative ways to “get out the count” in your community, as more than six in 10 North Carolina households still needs to complete the Census questionnaire. As of Wednesday, only 38.4% of North Carolina households had self-responded to the Census, well below the national average of 41.3% (see the U.S. Census Bureau’s map of response rates for more details).

Your nonprofit can help get a complete county by reminding your staff, board, volunteers, and those you serve that they can complete the Census in three ways: (1) online; (2) by phone; or (3) by mail. If you need tips on ways to promote the Census in the (new) age of social distancing, Nonprofit VOTE is offering a free webinar on April 8 from 2-3 p.m. about ways nonprofits can still “get out the count” during the COVID-19 crisis.
Secretary of State Extends First Quarter Lobbying Filing Deadline to July 22
The NC Secretary of State announced yesterday that first quarter lobbying expense reports, which would normally be due on April 22, may be submitted through July 22 without penalty. Nonprofits that are registered as lobbyist principals and nonprofit staff and contractors registered as lobbyists must submit their expense reports each quarter. For more information on lobbying registration and reporting requirements, check out the Center's summary of NC lobbying laws for nonprofits.
Nonprofit Policy Matters is a service 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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