August 6, 2021
In this issue...
Take 15 minutes to share the impact of the pandemic on your nonprofit
NC House of Representatives set to vote on state budget next week 
U.S. Senate could vote on bipartisan infrastructure bill this weekend
IRS issues updated guidance on employee retention tax credit
Center offers tips as nonprofits consider COVID-19 vaccination requirements for employees
SBA opens simplified portal for PPP loan forgiveness
Take 15 Minutes to Share the Impact of the Pandemic on Your Nonprofit
The National Council of Nonprofits and the Federal Reserve are partnering on a survey to create a comprehensive picture of the effects of the pandemic on nonprofits and the communities we serve, both nationwide and here in North Carolina. The results will help the Center and our national partners inform policymakers at every level of government about the challenges nonprofits have faced during the pandemic and can help nonprofit organizations advocate for further relief. 

Please take 15 minutes to complete the survey today. The survey is open through August 24.
NC House of Representatives Set to Vote on State Budget Next Week
Yesterday, the NC House of Representatives began its formal process of developing its version of the state budget for FY2021-23 yesterday, more than a month after the beginning of the state’s fiscal year. Several House appropriations subcommittees met yesterday morning to discuss plans for various parts of the state budget. Some nonprofit highlights of the parts of the House budget that were approved by House appropriations subcommittees yesterday include:
  • $40 million in one-time funding for North Carolina’s food banks;
  • About $22 million in increased funding (over two years) to arts nonprofits through new arts council grants;
  • About $16 million in new funding (over two years) for nonprofit museums;
  • About $6.8 million in additional funding (over two years) for nonprofits that provide services for survivors of human trafficking;
  • About $13 million in new funding (over two years) for nonprofits serving survivors of domestic violence and sexual assault;
  • $20 million in one-time funding for Habitat for Humanity;
  • $8 million in one-time funding for volunteer fire departments;
  • $100 million in one-time funding for nonprofit private colleges and universities;
  • $15 million in one-time funding for free and charitable clinics; and
  • Smaller appropriations for dozens of individual nonprofits.

Overall, the House budget appears to provide significantly more funding for nonprofits than the Senate version. Much of this new nonprofit funding comes from American Rescue Plan Act (ARP) funds that are intended to offset some of the challenges nonprofits have faced because of the COVID-19 pandemic.

The full House budget will likely be released on Monday night, and the House Finance and Appropriations committees will review it on Monday and Tuesday so the full House can vote on it later next week. In June, the NC Senate approved its version of the state budget (S.105). The Center will update its chart on nonprofit provisions in the state budget next week to include a variety of House appropriations and provisions.

Once the House approves its version of the budget, the House and Senate will negotiate with each other and with Governor Roy Cooper on a final version of the state budget. Legislative leaders hope to have a final budget in place by the end of the month. Because the new state budget hasn’t been finalized, current state spending levels remain in effect for the beginning of the new fiscal year, meaning that state funding won’t be increased or revised to adapt to changing needs in the state.
U.S. Senate Could Vote on Bipartisan Infrastructure Bill This Weekend
This week, the U.S. Senate has been debating the Infrastructure Investment and Jobs Act, a $1 trillion bipartisan bill. According to the White House, North Carolina would receive about $8.7 billion of the infrastructure investment in the bill, including $7.2 billion for highway projects, $457 million for bridge repairs, $911 million for public transit, $109 million for electric vehicle charging, and $100 million for broadband access. A few provisions in the infrastructure bill could affect nonprofits, including:
  • Ending the Employee Retention Tax Credit (ERTC) on October 1, 2021. The ARP had extended this refundable payroll tax credit through the end of the year, so the early expiration could mean less financial relief for some nonprofits.
  • Establishing a $50 million pilot program to support nonprofits that are retrofitting their buildings to be more energy efficient. 

The Senate is expected to vote on the bill this weekend or early next week.
IRS Issues Updated Guidance on Employee Retention Tax Credit
On Wednesday, the Internal Revenue Services issued updated guidance on the ERTC. The new guidance clarifies that:
  • The rules relating to the interaction between Payroll Protection Program loans and the ERTC continue to apply for determining the credit for the third and fourth quarter of 2021 (translation: wages cannot be claimed for both PPP and ERTC at any time during 2021);
  • Only full-time employees (those working 30 hours or more per month) are counted in determining whether an employer is a large or small employer for purposes of the tax credit, but employers can claim the qualified wages paid to full-time equivalents when calculating the amount of their tax credits; and
  • ERTC qualification due to a decline in gross receipts (20% less for the third and fourth quarter) is made separately for each calendar quarter.

In recognition that Congress may end the ERTC three months earlier than originally planned (see the item above), the guidance notes that the IRS is monitoring congressional action that may make further changes to the ERTC.
Center Offers Tips as Nonprofits Consider COVID-19 Vaccination Requirements for Employees
With North Carolina’s COVID-19 vaccination rates stagnating and positive cases surging due to the Delta variant, many nonprofits are beginning to ask whether they can or should mandate COVID-19 vaccinations for their staff. 

To answer the first question: It is legal for nonprofits to require their employees to be vaccinated. To help with the second question, the Center recently posted an analysis of the pros and cons of nonprofit vaccination mandates (spoiler alert: the pros probably outweigh the cons for most nonprofits). We have also included some tips for ways your organization can implement an employee vaccination requirement in a way that is fair and effective and that minimizes potential liability for your nonprofit.
SBA Opens Simplified Portal for PPP Loan Forgiveness
On Wednesday, the U.S. Small Business Administration (SBA) launched a streamlined application portal to allow borrowers with Paycheck Protection Program (PPP) loans of $150,000 or less secured through participating lenders to apply for forgiveness directly through the SBA. The portal is intended to simplify forgiveness for about 90% of loans by, among other things, skipping the step in Second Draw PPP loans of proving that revenues declined in a quarter by 25%.
The Center 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. Don’t miss out – become a member to ensure you continue receiving these updates along with many other valuable benefits.
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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.