The Coronavirus Aid, Relief, and Economic Security (CARES) Act
Please review The Chronicle of Philanthropy’s analysis of this important legislation as it pertains to nonprofits. Below is a portion of The Chronicle’s article.
The full article is available at: https://www.philanthropy.com/article/trump-signs-stimulus-bill/248350
Stimulus Bill Provides Nonprofit Loans, Grants, and One-Year ‘Universal Deduction’
The $2 trillion stimulus bill (The Coronavirus Aid, Relief, and Economic Security or CARES Act) expands the charitable deduction to all taxpayers for a year, makes nonprofits eligible for federal loans that could be largely forgiven, and boosts tax incentives for corporate giving, according to nonprofit analysts.
Currently, only people who itemize their taxes can claim charitable deductions. The stimulus bill will allow nonitemizers to deduct up to $300 in cash giving for the 2020 tax year, according to an analysis of the legislation by the National Council of Nonprofits.
Donations to donor-advised-fund accounts would not qualify for the nonitemizer deduction, according to Dean Zerbe, national managing director at AlliantGroup and a former top tax aide for the Senate Finance Committee.
For those who itemize, the bill lifts the cap on annual giving from 60 percent of adjusted gross income to 100 percent. For corporate charitable giving, the bill raises the annual limit from 10 percent to 25 percent of taxable income. The cap on deductibility of food donations from corporations would increase to 25 percent of taxable income, up from the current 15 percent cap.
More Help for Nonprofits
Other provisions of the bill affecting charities, according to the National Council of Nonprofits and other sources:
- Nonprofits with 500 or fewer employees (counting all full-time and part-time employees equally) will be eligible for Small Business Administration loans of up to $10 million. Nonprofits are also eligible for expedited loans of up to $1 million. The money would have to be used for payroll, including paid leave, as well as health-insurance premiums, facilities costs, and debt service.
- Nonprofits that keep their employees on the payroll from February 15 to June 30 could have their loans forgiven, turning the loan into a grant.
- The bill creates a refundable payroll tax credit of up to $5,000 for each employee on the payroll. To be eligible, a nonprofit must have experienced a drop in revenue of at least 50 percent in the first quarter of 2020 compared with the first quarter of 2019. The credit is available each quarter until the nonprofit’s revenue exceeds 80 percent of the same quarter in 2019. Nonprofits receiving emergency SBA loans are not eligible for these credits.
- The bill appropriates an additional $10 billion to another SBA program, Economic Injury Disaster Loans, and waives a creditworthiness requirements for all applicants, including nonprofits. Those eligible will be able to get checks for $10,000 within three days.
- Nonprofits that self-fund unemployment benefits could get reimbursed for up to half the costs of benefits provided to their laid-off employees.
This is available to all small businesses and nonprofits. There is no requirement for you to have a loss in revenue, to be closed down or anything of that nature. The focus is on retaining employees.
The USDA and its Federal partners have programs that can be used to provide immediate and long-term assistance to rural communities affected by the COVID-19 outbreak. This resource matrix organizes funding opportunities identified in the CARES Act and other federal resources that can help support rural America. Opportunities are categorized by customer and assistance type. These programs can support recovery efforts for rural residents, businesses and communities through: Technical, training, and management assistance; Financial assistance; and State and local assistance.