Breaking down the CARES Act for Social Good Organizations | npENGAGE

Breaking down the CARES Act:  How the New Stimulus Bill Could Provide Relief for Social Good Organizations

By on Mar 28, 2020

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CARES Act and 501(c)3 organizations

Please also view Blackbaud’s COVID-19 Relief page which provides additional information on the provisions included in the CARES Act including:  incentives for charitable giving, like the temporary universal charitable deduction; information on the Paycheck Protection and Economic Injury Disaster Loan Programs; as well as other relief programs available to the social good sector.  We anticipate updating this page as more information becomes available.

On Friday, March 27, the House of Representatives and the President signed into law H.R. 748 (also known as the CARES Act), the third relief package Congress has passed, and the President has signed into law to address the US response to COVID-19. The package, which was passed by the Senate on Wednesday, March 25, is the largest relief package in U.S. history and includes several provisions helpful to the social good sector.

This package assists social good organizations as employers and mission-driven organizations. Here is an overview of six specific provisions of this bill.

 

  1. Universal Charitable Deduction

This package includes a temporary universal charitable deduction. This deduction will allow all taxpayers, even those who do not currently itemize their deductions, to claim a charitable deduction for cash donations up to $300 through December 31.  Donations to donor advised funds and supporting organizations are not eligible for this deduction.

 

  1. Adjusted Gross Income Limitation

In this package, adjusted gross income limits on charitable deductions are suspended or adjusted for cash gifts made by individuals and corporations. The adjusted gross income cap for individual taxpayers has been suspended, which increases the cap from 60% to 100% of adjusted gross income. The cap for corporations has been increased from 10% to 25%. For food donations, the corporate cap has been increased from 15% to 25%.

 

  1. Emergency Small Business 7(a) Relief Loans

Organizations classified as 501(c)(3)s with a total number of employees of 500 or less are eligible to apply for emergency Small Business Administration loans.  Organizations can apply for up to $10M or 2.5X average monthly payroll from 2019, whichever is less.  These loans can be used for payroll, mortgage, rent, and health insurance, among other costs.   Loan forgiveness is available for the principal of this loan used for payroll, mortgage, rent, and other approved costs.

 

  1. Emergency Economic Injury Grants

Organizations classified as 501(c)(3), that apply for the emergency small business loan outlined above, may receive up to $10,000 as an advance against the loan within three days of applying if the Small Business Administration certifies that the organization is eligible. Eligibility is based solely on the organization’s credit score.

 

  1. Deferral of Employer Payroll Taxes

Employers can delay the payment of employer payroll taxes for the 2020 tax year.  50% of employer payroll taxes are due by December 31, 2021. The remaining 50% of the employer’s portion of the 2020 payroll tax is due December 31, 2022. Please note: The delay does not apply to organizations receiving loan forgiveness for an emergency Small Business Administration loan.

 

  1. Treasury Industry Stabilization Loan Program

This loan program will provide funding to organizations with between 500 and 10,000 employees through December 31. These loans could come in the form of direct loans or guarantees of private loans. Direct loans would have an interest rate no higher than 2% with no principal and interest payments due for the first six months. These loans cannot be forgiven.

There are more provisions of this bill that benefit social good organizations. My public policy colleagues at Independent Sector and National Council of Nonprofits have crafted summaries of this bill and I have included links to their summaries here: National Council of Nonprofits and Independent Sector.

This package also includes additional funding for a number of government programs and direct payments to individuals. A list of these programs and funding amounts can be found below –

  • Child Nutrition Programs – $8.8 Billion
  • Supplemental Nutrition Assistance Program (SNAP) – $15.5 Billion
  • Emergency Food Assistance Program – $450 Million
  • Bureau of Indian Affairs – $453 Million
  • Community Services Block Grant – $1 Billion
  • Head Start – $750 Million
  • Low-Income Home Energy Assistance – $900 Million
  • Child Care Development Block Grant – $3.5 Billion
  • Children and Family Services Programs – $1.9 Billion
  • National Domestic Violence Hotline – $2 Million
  • Family Violence Prevention – $45 Million
  • Runaway and Homeless Youth – $25 Million
  • Child Welfare Services – $25 Million
  • Aging and Disability Services – $955 Million
  • National Endowments for the Arts and Humanities – $75 Million each
  • Institute of Museum and Library Services – $50 Million
  • Community Development Block Grant – $5 Billion
  • International Disaster Assistance – $50 Million
  • Public Health and Social Services Emergency Fund – $27 Billion
  • Veterans Administration Homelessness Assistance Grants – $4 Billion

 

Thanks again for all you do to serve our communities! We will do our best to continue bringing valuable updates on this and other legislation related to COVID-19 relief for the social good sector.

To help the social good community prepare for and respond to any impacts of the COVID-19 coronavirus, Blackbaud has also compiled a list of resources from across the sector that may be useful. Visit www.blackbaud.com/covid-19 for more information.

ABOUT THE AUTHOR

Sally J. Ehrenfried, Principal, Government Relations leads public policy at Blackbaud, Inc. (NASDAQ: BLKB), headquartered in Charleston, SC., and is responsible for the company’s global government relations portfolios, with specific focus on the US, Canada, and the UK, and advocates for policies that benefit the social good sector. Previously, she led philanthropy and volunteer engagement for the company and was responsible for the company’s global community relations, corporate giving, and volunteerism portfolios.  In this role, Sally served as a catalyst for Blackbaud and its employees to engage across the social good community where she set the strategy and tactics for the company’s employee facing volunteer and philanthropy efforts.

Sally spent 13 years in the United States Senate as an aide to Senators George J. Mitchell (D-Maine), William S. Cohen (R-Maine), and Ronald L. Wyden (D-Oregon), serving in a variety of committee, personal office, and leadership staff roles.

Sally is chair of Giving Institute’s Public Policy Committee and co-chair of the Southeastern Council on Foundations Public Policy Committee.   She presents regularly on advocacy and the social good sector, effective grantmaking, and employee engagement and volunteerism.

Sally is a graduate of Bates College in Lewiston, ME, and received a master’s degree in Business Administration from the Moore School of Business at the University of South Carolina.  She is a past president of the Bates College Alumni Association, serves as a tutor with Reading Partners, volunteers with English Springer Rescue America, and chairs Grace Church Cathedral’s annual stewardship efforts.

Comments (14)

  • Stanley DeVoogd says:

    I represent a small Kentucky based 501c3.
    Where do we apply for the small business loans available to 501c3s.
    thanks

    • Sally Ehrenfried says:

      Hi Stanley – Thanks so much for the question. For the 7a loans mentioned above, you should reach out to your banking partner. These loans will be administered by SBA approved commercial lenders. As an FYI, the SBA is also increasing the number of lenders approved for these loans. The SBA anticipates issuing guidance to lenders this week and the application process could open as early as this Friday.

      • April Lyon says:

        I represent a pool and tennis club that is a 501(c)(7) and I was wondering if we would qualify for anything in this stimulus? We have 400 members that have been affected by this pandemic and most cannot pay their club dues that are $800. We also have staff that will most likely not be able to be paid if we can’t open for the pool season.

        • Sally Ehrenfried says:

          Hi April – The short answer is yes, you do qualify for some assistance within the CARES Act.

          As an employer, you can defer your portion of social security taxes on your employees’ wages through 12/31/20. 50% of those taxes would be do by 12/31/21 and 50% would be do 12/31/22. You’re also eligible for the employee retention credit. Here’s a link to the IRS information on this program. https://www.irs.gov/newsroom/irs-employee-retention-credit-available-for-many-businesses-financially-impacted-by-covid-19. Keep in mind you can’t defer payroll taxes and take the employee retention credit.

          Unfortunately, as a c7 you’re not eligible for the Payroll Protection Program. However, depending on the number of employees you have, you could be eligible for Economic Injury Disaster Loans, administered by SBA, or the Treasury Industry Stabilization Program.

  • Kyle says:

    Hello Sally,

    I represent a private operating foundation that is a 501(c)(3). I do not have traditional payroll, but do have a number of independent contractors that I pay for their work. Would I qualify for anything in this stimulus? Thank you.

    • Sally Ehrenfried says:

      Hi Kyle – Excellent question. Since you don’t have traditional payroll, you wouldn’t qualify for most of the provisions in the CARES Act. The intent of this relief package is to keep workers on payrolls for an 8-10 week period.
      However, the CARES Act has provisions for those working within the gig economy to seek assistance. Self-employed individuals are provided for and they could seek assistance on their own.

  • Philip Mintz says:

    Hi Sally, I represent a small 501 (c) 13. Are there any provisions in the CARES Act that cover us?

    Thank you

  • Niki Plaitis says:

    Hi Sally,

    I am the HR Director of a private Yacht and Country Club and we are trying to figure out if we would qualify for SBA loan under the CARES ACT. We employ 300 employees during our season and also have 210 that are either year round full time and part time. We want to avoid lay offs and/or furlough.

  • Shelly Powell says:

    Hi there. We have a 501(c)3 non profit that has several fundraisers throughout the year to be able to donate to help individuals fighting cancer. We have had to cancel our big fundraisers over the last month and over the next several months coming up. Is there anything we would qualify for under CARES Act that would help us to continue to help individuals through this time, even though we are unable to fundraise to do this? Thank you.

  • Anne S says:

    Hi, Sally, I run a 501c4 nonprofit membership club with about $440K in revenue, mainly through membership and class fees (we train dogs). Do we qualify for relief under the Payroll Protection Program? Thanks1

  • Jackie krentzman says:

    How are social enterprises affected? I work for social enterprise with 550 employees (so beyond the 500 employee threshold). But we raise 75% of our operating income at our stories which are now closed. Those funds, along with the 25% we raise as a 501c3, funds our job training programs for people with significant barriers to employment.

    Is there any language in CARES (or other legislation) that would provide our org with some relief?

    thank you

    • Pat Kramer says:

      I have been trying to find any verification about 501c(7) and the Cares Act. I have read that they are unable to apply for the PPP loans. Is there anything that they can do for financial aid?

  • Jim Manke says:

    I am the owner of an association management company and one of our long time clients is a 501c3 in the medical research field. Our client is facing the possibility of having to cancel their annual scientific meeting that will probably bankrupt the organization. Would we qualify for a CARES Act loan / grant and what would be the best way to apply? Thanks so much.

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