COVID-19 Legal Updates & Resources

COVID-19 Legal Updates and Resources for Nonprofit Organizations

Loans and Grant Programs
Charitable Giving Incentives
Unemployment Benefits and Leaves of Absence
Selected State Resources
Other Resources

CARES Act (2020) & Consolidated Appropriations Act, 2021: Loans and other Emergency Benefits

Nonprofit organizations are eligible for a number of new loans, grants and tax credits created by the CARES Act and extended by the Consolidated Appropriations Act, 2021. Experts recommend contacting your bank as soon as possible to discuss your organization's eligibility for the many new and extended programs. Read more on the Small Business Administration's website regarding Coronavirus Relief Options. The National Council of Nonprofit Organizations has created a helpful chart outlining the various loans available to nonprofits and The Chronicle of Philanthropy has an article on applying for these loans and emergency benefits.

Paycheck Protection Program - Note: The Paycheck Protection Program closed on May 31st, 2021. Those who received loans through this program should review the PPP loan forgiveness requirements.

Paycheck Protection Program resources:

New Targeted EIDL Advance for Small Business Continuity, Adaptation, and Resiliency. This program supplements the previous Economic Injury Disaster Loan or "EIDL" Emergency Advance program which provided special advances of up to $10,000 ($1,000 per employee) to small businesses and nonprofit organizations. However, in this latest iteration of the program, new restrictions have been put in place. Loan applicants must:

be located in a low-income community;
have suffered an economic loss of greater than 30%; and,
have 300 or fewer employees.

In addition, entities in low-income communities that received an EIDL Emergency Advance of less than $10,000 previously are eligible to apply for a new advance for the difference between these amounts. The "loan advance" is to be paid to the applicant within 21 days of a successful application and does not have to be repaid. Applications are completed online at the SBA website (see below). Note: This program is expected to launch on January 15th, 2021. The deadline to apply is December 31, 2021.

Low Interest Disaster Loans - Larger loans of up to $2 million are also available through the SBA's EIDL program. Again, the organization must have fewer than 500 employees or meet the SBA's size standards for the NAICS code associated with its primary industry. Unlike the "loan advance" described above, these loans must be repaid. However, nonprofit organizations qualify for a rate of 2.75% and terms of up to 30 years are available. Applications are completed online at the SBA website (see below). Note that loans are also available for disasters unrelated to COVID-19. Those applications are also completed online here.

SBA's Disaster Loan Website
Borrower Application Form
Refer to the SBA's presentation for more information on this loan program

Employee Retention Credit - Nonprofit employers of all sizes are eligible for this credit. However, if the organization takes one of the small business loans mentioned above it is not eligible. To qualify for this credit your organization must either be fully or partially suspended by government order due to COVID-19 during a given calendar quarter, or its gross receipts must be below 50% of the comparable quarter in 2019. If you qualify based on gross receipts, then once gross receipts exceed 80% of the comparable quarter in 2019 you no longer qualify after the end of the given quarter. The credit is claimed when filing the quarterly IRS Form 941. Advance payment may also be requested using the new IRS Form 7200.

IRS Employee Retention Credit Webpage
Read the IRS' Frequently Asked Questions

CARES Act (2020) & Consolidated Appropriations Act, 2021: Charitable Giving Incentives

The CARES Act and subsequent Consolidated Appropriations Act, 2021 included a number of charitable giving incentives for individuals and businesses. Included in these incentives are the following;

Universal Charitable Deduction - This incentive has been extended in the recent Consolidated Appropriations Act, 2021 which was signed into law on December 27, 2020. Similar to the provision in the 2020 CARES Act, this provides a tax deduction for those who take the standard deduction ($12,550 for those filing singly, $25,100 for married filing jointly for the 2021 tax year) and who make cash gifts of up to $300 for the 2021 tax year. Note that in order to qualify for this "above-the-line" deduction, the donation(s) must be made to public charities (excluding donor advised funds and supporting organizations under IRC Section 509(a)(3)) or private operating foundations. However, this update to the law has an added benefit, namely, a married couple filing jointly can claim double the deduction for 2021 ($600) if they make $600 in cash gifts to charity.

AGI Limitation Eliminated - For those taxpayers who itemize their deductions, the deduction for donations of cash is normally capped at 60% of a taxpayer's adjusted gross income. For the 2020 and 2021 tax years, that cap has been eliminated. Therefore, it is conceivable that a donor could entirely eliminate his or her Federal income tax liability by offsetting their adjusted gross income under this provision. As with the universal charitable deduction above, this only applies to gifts of cash made to public charities or private operating foundations. Gifts to donor advised funds and supporting organizations are excluded.

Corporate Charitable Deduction Increased - The CARES Act also increased the percentage of a corporation's taxable income that may be offset by charitable contributions. The previous limit of 10% was increased to 25% for the 2020 tax year. As with the other incentives above, this only applies to gifts of cash made to public charities other than donor advised funds and supporting organizations.

Unemployment Benefits and Leaves of Absence

No additional leave benefits, but tax credits exist for employers who continue to provide them through March 31, 2021. The Consolidated Appropriations Act of 2021 did not include a continuation of the Emergency Family and Medical Leave Act (EFML) or the Emergency Paid Sick Leave Act (EPSL). The Act did, however, extend the payroll tax credits for employers who voluntarily continue to provide these benefits to employees through March 31, 2021. Note that employees who exhausted this entitlement in 2020 are not entitled to additional paid leave in 2021.

Updates to Unemployment Benefits and Protections for Reimbursable Employers. Congress also amended the provision of the CARES Act that provided federal support to cover fifty percent (50%) of the costs of unemployment benefits for employees of state and local governments and nonprofit organizations who are reimbursable employers through March 14, 2021. Accordingly, reimbursable employers will not need to return to paying full benefits during the first quarter of 2021.

In addition, Congress restored the Federal Pandemic Unemployment Compensation (FPUC) supplement to state and federal unemployment benefits at a rate of $300 per week, effective after December 26 and ending March 14, 2021. The effective date appears to indicate these payments will not be retroactive. Congress further expanded the length of time recipients can collect unemployment benefits under the Pandemic Emergency Unemployment Compensation (PEUC) by an additional eleven weeks from 39 to 50 weeks in total. These programs will close to new applicants on March 14, 2021, but individuals receiving these benefits as of March 14, 2021, will continue to receive them through April 5, 2021, so long as they have not reached the maximum number of weeks.

Selected State Resources

California