Last week’s passing of the coronavirus stimulus package or the CARES Act has an impact on all of us. With all the information included in the act, our goal is to provide you with the most up-to-date and useful information. Below are a few highlights of the bill’s direct impact on nonprofits:
Loans for Nonprofits
Allows nonprofit organizations (including foundations) with less than 500 employees (full time and part time) to access $350B in loans from the Small Business Administration (SBA). The loan can be forgiven and become a grant if certain requirements are met. Larger nonprofits may also be eligible for loan support through newly created or existing SBA programs. Talk to your banker or CPA soon about these guidelines. Here is some additional information from the U.S. Chamber of Commerce.
Provides fully refundable tax credits to nonprofits (including foundations). If a nonprofit is subject to a shut-down order and has lost 50% of revenue compared with last year:
- They can receive up to $5,000 per eligible employee.
- Tax credits could be applied against payroll taxes so it’s an immediate benefit.
Employers CANNOT take both the tax credit and SBA loans.
Universal Charitable Deduction
For 2020, creates an above-the-line charitable deduction for non-itemizers, for cash gifts only, capped at $300, excluding gifts into donor-advised funds.
Suspended Adjusted Gross Income Limits
For 2020, suspends current AGI limits for charitable deductions for cash gifts made by individuals and businesses. This provision excludes gifts into donor-advised funds.
- Individuals: Total charitable contributions can be deducted up to 100% of a donor’s adjusted gross income (had been up to 60%).
- Corporations: Charitable contributions can be deducted up to 25% of taxable income (had been up to 10%).
Individual Financial Support
Direct payments of $1,200/taxpayer plus $500/child will begin going out shortly. Lesser amounts to those individuals making between $75K and $99K/year and couples earning between $150K and $198K/year.
Payroll Tax Extension
Employers can stretch out payments of their share of the Social Security payroll tax owed, half by the end of 2021 and the other half by the end of 2022.
Provides $30B in emergency education funding or colleges and universities, states and school districts.
Thanks to The Giving Institute and the Alliance for Charitable Reform Specific to Nonprofits for sending us a summary of the bill. For further information, you can find a section-by-section breakdown of the legislation, the Appropriations summary, and you can read further analysis from our colleagues at the National Council of Nonprofits in this document.