April 2020 Public Policy Update
Each month, SECF provides members with monthly updates on the latest public policy developments in Washington and state capitols around the region, analyzing their possible impact on the charitable sector. If you would like to see an issue featured in a future Public Policy Update, contact Jaci Bertrand, SECF's vice president of member engagement, at email@example.com.
Recent COVID-19 Relief Bill Includes Significant Support for Nonprofits, Philanthropy
Almost as soon as Foundations on the Hill had wrapped up this year, activity in Congress became focused almost exclusively on addressing the COVID-19 pandemic. While the first two bills addressing the effects of the outbreak were largely focused on halting the spread of the disease and expanding family leave protections, the third bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, represented the single largest piece of relief legislation ever passed by Congress.
The bill, a $2 trillion package focused on the catastrophic economic effects of the outbreak, includes several provisions aimed at boosting charitable giving and supporting the nonprofit organizations during a time of unprecedented crisis.
The legislation, signed into law on March 27, includes the following provisions:
- Creates a temporary universal charitable deduction for non-itemizers, for cash donations only, capped at $300. This provision excludes gifts to donor-advised funds and 509(a)(3) supporting organizations. However, it does not exclude gifts given directly to community foundations.
- Temporarily suspends current AGI limits for charitable deductions for cash gifts made by individuals who itemize their return and businesses. This provision also excludes gifts to donor-advised funds and 509(a)(3) supporting organizations.
- For itemizing individuals: Total charitable contributions can be deducted up to 100 percent of the taxpayer's adjusted gross income, up from 60 percent.
- For corporations: Charitable contributions can be deducted up to 25 percent of taxable income, up from 10 percent.
- Allows nonprofit organizations (including foundations) with fewer than 500 employees to access $350 billion in Paycheck Protection Program loans from the Small Business Administration.
- If conditions are met, a portion of these loans can be forgiven.
- These loans became available last week, but due to delays in finalizing rules for the program and overwhelming demand, organizations may have to wait longer than expected to receive support.
- Provides fully refundable tax credits to nonprofits (including foundations) that are subject to a shut-down order and have lost 50 percent of revenue compared with last year.
- They can receive up to a $5,000 per employee tax credit.
- Tax credits could be applied against payroll taxes to provide an immediate benefit.
- Employers CANNOT take both the tax credit and SBA loans.
Treasury Secretary Steven Mnuchin has indicated this bill is meant to bridge the economic fallout from the coronavirus for the next 10 to 12 weeks, and congressional leadership has said they’re already looking ahead to a fourth bill to provide further economic relief.
The Council on Foundations has posted an analysis of all three coronavirus response bills online.
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Next Coronavirus Relief Bill May Include Further Support for Charitable Sector
Congressional leaders and the White House are already discussing a fourth relief package to address fallout from the COVID-19 outbreak.
One possible provision would provide additional funds for SBA loans, which are also available to nonprofits and foundations. There are already concerns the $350 billion fund for SBA loans in the previous bill may be exhausted earlier than expected. However, the Trump administration is already signaling support for more funding for the program, which enjoys wide bipartisan support. House Speaker Nancy Pelosi (D-CA) has called specifically for doubling the size of the SBA loan fund and extending loan forgiveness for expenses like payroll for up to 16 weeks – the CARES Act requires those expenses to be made within eight weeks.
One challenge Congress faces in passing further legislation is logistical: Lawmakers may be wary of returning to Washington for votes in the midst of the outbreak. With no provisions for remote voting in either chamber, any bill would need to be passed by unanimous consent, which can be denied by a single member.
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Keep an Eye Out for Future Alerts
News on the policy response to the COVID-19 outbreak is happening very quickly, sometimes changing by the hour. Keep an eye on your email for the latest news, as well as opportunities to encourage lawmakers to continue supporting nonprofits and foundations during this challenging time.
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