After weeks of negotiation, a $1.9 trillion coronavirus relief package has been signed into law. The bill, known as the American Rescue Plan, is one of the most expensive economic rescue bills in United States history and will stipulate direct financial payments to a large number of Americans; extend and increase unemployment benefits; expand the current Paycheck Protection Program (PPP); and provide $15 billion for vaccine efforts, among many other efforts virus mitigation and economic relief efforts.
Throughout the pandemic, nonprofits have urged congress to enact particular relief measures relevant to the sector, including: forgivable loans, refundable tax credits, charitable giving incentives, unemployment benefit reimbursements, and increased aid to state and local governments.
Here’s what employers in the nonprofit sector can expect from the American Rescue Plan:
EXPANDED PAYCHECK PROTECTION PROGRAM
The latest COVID-19 relief bill provides an additional $7.25 billion in PPP loans and broadens eligibility for the current program, allowing larger nonprofits to apply for PPP loans for the first time.
Nonprofits with more than 500 employees, operating at multiple locations will now be able to receive PPP assistance — so long as no more than 500 employees work at the same location.
Performing arts nonprofits will also be able to apply for aid under both the PPP and Shuttered Venue Operator Grants program.
The PPP application deadline is currently set for May 31, but nonprofit organizations and accounting professionals are urging the Small Business Administration to extend the deadline.
EXTENDED FFCRA TAX CREDITS
The Federal Families First Coronavirus Response Act (FFCRA), which expired on December 31, 2020, required employers to provide emergency paid sick leave and expand family and medical leave.
The latest COVID-19 relief bill extends the tax credit for employers who voluntarily provide FFCRA leave from March 31, 2021 to September 30, 2021.
The tax credits are available for employers who provide employees with paid sick or family leave to:
- Obtain a COVID-19 vaccination
- Recover from injury, disability, or illness related to vaccination
- Await results of a COVID-19 test
The package also adds a non-discrimination rule that eliminates the tax credit if an employer discriminates against highly compensated employees, full-time employees, or employees based on tenure in determining who receives paid leave.
EXTENDED UNEMPLOYMENT BENEFITS
Federal unemployment insurance payments will remain at $300 per week but will be extended through Sept. 6, 2021. The bill provides that up to $10,200 in unemployment payments will be tax-exempt for those who made less than $150,000 in adjusted gross income in 2020.
INCREASED FEDERAL UNEMPLOYMENT INSURANCE REIMBURSEMENT RATE
In a win for reimbursing nonprofits, federal coverage of unemployment costs of reimbursing nonprofits will increase from 50% to 75% from April 1, 2021 through August 29, 2021. Additionally, the bill extends federal funding to cover the first week of regular unemployment and provides additional funding to address unemployment insurance fraud.
Unemployment reimbursement has been a consistent priority pushed by nonprofit groups, who would like to see 100% federal reimbursement for unemployment insurance benefits.
“They’ve been hit with huge unemployment bills by the state unemployment insurance programs. And in many cases, that’s really put a crimp on their operating budgets. And that’s a huge, huge dollar burden on many nonprofits,” says lobbyist Steven Woolf of the Jewish Federation of North America, a lobbying group for Jewish organizations.
EXTENDED EMPLOYEE RETENTION CREDIT
The Employee Retention Credit (ERC) was established under the CARES act to encourage businesses to keep employees on their payroll. Now, the ERC is extended through December 31, 2021, and is expanded to include certain start-up businesses that otherwise would not have qualified.
What’s not in the plan?
INCREASED CHARITABLE GIVING INCENTIVES
While the relief bill does not include expansion of charitable deductions, lawmakers in the House and Senate will soon introduce bipartisan legislation to increase giving incentives for taxpayers.
“Throughout the coronavirus crisis, charitable organizations have played a vital role in helping families and communities recover and rebuild,” Congresswoman Jackie Walorski (R-Ind) said. “Strengthening the charitable contribution deduction during the pandemic is a commonsense way to ensure fairness for taxpayers and encourage even more generous giving in a time of need. This bipartisan bill would help put our country on the path to restoring our way of life and emerging stronger than ever before.”
INCREASED FEDERAL MINIMUM WAGE
Despite efforts by the House, the Senate removed language regarding an increase to the federal minimum wage from the American Rescue Plan.
ABOUT THE AUTHOR
Lia Tabackman is a freelance journalist, copywriter, and social media strategist based in Richmond, Virginia. Her writing has appeared in the Washington Post, CBS 6 News, the Los Angeles Times, and Arlington Magazine, among others.