As the Senate adjourned in August amidst massive gridlock surrounding the second COVID-19 federal relief bill, many Americans were left asking how they will be affected once a second stimulus bill eventually gets passed. Nonprofits in particular have been some of the hardest hit by the pandemic, as unemployment rates continue to skyrocket and families earn less money for charitable giving. In the first quarter of 2020 alone, nonprofit donations already declined by 6%.
The second wave of COVID-19 relief has largely become a battle between one Democratic-backed bill, titled the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), and the Republican-backed bill, called the Help, Economic Assistance, Liability Protection and Schools (HEALS) Act. While each bill has differences, there are new portions that will benefit nonprofits if passed in the next legislative session.
So how will the government extend help to the nonprofit industry, which is facing up to $25 billion in revenue losses in 2020? We took a deep dive into what has been discussed for the potential second stimulus bill, and three ways nonprofits may benefit:
- Second Round of PPP Loans: The first relief bill which was passed in March, titled the CARES Act, unfortunately shut out a large portion of the nonprofit sector from accessing a grant under the Paycheck Protection Program (PPP). The new HEROES Act aims to fix this by extending PPP eligibility to all 501(c) nonprofits, not just 501(c)(3) and 501(c)(19) veterans organizations. Additionally, the new bill lifts the cap of 500 employees so that nonprofits of all sizes can apply for relief, and also eliminates the requirement that 75 percent of the loan through the CARES Act cover payroll expenses. These measures will ensure that a much larger number of nonprofits across the country can apply for desperately needed aid for a variety of purposes beyond payroll.
- Loan Qualification & Forgiveness: The Main Street Lending Program will provide low-interest loans to nonprofits with a minimum of 10 employees through December 31, 2020. The HEROES Act aims to ensure that nonprofit organizations in economic danger can qualify for a loan and eliminates the minimum loan size. This portion of the bill will also allow nonprofits serving low-income communities to defer payments and earn loan forgiveness. The HEROES Act also hopes to incorporate a $60 billion long-term recovery loan program that targets nonprofits, low-income communities and minority-owned businesses.
- Liability Shield for Nonprofits: A major point of contention amongst the Democrats and the Republicans is the SAFE TO WORK Act, which aims to protect a wide variety of entities from coronavirus-related liability. These protections are designed to protect business owners unless they engage in gross negligence or consciously engage in reckless disregard for the safety of their customers and employees. Republicans argue that this will provide extra protections for businesses and nonprofits who are already struggling economically, while Democrats argue that it would allow organizations to put employees in danger with no legal consequences. It still remains to be seen whether this portion of the bill will pass or not.
While the Senate adjourns through Labor Day without reaching a stimulus deal – and we very likely will continue to see a debate between Republicans and Democrats on the path forward – it is key for organizations to keep track of the bills that will impact them or their constituents. This legislation could affect almost every American, as well as nonprofits, advocacy organizations, employers, states and municipalities. If you have a stake in the outcome, now is the time to track what matters most and work to advocate for your members.
