This edition of the COVID-19 Nonprofit Update contains:
  • Policy updates and tips on unemployment insurance for nonprofits;
  • Resources to help nonprofits navigate the new federal loan programs created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act; and
  • MNN affiliate members who have indicated that they are available to assist nonprofits with COVID-19-related issues.

Reach out to [email protected] with any questions.
Unemployment Insurance Policy Updates and Tips
Unemployment Insurance Policy Updates
As a result of significant national-level advocacy, the federal  CARES Act  provides   funding for states to forgive 50% of the reimbursements owed to state trusts by nonprofits who self-insure for unemployment.   In addition, the CARES Act expands unemployment coverage to workers who are furloughed, gig workers, and freelancers, and increases payments by $600 per week for four months on top of what state unemployment programs pay. A section-by-section breakdown of provisions in the CARES Act related to unemployment insurance can be found here .

On the state level, MNN is leading a coalition of associations to advocate for additional state relief/hold harmless for self-insured nonprofits, and a 120-day deferment of payments owed by organizations that self-insure for unemployment. MNN has been working with Senate leaders on  S.2618  which proposes the deferment as an initial step.

Here is the letter sent by MNN and the coalition to the Baker-Polito Administration and legislative leaders on Tuesday.
Understanding Unemployment Insurance: Tips for Nonprofits
MNN understands that nonprofits may be making difficult staffing decisions. Here are two tips for nonprofits to consider as they navigate their options:

1. Clarify if your organization pays state unemployment taxes (SUTA) or self-insures.
  • In the state system: Some charitable nonprofits pay state unemployment taxes (SUTA) like for-profit businesses. These organizations pay quarterly taxes. When an employee is laid off, they receive benefits paid through the state trust. The state pays out these benefits.
  • Self-insured: Charitable nonprofits also have the option of electing to self-insure rather than paying SUTA. Nonprofit organizations that have elected to take this option are required to reimburse the Commonwealth's unemployment insurance trust fund for the amount of benefits that laid off employees claim. As noted in the policy update above, the federal CARES Act provided funding for states to forgive one half of these costs. Policy efforts are underway to request additional forgiveness of these expenses, due to the unprecedented nature of this pandemic.

See  a more detailed description  from the North Carolina Center for Nonprofits, and the MA  Employer's Guide to Unemployment Insurance  for more information.

2. Consider which new federal loan programs could help cover the cost of operations and payroll expenses.
The US Small Business Administration has expanded loan options for nonprofits, made available through federal stimulus packages passed as a result of COVID-19:
  • SBA Economic Injury Disaster (EIDL) Loans: Provides loans of up to $2M at a 2.75% interest rate, repayable over up to 30 years, includes a $10K advance that does not need to be repaid. SBA has set up a streamlined application process here.
  • The Payroll Protection Program: Provides funding for special emergency loans of up to $10M for eligible nonprofits (less than 500 employees), to cover payroll, operations, and debt service, and provides that the loans be forgiven in whole or in part under certain circumstances. More information on applying for these loans is below.

Use  this chart  to determine if a federal loan is right for you.

More information on how to apply is forthcoming  here ; s ee a sample application form to prepare  here .

Nonprofits with questions or input on these or other policies that would be beneficial to their organizations should sign up for an Office Hours appointment with MNN's Director of Government Affairs  Danielle Fleury : click here .
Navigating New Federal Loan Programs
Nonprofits may be considering the new federal loan programs created by recent federal stimulus packages. Below are steps to apply for one of these loans–the Paycheck Protection Program–and additional resources to help nonprofits weigh available options.

How to Apply for a Paycheck Protection Program Loan
MNN member Empower Success Corps published the below steps to help nonprofits prepare their application for a Paycheck Protection Program loan.

Note: lenders may begin processing loan applications as soon as Friday, April 3, 2020 , and the announcement states it will be available through June 30, 2020.

Step 1: Nonprofits should consult with their local bank/lender as to whether it is participating in the program. They can also apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.

Step 2: Gather the following payroll information:
  • 2019 Payroll: include the last 12 months of payroll. Exclude federal payroll taxes, including income withholding, in addition compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020.
  • 2019 Employees: 1099s for 2019 employees and independent contractors that would otherwise be an employee of a nonprofit. (Note: do NOT include 1099s for services)
  • Healthcare costs: all health insurance premiums paid by the business owner under a group health plan.
  • Retirement: company retirement plan funding paid for by the company.

Step 3: Calculate how much you can borrow. The maximum amount you can borrow is your average monthly “payroll costs” during the one-year period before the date the loan is funded multiplied by 2.5, but not to exceed $10 million.

To begin preparing an application, download a sample form here to see the information that will be requested.
Resources for Nonprofits to Navigate Federal Loan Programs
Consult this list of resources for additional information available for nonprofits to help them navigate federal loan programs:
MNN Affiliates Ready to Help
MNN has prepared a listing on its Business Directory of affiliate members that have indicated that they are ready to assist nonprofits with COVID-19-related impacts. Areas of expertise include accounting and auditing, fundraising, human resources, technology, and more. Click the image below to visit the COVID-19 category on MNN's Business Directory.
Coronavirus and Massachusetts Nonprofits