December 18, 2020
Note: The North Carolina Center for Nonprofits typically provides Nonprofit Policy Update each week as a benefit to its nonprofit members. However, to help all North Carolina nonprofits respond to the COVID-19 pandemic, we're temporarily providing this newsletter to non-member nonprofits.
In this issue...
Congress nears agreement on COVID-19 legislation with some relief for nonprofits
Federal government could have brief shutdown this weekend
Take action: Your nonprofit can help minimize spread of COVID-19
Center releases 2021 Public Policy Agenda for North Carolina’s Nonprofit Sector
Let us know: Is your nonprofit being asked to spend CRF funds early?
Legislators seeks solutions for government-nonprofit cooperation on disaster recovery
Judge expresses concerns about executive order limiting race and gender equity trainings
Be alert for unemployment fraud involving your nonprofit’s account
Reminder: CARES Act provisions may affect year-end giving 
Congress Nears Agreement on COVID-19 Legislation with Some Relief for Nonprofits
This week, leaders from both parties in the U.S. Senate and U.S. House of Representatives have gotten close to an agreement on $900 billion in additional COVID-19 relief legislation as part of an omnibus federal spending bill. Congressional leaders are hoping to reach a final agreement today so the Senate and House can vote on the legislation over the weekend or early next week. 

Although the final bill text is not yet available, it appears likely that the COVID-19 parts of the bill will include very limited relief for nonprofits. We have highlighted in red how the bill is likely to address the main policy solutions for which charitable nonprofits have been advocating for the past six months.

  • Expanding Nonprofit Access to Relief and Support. Nonprofits are struggling financially and are facing ever-growing challenges in continuing to provide essential services to our communities. Congress can help by: 
  1. Expanding the eligibility for charitable nonprofits to participate in the Paycheck Protection Program (PPP) by modifying the current 500-employee cap so that mid-size and larger nonprofits can participate, and modify the PPP so that charitable nonprofits can participate in a second round of funding. The bill is expected to create a second round of PPP funding for nonprofits and businesses with fewer than 300 employees that had a 30% reduction in revenue in any quarter of 2020. Bill drafters are still working on the details of how nonprofits would calculate this reduction in revenue. The bill is not expected to extend access to the PPP to larger nonprofits.
  2. Expanding the Employee Retention Tax Credit (ERTC) to allow nonprofits to receive both PPP loans and the ERTC if they have retained their employees. The bill does not expand the ERTC.

  • Strengthening Incentives for Charitable Giving. Donations are especially necessary today as nonprofits respond to the current health and economic crisis and will be critical in the future as nonprofits play an essential role in recovery efforts when the pandemic ends. Congress can help by: 
  1. Encouraging donations to charitable organizations in their communities by significantly increasing the $300 cap in the above-the-line or universal charitable deduction in the CARES Act. The bill will probably not increase the $300 cap on the universal charitable deduction.
  2. Extending the giving incentives in the CARES Act – including the universal charitable deduction and incentives for corporations and wealthier donors to give more – through at least 2021. The bill will probably not extend the CARES Act charitable giving incentives into 2021.

  • Increasing and Extending Federal Unemployment Insurance Reimbursement for Self-Insured Nonprofits. The CARES Act provides federal funds to cover 50% of the COVID-related unemployment costs of self-insured nonprofits through December 30, 2020. North Carolina is covering the other half of these costs for nonprofits in our state at least through the end of 2020, but nonprofits in many parts of the country are still bearing a huge financial burden from unemployment claims caused by unforeseeable layoffs and furloughs stemming from the pandemic. Congress can help address this issue by:
  1. Increasing to 100% the federal unemployment insurance reimbursement for self-insured nonprofits. The bill will probably maintain the 50% of federal coverage of these expenses from the CARES Act.
  2. Extending this reimbursement through 2021. The bill will probably extend the partial federal coverage by 16 weeks, through April 19, 2021. This extension, along with an executive order from Governor Roy Cooper, would mean that North Carolina nonprofits that reimburse for unemployment benefits would not owe anything for their UI costs stemming from COVID-19, at least through April 19, 2021.

  • Extending Unemployment Benefits. The Pandemic Unemployment Assistance program – which provides unemployment benefits to self-employed individuals and laid-off or furloughed workers at small and religious nonprofits that are exempt from unemployment requirements – is set to expire on December 30, 2020, along with several other temporary expansions of unemployment benefits. Congress can help communities by extending these programs into 2021 and by restoring weekly supplemental unemployment benefits for most laid-off or furloughed workers. The bill will probably provide 16 weeks of $300 supplemental federal unemployment benefits for individuals who are out of work due to the pandemic. This spring and summer, individuals had received $600 per week in supplemental benefits if they had been furloughed or laid off due to COVID-19. The bill also will probably extend other CARES Act unemployment benefits by 16 weeks, through April 19, 2021.

  • Providing Additional Aid for State and Local Governments. This additional funding is critical to help state and local governments continue to provide essential services despite growing revenue shortfalls. While the final spending is not expected to provide for direct appropriations to state and local governments, it will likely include $90 billion for the Federal Emergency Management Agency to distribute to address state and local emergencies.

  • Including Nonprofits in Liability Protections. Any provisions limiting businesses’ liability for reasonable actions during the pandemic also must apply to nonprofits and their board members and volunteers. The bill is not expected to include liability protections for businesses, nonprofits, or individuals.

Some other highlights and omissions of the COVID-19 relief negotiations include:
  • Additional economic stimulus payments of between $600 and $700 per person.
  • A one-month extension of the Centers for Disease Control and Prevention eviction moratorium through January 31, 2021.
  • A $10 billion “Save Our Stages” grant program that will provide support to many nonprofit performing arts organizations and museums.
  • No extension of the paid sick leave and paid family and medical leave requirements from the Families First Coronavirus Response Act. These paid leave provisions – and the federal tax credit to cover employers’ cost of providing paid leave – expire on December 31, 2020.

While the latest COVID-19 legislation is expected to fall short of providing much of the relief nonprofits need, there is still hope there will be action on the nonprofit sector’s policy priorities in 2021. On Wednesday, President-elect Joe Biden indicated his plans to push for a larger COVID-19 relief package once he becomes President on January 20, 2021. The Center will continue to advocate for Congress and the White House to provide more relief to nonprofits and the communities they serve.
Federal Government Could Have Brief Shutdown This Weekend
The current temporary spending resolution to fund the federal government expires today. Without another extension, parts of the federal government would have to shut down. Instead of passing another short-term extension of federal funding, congressional leaders may allow for a partial shutdown of the federal government for a few days while they finish negotiating – and then vote on – a federal spending bill for the remainder of the current fiscal year (through September 30, 2021). This federal spending bill will include the $900 billion in COVID-19 relief.
Take Action: Your Nonprofit Can Help Minimize Spread of COVID-19
COVID-19 infections and hospitalization reached record high levels in North Carolina and across the nation this week, and community spread is expected to continue for the near future. As we face the most challenging days of the pandemic, it is essential for every nonprofit to remind their staff, boards, volunteers, clients, and communities to take steps to minimize the further spread of COVID-19. 

Nonprofits are trusted messengers, and many North Carolinians are more likely to take important public health actions if the message comes from a familiar nonprofit organization rather than a government official. Your nonprofit can make a big difference in fighting the pandemic by spreading the word about the importance of avoiding large gatherings over the holidays and practicing the “three Ws”:
  • Wearing a cloth mask that covers your nose and mouth;
  • Waiting six feet apart to avoid close contact with people outside your household; and
  • Washing your hands or using hand sanitizer. 

Look for more tips from the Center in the coming weeks and months on ways that your nonprofit can provide clear and accurate information about COVID-19 vaccines and other important public health actions.
Center Releases 2021 Public Policy Agenda for North Carolina’s Nonprofit Sector
This week, the Center’s Board of Directors approved the 2021 Public Policy Agenda for North Carolina’s Nonprofit Sector. The Center advocates on state and federal public policy issues that affect all or most 501(c)(3) nonprofits in North Carolina. The public policy agenda highlights many of the specific issues that will be policy priorities next year, including COVID-19 relief, tax policy, government grants and contracts with nonprofits, and policy solutions related to nonprofit operations.
Let Us Know: Is Your Nonprofit Being Asked to Spend CRF Funds Early?
The U.S. Treasury Department is requiring states to make final reports on their Coronavirus Relief Fund (CRF) spending by January 8, 2021. This may force some state agencies to get final reports from nonprofits on their CRF expenditures prior to the December 30, 2020 deadline for spending CRF money. Let us know if your nonprofit has CRF funding and is being asked to spend or report on money immediately. If there are significant issues with this deadline among North Carolina nonprofits, the Center will work with our national partners to advocate for an extension.
Legislators Seeks Solutions for Government-Nonprofit Cooperation on Disaster Recovery
On Monday, the NC General Assembly’s Program Evaluation Division released a report with recommendations on ways that the state can develop systems for better coordination with nonprofits on disaster preparedness, relief, and recovery. The report includes three recommendations for steps that the Division of Emergency Management at the NC Department of Public Safety (NCEM) should take: 
  1. NCEM should provide guidance to local government emergency management agencies to improve coordination with nonprofits;
  2. NCEM should provide clear information to nonprofits about disaster preparedness plans; and
  3. NCEM should have a dedicated, full-time Voluntary Agency Liaison (VAL) to serve as a central point of contact and coordination between government agencies and nonprofits engaged in disaster preparedness, relief, and recovery.

The General Assembly could consider legislation to implement these recommendations in 2021. The Center provided input to the Program Evaluation Division as it was preparing this report. We are pleased that policymakers are looking at ways to include nonprofits in disaster preparedness planning and considering ways to ensure that nonprofits engaged in disaster preparedness, relief, and recovery work receive necessary support and coordination from government agencies.
Judge Expresses Concerns about Executive Order Limiting Race and Gender Equity Trainings
Last week, a federal judge expressed the opinion that President Donald Trump’s recent executive order limiting workplace trainings on equity, diversity, and inclusion could be applied in arbitrary and discriminatory ways. The judge could issue an injunction delaying the implementation of the executive order in the coming days or weeks. The judge’s actions are good news for nonprofits since this executive order is clearly troubling for organizations with federal grants and contracts. Even if the court does not immediately stop the implementation of the executive order, there is a strong chance that the Biden administration will rescind it on or shortly after January 20, 2021.
Be Alert for Unemployment Fraud Involving Your Nonprofit’s Account
With more than 1.3 million North Carolinians having filed for unemployment benefits since the beginning of the pandemic, it is no surprise that employers – including nonprofits – are beginning to discover fraudulent claims against their unemployment insurance (UI) accounts. If your nonprofit receives a Request for Separation Information from the Division of Employment Security (DES) at the NC Department of Commerce about a UI benefits claim from someone who was not employed by your nonprofit or who is still working for your organization, you can report this to DES in three ways:
  1. Through the Fraud Hotline (984-465-9224); 
  2. Through an online fraud reporting form on the DES website; or 
  3. By logging in to your nonprofit’s account at the DES employer portal and clicking on Claims Services ->Unemployment Claims Application and Services ->Submit Tip/Lead and completing Section A and identifying that the claimant never worked for your organization as the reason for possible unemployment insurance fraud (using the “Other activity that caused you to make this report” option.  

DES will investigate possible claims of UI fraud to help ensure that your nonprofit’s account is not charged for fraudulent claims – regardless of whether you pay state unemployment tax or are a reimbursing employer.

Even though the state of North Carolina is not charging reimbursing nonprofits for the costs of their UI claims stemming from COVID-19, DES is sending statements of claims to reimbursing nonprofits that furloughed or laid off staff during the pandemic. It is important for your nonprofit to check these statements to ensure that all claimants listed actually worked for your nonprofit.
Reminder: CARES Act Provisions May Affect Year-End Giving
Two temporary provisions in the CARES Act may help some nonprofits with year-end fundraising campaigns:
  1. The CARES Act provides for a $300 above-the-line deduction for taxpayers who use the standard deduction. While many North Carolinians give generously to nonprofits regardless of whether they receive a tax benefit, this temporary universal charitable deduction may encourage some people in your community who do not typically donate to nonprofits to make up to $300 in charitable contributions this year.
  2. For wealthy donors who itemized their deductions, the CARES Act temporarily eliminates the 60% of adjusted gross income cap on deductible charitable contributions. For example, a taxpayer with $1 million in adjusted gross income would normally only be able to deduct $600,000 in charitable contributions, but this year, they could deduct $1 million in contributions. This means that these donors may have a tax incentive to make significantly larger charitable contributions this year or to pay the full amount of a multi-year pledge to a nonprofit before December 31, 2020.

Your nonprofit may want to consider reminding potential donors of these tax provisions in any year-end fundraising appeals you are sending.
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Nonprofit Policy Update is a weekly newsletter for current members of the North Carolina Center for Nonprofits. We track state and federal policy issues that affect all 501(c)(3) nonprofits. Learn about the Center's public policy priorities. For more information, contact David Heinen, Vice President for Public Policy and Advocacy.