March 5, 2021
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...
U.S. Senate to vote on COVID relief package
Reminder: SBA limiting PPP loan applications to small employers through March 9 
IRS issues guidance on employee retention tax credit that may benefit more nonprofits
NC General Assembly approves additional COVID relief
Spread the word: Don’t miss out on federal stimulus payments 
Take action: Your nonprofit can help eligible community members get vaccinated 
NC House bill would create grant program to address vaccine hesitancy
New analysis debunks misleading claims about pending donor disclosure Supreme Court case
U.S. House of Representatives approves For the People Act
NC House committee approves bill that would prevent UI cost increases for nonprofits
Center offers nonprofit policy briefings this month
U.S. Senate to Vote on COVID Relief Package
The U.S. Senate will vote tonight or tomorrow on its version of the American Rescue Plan Act of 2021, the $1.9 trillion COVID relief package that President Biden has proposed. The U.S. House of Representatives approved it last Saturday, and the Senate has made several changes. Some highlights of the American Rescue Plan Act for nonprofits include:
  • Improvements to the Paycheck Protection Program (PPP) Loan Programs. The American Rescue Plan Act would allow many larger nonprofits to apply for PPP loans for the first time by extending eligibility to nonprofits with more than 500 employees that operate at multiple locations as long as no more than 500 employees work at any one location. Under the provision in the CARES Act that established the PPP, some nonprofits are ineligible for PPP loans if they are affiliates of national organizations. The House version of the American Rescue Plan Act would have repealed this “affiliation rule,” but the Senate version adds this rule back into the bill.
  • Extension and Improvement of Federal Unemployment Coverage. The COVID relief package would extend various federal benefits for unemployed workers – including coverage for self-employed workers and staff of religious and very small nonprofits, as well as increasing to $400 (formerly $300) per week supplemental federal payments – through August 29, 2021. Currently, these benefits are scheduled to expire on March 14. Notably for nonprofits, the provisions would have the federal government cover 75% of the unemployment costs of reimbursing nonprofits from April 1 through August 29; currently, the federal government is only covering 50% of these costs, and the state of North Carolina is covering the other 50%. 
  • Tax Relief for Individuals and Employers. The American Rescue Plan Act would provide $1,400 stimulus checks for most taxpayers, would increase the child tax credit and earned income tax credit, and would extend the tax credit for nonprofits and other employers that offer paid sick leave and paid family and medical leave through September 30, 2021 (it is currently set to expire on March 31). The Senate version caps the stimulus checks for individuals with adjusted gross income of $75,000 or more and married couples with adjusted gross income of $150,000 or more.
  • No Change to the Universal Charitable Deduction. Taxpayers who use the standard deduction on their federal taxes would still be able to get a small, above-the-line deduction for their charitable contributions in 2021. Under current law, this universal charitable deduction applies to the first $300 in cash donations for individual taxpayers and the first $600 for married couples filing jointly for 2021 (last year, the deduction was capped at $300 for both individual taxpayers and for married couples filing jointly).
  • Increased Federal Funding for Various Programs Important to the Work of Nonprofits. The American Rescue Plan Act would provide additional funding for child care providers, the Corporation for National and Community Service, arts and humanities organizations, food assistance, housing and homelessness prevention, and nonprofits providing services to survivors of domestic violence and sexual assault.
  • $340 Billion in Additional Funding for State and Local Governments. This support could help ease financial pressures on cities and counties throughout North Carolina and provide additional support to state legislators to invest in nonprofits providing COVID relief. The House version had included $350 billion in funding for state and local governments, but the Senate version transferred $10 billion of this to provide addition funding for rural broadband. 
  • No Increase in the Minimum Wage. The House-passed version included a gradual increase of the federal minimum wage to $15 per hour over the next four years, but the Senate removed this provision. Many analysts expect that a higher minimum wage would reduce poverty, which would improve the lives of many clients of nonprofits.
  • Funding for COVID-19 Vaccines, Treatment, and Testing As Well As Other Public Health Programs. The added investment in these public health measures would significantly reduce the spread of COVID-19.

Many of these important provisions are included in the American Rescue Plan Act because of the persistent advocacy of nonprofits. Once it passes the Senate, the House will vote on the Senate-approved version one more time next week so that both chambers approve identical language. President Biden is expected to sign it into law before unemployment benefits expire on March 14. Because Congress is using the budget reconciliation process for this COVID relief plan, it only needs 50 votes to pass the Senate (most bills require 60 votes for Senate approval).
Reminder: SBA Limiting PPP Loan Applications to Very Small Employers through March 9
Last week, President Biden announced a two-week period in which the Small Business Administration (SBA) will only process PPP loans for businesses and nonprofits with fewer than 20 employees. The priority period runs through March 9. The Center encourages nonprofits with fewer than 20 employees that are considering applying for a first-draw or second-draw PPP loan to apply by March 9.
IRS Issues Guidance on Employee Retention Tax Credit That May Benefit More Nonprofits
On Monday, the Internal Revenue Service issued guidance on the changes to the employee retention tax credit. Under the federal COVID relief plan that was enacted in late January, many more nonprofits may now be eligible for this refundable payroll tax credit. Notably, nonprofits that have received PPP loans are also permitted to claim the employee retention tax credit, but the same wages cannot be counted for both seeking forgiveness of the PPP loan and calculating the employee retention credit. For example, a nonprofit with $200,000 in payroll expenses between April 1, 2020 and June 30, 2020 that received a $150,000 forgivable PPP loan to cover part of these personnel expenses may now be able to apply for the employee retention tax credit to recoup part of the other $50,000 in payroll expenses that weren’t covered by its PPP loan.

The new IRS guidance explains when and how employers that received a PPP loan can claim the employee retention credit for 2020 and provides answers to technical questions that nonprofits may have in determining their eligibility for the tax credit. The new guidance only applies to the 2020 employee retention credit; the IRS plans to offer additional guidance on the 2021 tax credit in the near future.
NC General Assembly Approves Additional COVID Relief
This week, the NC House of Representatives and NC Senate both unanimously passed a bill (H.B. 196) that provides additional COVID relief for schools, businesses, nonprofits, and communities. Among other things, the bill:
  • Appropriates funds from the federal omnibus spending and COVID relief bill passed in December, including funding for private nonprofit schools and food assistance programs;
  • Provides more details for how state emergency rental assistance funds will be distributed, including how much will go to each county;
  • Appropriates an additional $6 million to North Carolina’s food banks; and
  • Extends a law that allows notaries to use video technology to notarize documents through December 31, 2021 (the law expired on March 1, 2021).

Governor Cooper is expected to sign this bill into law soon. Legislators will likely take up additional COVID relief legislation once President Biden signs the American Rescue Plan Act into law and there is additional federal aid for states. 
Spread the Word: Don’t Miss Out on Federal Stimulus Payments
As part of the COVID relief package that was approved in December, most Americans were eligible for Economic Impact Payments – or stimulus payments – in the amount of $600 for each person in their household. The IRS has made direct deposits or issued checks for these stimulus payments, but many North Carolinians – particularly those with low incomes who don't typically file federal income tax returns and those with children – may not have received these payments or may not have received the full amount they are due. The IRS has a tool to allow individuals to check the status of their stimulus payments.

Individuals and families that did not receive their stimulus payments are eligible for a Recovery Rebate Credit, which they can claim by filing IRS Form 1040 and using line 30. The Center strongly encourages nonprofits – particularly those serving North Carolinians in poverty and those serving children – to help spread the word to ensure that those who did not receive their full Economic Impact Payments file a Form 1040 and use line 30 to request their stimulus payments.
Take Action: Your Nonprofit Can Help Eligible Community Members Get Vaccinated
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 COVID-19 pandemic by spreading information about the availability, safety, and importance of vaccines and about the continuing importance of wearing masks and social distancing when in public. 

On Tuesday, Governor Roy Cooper announced that North Carolina is expediting its plans for vaccinations of North Carolinians. As of Wednesday, frontline essential workers – including social workers, public health workers, clergy, homeless shelter staff, veterinarians, college and university instructors and support staff, and workers in stores that sell groceries and medicine – are eligible to begin receiving vaccines. North Carolina is also currently vaccinating educators, school personnel, child care workers, health care workers, long-term care staff and residents, and people 65 and older.

Here are three things your nonprofit can do to help ensure that people you serve get vaccinated once they are eligible:
  • Share the NC Department of Health and Human Services’ (DHHS’s) online Find My Group tool to help North Carolinians know when they will be eligible to get their vaccine. 
  • Share the DHHS Find My Spot search tool to help North Carolinians locate vaccine providers near where they live and work. 
  • Help the people you serve and others in your community get appointments for vaccinations. Many North Carolinians are struggling with the technology required to get an appointment to receive a vaccine. Nonprofit staff and volunteers can help people navigate the online appointment systems to ensure that technology is not a barrier to vaccinations.
NC House Bill Would Create Grant Program to Address Vaccine Hesitancy
One of the challenges in maximizing COVID vaccinations in North Carolina is the hesitancy of some North Carolinians – particularly those living in communities of color where there has been a history of abuse of vaccination for human experimentation – to receive vaccines. A new bill in the NC House of Representatives (H.B. 214) would create a new grant program through the DHHS Office of Minority Health and Health Disparities to help address vaccine hesitancy in historically marginalized communities. Community centers, long-term care facilities, rehabilitation facilities, and faith-based organizations would be eligible to receive grants of up to $10,000. The Center is working with bill sponsors to try to ensure that other nonprofits serving historically marginalized communities would also be eligible for these grants if this bill is passed, either on its own or as a part of a future COVID relief bill.
New Analysis Debunks Misleading Claims about Pending Donor Disclosure Supreme Court Case
The U.S. Supreme Court will soon consider two cases challenging a California law that requires charitable nonprofits to disclose donor information to state officials. The plaintiffs argue that the California disclosure rule infringes on nonprofits’ First Amendment rights. The California law requires nonprofits to disclose to the state – but not to the public – donor information from Schedule B of Form 990. The Center has heard that some North Carolina nonprofits have been contacted by a national nonprofit that is providing misleading information about the case to try to get nonprofits to sign on to an amicus brief urging the Supreme Court to strike down the California law.

This week, the California Association of Nonprofits (CalNonprofits) posted an analysis of the case, explaining why the California law is actually safe and beneficial for nonprofits. The law helps protect the nonprofit sector’s reputation by giving the California Attorney General the tools it needs to investigate and prosecute fraud and abuse of nonprofits. The CalNonprofits analysis debunks some of the misleading claims that other organizations have used to try to convince nonprofits that the law could jeopardize donor privacy (which it would not do). CalNonprofits plans to file an amicus brief in support of the California law.
U.S. House of Representatives Approves For the People Act
On Wednesday, the U.S. House of Representatives approved the For the People Act of 2021, a bill that would make significant changes to voting laws, campaign finance laws, and ethics rules. Several provisions in the bill would be beneficial to nonprofits and the communities they serve, including:
  • Voting Access Changes. The For the People Act would require states to make a variety of changes to election laws, including allowance for same-day voter registration on Election Day and improving access to voting for individuals with disabilities. These changes would be important to the many nonprofits that work to ensure that the people they serve are registered to vote and actually vote in elections. These changes would be particularly important to nonprofits that serve populations with:
  1. Lower-propensity voters (such as communities of color);
  2. People who may need to register to vote (such as new citizens, renters whose addresses have changed since the most recent election, and people who had been incarcerated);
  3. People who have difficulty voting in-person on Election Day (such as seniors and individuals with disabilities). 
  • Redistricting Reform. The bill would require states like North Carolina that rely on gerrymandered legislative districts to shift to an independent redistricting process. As the Center has regularly explained, this type of independent redistricting process would strengthen nonprofits’ voices in public policy advocacy
  • Campaign Finance Reform. The bill would limit the ability of 501(c)(4) social welfare nonprofits to be used as “dark money” political funders. This would help 501(c)(3) nonprofits – which are not permitted to spend money supporting or opposing candidates for office, political parties, or PACs – by diminishing the ability of non-501(c)(3) organizations to use campaign contributions to increase their influence on public policy advocacy. 
  • Government Ethics Reforms. The bill would create new conflict of interest and transparency requirements for members of Congress and many officials in the White House and other federal agencies. These ethics reforms would help prevent future political scandals involving nonprofits. 

Although many parts of the bill have broad, bipartisan support, the For the People Act passed the House along party lines. It is unlikely it will have enough support to pass the Senate, where it would need 60 votes (out of 100 Senators) for approval.
NC House Committee Approves Bill That Would Prevent UI Cost Increases for Nonprofits
On Wednesday, the NC House Rules Committee approved a bill (H.B. 107) that would prevent increases in unemployment insurance (UI) costs for virtually all North Carolina nonprofits this year. Two Senate committees approved an identical bill (S.114) this week. Two parts of these bills are particularly noteworthy for nonprofits:
  1. It would keep the base rate for state unemployment tax (SUTA) at 1.9% for 2021. Without this change, the tax rate would increase to 2.4% this year. Businesses and many nonprofits pay SUTA quarterly. Their tax rate is a combination of the base rate and their experience rating, which is based on the history of UI claims by their employees.
  2. It would extend the period when employers’ accounts will not be charged for COVID-related UI claims through December 31, 2021 (or the expiration of Governor Roy Cooper’s emergency declaration, if that occurs before the end of this year). This non-charging period expired on December 31, 2020. This provision is significant for nonprofits that elect to reimburse the state for UI claims rather than pay SUTA since it means they are not liable for the 50% of the cost of these claims that is not covered by federal payments. For reimbursing nonprofits that have laid off or furloughed staff, this provision is a significant costs savings. Since the start of the pandemic, the Center has successfully advocated that it is essential that state policymakers hold harmless reimbursing nonprofits for their COVID-related UI claims, and this bill would continue this important policy into 2021.

The NC House and NC Senate are expected to vote on one or both of these bills next week.
Center Offers Nonprofit Policy Briefings This Month
The Center will offer two online nonprofit policy briefings this month. The first policy briefing on Monday, March 15, will provide an overview of the latest federal and state COVID-19 relief plans and the potential policy solutions that could help nonprofits during the 2021 NC legislative session. The second policy briefing on Friday, March 19, will feature a bipartisan panel of state legislators sharing insights on state policy priorities in 2021, the budget process, and how nonprofits can effectively engage with elected officials as the pandemic continues. Join us for one or both of these policy briefings.
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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.