By: Thomas G. Bognanno
What nonprofits need to know about the $2 trillion stimulus bill
An important $2 trillion stimulus bill is expected to clear Congress this Friday that will impact all nonprofits in the nation. Here are the main points that you need to pay attention to:
- It expands the charitable deduction to all taxpayers for one year (not permanently). The bill will allow nonitemizers to deduct up to $300 in cash giving for the 2020 tax year, according to an analysis of the legislation by the National Council of Nonprofits. Donations to donor-advised-fund accounts would not qualify for the nonitemizer deduction.
- For those who itemize, the bill lifts the cap on annual giving from 60 percent of adjusted gross income to 100 percent. For corporate charitable giving, the bill raises the annual limit from 10 percent to 25 percent of taxable income. The cap on deductibility of food donations from corporations would increase to 25 percent of taxable income, up from the current 15 percent cap.
- Nonprofits with 500 or fewer employees (counting all full-time and part-time employees equally) will be eligible for Small Business Administration loans of up to $10 million. Nonprofits are also eligible for expedited loans of up to $1 million. The money would have to be used for payroll, including paid leave, as well as health-insurance premiums, facilities costs, and debt service. Nonprofits that keep their employees on the payroll from February 15 to June 30 could have their loans forgiven, turning the loan into a grant.
- The bill creates a refundable payroll tax credit of up to $5,000 for each employee on the payroll for those nonprofits who have experienced a drop in revenue of at least 50 percent in the first quarter of 2020 compared with the first quarter of 2019. The credit is available each quarter until the nonprofit’s revenue exceeds 80 percent of the same quarter in 2019.
- Nonprofits that self-fund unemployment benefits could get reimbursed for up to half the costs of benefits provided to their laid-off employees.
- The bill appropriates an additional $10 billion to another SBA program, Economic Injury Disaster Loans, and waives a creditworthiness requirements for all applicants, including nonprofits.
For more, read articles from The Chronicle of Philanthropy, Nonprofit Quarterly, Chicago Tribune and The New York Times.