On Friday, March 27, the House of Representatives and the President signed into law H.R. 748 (also known as the CARES Act), the third relief package Congress has passed, and the President has signed into law to address the US response to COVID-19. The package, which was passed by the Senate on Wednesday, March 25, is the largest relief package in U.S. history and includes several provisions helpful to the social good sector.
This package assists social good organizations as employers and mission-driven organizations. Here is an overview of six specific provisions of this bill.
Universal Charitable Deduction
This package includes a temporary universal charitable deduction. This deduction will allow all taxpayers, even those who do not currently itemize their deductions, to claim a charitable deduction for cash donations up to $300 through December 31. Donations to donor advised funds and supporting organizations are not eligible for this deduction.
Adjusted Gross Income Limitation
In this package, adjusted gross income limits on charitable deductions are suspended or adjusted for cash gifts made by individuals and corporations. The adjusted gross income cap for individual taxpayers has been suspended, which increases the cap from 60% to 100% of adjusted gross income. The cap for corporations has been increased from 10% to 25%. For food donations, the corporate cap has been increased from 15% to 25%.
Emergency Small Business 7(a) Relief Loans
Organizations classified as 501(c)(3)s with a total number of employees of 500 or less are eligible to apply for emergency Small Business Administration loans. Organizations can apply for up to $10M or 2.5X average monthly payroll from 2019, whichever is less. These loans can be used for payroll, mortgage, rent, and health insurance, among other costs. Loan forgiveness is available for the principal of this loan used for payroll, mortgage, rent, and other approved costs.
Emergency Economic Injury Grants
Organizations classified as 501(c)(3), that apply for the emergency small business loan outlined above, may receive up to $10,000 as an advance against the loan within three days of applying if the Small Business Administration certifies that the organization is eligible. Eligibility is based solely on the organization’s credit score.
Deferral of Employer Payroll Taxes
Employers can delay the payment of employer payroll taxes for the 2020 tax year. 50% of employer payroll taxes are due by December 31, 2021. The remaining 50% of the employer’s portion of the 2020 payroll tax is due December 31, 2022. Please note: The delay does not apply to organizations receiving loan forgiveness for an emergency Small Business Administration loan.
Treasury Industry Stabilization Loan Program
This loan program will provide funding to organizations with between 500 and 10,000 employees through December 31. These loans could come in the form of direct loans or guarantees of private loans. Direct loans would have an interest rate no higher than 2% with no principal and interest payments due for the first six months. These loans cannot be forgiven.
There are more provisions of this bill that benefit social good organizations. My public policy colleagues at Independent Sector and National Council of Nonprofits have crafted summaries of this bill and I have included links to their summaries here: National Council of Nonprofits and Independent Sector.
This package also includes additional funding for a number of government programs and direct payments to individuals. A list of these programs and funding amounts can be found below –
- Child Nutrition Programs – $8.8 Billion
- Supplemental Nutrition Assistance Program (SNAP) – $15.5 Billion
- Emergency Food Assistance Program – $450 Million
- Bureau of Indian Affairs – $453 Million
- Community Services Block Grant – $1 Billion
- Head Start – $750 Million
- Low-Income Home Energy Assistance – $900 Million
- Child Care Development Block Grant – $3.5 Billion
- Children and Family Services Programs – $1.9 Billion
- National Domestic Violence Hotline – $2 Million
- Family Violence Prevention – $45 Million
- Runaway and Homeless Youth – $25 Million
- Child Welfare Services – $25 Million
- Aging and Disability Services – $955 Million
- National Endowments for the Arts and Humanities – $75 Million each
- Institute of Museum and Library Services – $50 Million
- Community Development Block Grant – $5 Billion
- International Disaster Assistance – $50 Million
- Public Health and Social Services Emergency Fund – $27 Billion
- Veterans Administration Homelessness Assistance Grants – $4 Billion
Thanks again for all you do to serve our communities! We will do our best to continue bringing valuable updates on this and other legislation related to COVID-19 relief for the social good sector.
To help the social good community prepare for and respond to any impacts of the COVID-19 coronavirus, Blackbaud has also compiled a list of resources from across the sector that may be useful. Visit www.blackbaud.com/covid-19 for more information.