Aid for Non-Profits Under New Federal Law
The Consolidated Appropriations Act of 2021 (the “Act”) was approved by Congress on December 21, 2020 and signed into law on December 27, 2020. Among its various provisions, the Act expanded the eligibility of additional non-profit organizations for Paycheck Protection Program (“PPP”) loans, provided additional dedicated funding to assist non-profits and continued incentives to stimulate donations to non-profits.
The Act provides a second round of PPP loans to qualifying non-profit organizations. If organizations received a PPP loan in the first round, they are eligible for a second PPP loan if they employ 300 or fewer employees and demonstrate a decrease in gross revenues of 25% or more between the same quarters in 2019 and 2020. As with the first round of PPP loans, loans may be 100% forgiven if used for qualifying expenses.
The Act now includes 501 (c)(6) organizations, such as chambers of commerce, in the types of organizations potentially eligible for PPP loans. These newly eligible non-profit organizations may apply for both first round and second round PPP loans, provided guidelines are met.
In addition to the increased funding for PPP loans and EIDL grants, the Act also allocated $15 billion in dedicated funding for performance venues that have been shuttered by COVID 19. Eligible theatres can obtain grants of up to $10 million.
Finally, the Act continues the $300 above the line tax deduction for individuals contributing to non-profits in 2021. For corporations, the increased limits on deductible charitable contributions found in the CARES Act were extended into 2021.
While additional guidance from the Small Business Administration is yet to come, the provisions of this Act will be welcome assistance to non-profits struggling due to the impact on their fundraising efforts and operations due to COVID 19.