[ Updated July 6, 2020 | 11:00am ]
We are experiencing an unprecedented time: exponential growth of Covid-19 (Coronavirus) cases, social distancing, and growing unemployment. As the United States economy and daily life is being reshaped by COVID-19, maintaining “normal” organizational functions during these times is a challenge.
At YHB we work with not-for-profit organizations across the region of all shapes and sizes. Over the past few days we have been in touch with many of our clients as we work together to lead through this pandemic. Below we have included some ideas and updates to help your organization during this time.
Accounting for the PPP Loan & Related Forgiveness
If you are a nongovernmental entity, which includes business entities and not-for-profit entities, and you have received a loan through the Paycheck Protection Program (PPP), you may be wondering how to appropriately account for the loan and the expected partial or full forgiveness of the loan in accordance with FASB.
Here is how to handle “Gifts in Kind” and Donate Services
As unemployment and financial insecurity become widespread during the novel coronavirus (COVID-19) crisis, many not-for-profit donors find themselves unable to provide monetary support to favorite charities. Instead, your organization may receive offers of gifts in kind (GIK) or donated services. Although you likely welcome these gifts, you may be unsure about how to record and value them. Here’s a brief summary.
Surviving the COVID-19 Crisis: A Nonprofit Action Plan
Although most not-for-profits have been hurt by the coronavirus (COVID-19) pandemic, your organization’s specific challenges probably depend on your mission, constituency and other factors. For example, social distancing rules have forced most arts organization to temporarily shut down and furlough employees. Many social services charities, on the other hand, have remained open and are struggling to meet surging demand for services.
What COVID-19 legislation means for nonprofits and their staffers
Whether your not-for-profit is newly deluged with demand for services or you’ve closed doors temporarily, it’s important to keep up with legislation responding to the coronavirus (COVID-19) crisis. On March 18, the Families First Coronavirus Response Act was signed into law to provide American workers affected by the pandemic with extended sick and family leave benefits.
The new law applies to your nonprofit if you have fewer than 500 employees, although you may be exempt if you have fewer than 50. Here are some details.
3 things to know
There are three important components of the new law:
1. Paid sick leave. If a staffer is ill, is instructed to be isolated by a physician or government authority or is caring for a sick family member or child whose school has closed, your organization must provide two weeks of paid leave. Pay part-time workers based on their average hours over a two-week period. Benefits are capped at $511 per day and $5,110 total for employees on leave because of their own health issue, or $200 per day and $2,000 total to care for others.
2. Job-protected leave. You must provide 12 weeks of job-protected leave for employees who need to take care of a child due to the closure of a school or day care center. This provision updates existing rules under the Family and Medical Leave Act. Employers are now required to pay workers two-thirds of their regular wages, not to exceed $200 per day and $10,000 total. You aren’t required to pay employees during the first 10 days off; however, they may choose to use accrued time off benefits at this time.
3. Employer payroll tax credits. To help employers pay for time off, the law enables tax credits. You may claim a 100% refundable payroll tax credit on wages associated with paid sick and medical leave and other expenditures associated with health benefit contributions. Additional wages paid to staffers due to the law’s leave requirement aren’t subject to the employer portion of the payroll tax.
Congress has also provided $1 billion in emergency grants to states to process and pay unemployment insurance benefits. So if you need to lay off staffers during the extended COVID-19 crisis, this provision can help them manage the financial burden.
Of course, more is likely to be needed. Legislators are currently working out a deal to provide furloughed and laid-off workers with direct financial assistance as well as loans and other financial support for employers. Keep your eye on the news.
If you have questions about how the Families First Act applies to your nonprofit, please contact us. Also, because many nonprofits operate on thin margins at the best of times, you may worry about staying afloat. We can analyze your position and help you come up with possible survival strategies.
CARES Act Offers Help for Nonprofits
Relief, and Economic Security (CARES) Act was signed into law. How is this massive $2 trillion recovery package poised to help your not-for-profit organization? It depends on your group’s size, financial condition and other factors. But most nonprofits affected by the coronavirus (COVID-19) outbreak are eligible for some relief under the CARES Act.
Expanded charitable contribution deductions
Individual taxpayers can take advantage of a new above-the-line $300 deduction for cash contributions to qualified charities in 2020. “Above-the-line” means the deduction reduces AGI and is available to taxpayers regardless of whether they itemize deductions.
The CARES Act also loosens the limitation on charitable deductions for cash contributions made to public charities in 2020, boosting it from 60% to 100% of AGI.
Paycheck Protection Program
The Department of Treasury has released the Paycheck Protection Program application and supplemental information. Interested applicants can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. According to the SBA, other regulated lenders will be available to make these loans once they are approved and enrolled in the program.
Economic Injury Disaster Loan
All tax-exempt entities (charitable organizations, trade associations, social clubs, etc…) with no more than 500 employees may apply for the economic injury disaster loan with the SBA. Organizations in all U.S. states are currently eligible to apply for a low-interest loan due to COVID-19. To apply for the loan and find additional information on the SBA’s Economic Injury Disaster visit here. Applicants are encouraged to apply online.