In the face of coping with a world that has drastically changed, we thought it was important to share the most significant news for struggling nonprofits to date.

The US Senate and the House of Representatives just passed the CARES Act. You may ask, so what does that mean for those of us in the nonprofit world?  There are two main components that you need to know about right now: 1) a forgivable loan fund for small and mid-sized nonprofits and 2) a new, one-time $300 charitable deduction for the 2020 tax year to incentivize donors to contribute.

Below we have created a Frequently Asked Questions list with some links:

What is the CARES Act?

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (S. 748) provides significant funding for businesses, hospitals, schools, and social support programs, among many other things. Below are key nonprofit issues of sector-wide interest on which advocates have been most active. Click HERE to see the bill.

When does it go into effect?

Just after the House of Representatives votes on the bill and the President signs it. The CARES Act was passed in the US Senate on Wednesday, March 25th, and just today in the House of Representatives. The President must then sign the CARES Bill. Assuming the President does not exercise his Line Item Veto power to change aspects, the bill will stand and become law within days.

What are the forgivable Small Business Administration loans that have been funded by the CARES Act, and are small and midsized nonprofits going to be eligible? 

The short answer is YES! If your organization has been in existence since March 1st, 2020, and has fewer than 500 employees and continue to employ your staff through June, you are eligible. This includes funding for 1099 employees. The bill now includes those nonprofits that receive Medicaid payments (unlike earlier versions of the bill).

Does “forgivable” mean we do not have to pay it back?

Yes. These forgivable loans are a source of general operating support. Forgivable loans of up to $10MM are to meet payroll, facilities costs, debt service, and other operating expenses.

What are the details of the new $300 charitable deduction for the 2020 tax year?

You may remember that the Trump administration eliminated charitable deductions to help fund his tax breaks to the top 1%. The CARES Act allows for a $300 charitable deduction for individuals. This deduction is for tax year 2020, one-time only, above the line deduction for total charitable cash contributions. This is for both those who itemize and for those who do not itemize their taxes.

Click HERE for a great Nonprofit Quarterly article which was very helpful. We recommend subscribing to this excellent publication.

Click HERE to see our favorite School House Rock video on how a bill becomes a Law if you need a civics refresher. Or if you just need a smile and hummable tune.