There are increasingly good resources for how nonprofits can access federal funds and other federal-level resources, from organizations such as the National Council of Nonprofits, Nonprofit Quarterly, and field-based organizations like Americans for the Arts. We have started collecting them on our own resources page, but we’ve been getting similar questions from so many California nonprofits that we want to offer a few responses to what we see as the Top Five Questions for nonprofits right now.

1. How do we access emergency government dollars for nonprofits to cover payroll and other “overhead” expenses?

Federal: The new CARES Act includes several provisions that will result in funding for nonprofits, in addition to the expanded Small Business Administration loan programs described below. You can find an analysis of the CARES Act here. The Act provides $150B for a state, tribal, and local government Coronavirus Relief Fund. Some of those dollars (some sources estimate $15B) will come to California, although we do not know yet how those funds will be distributed.

CalNonprofits will be advocating at the state level to ensure that nonprofits get a significant portion. (We have already begun gathering data to estimate the economic impact of COVID-19 on California nonprofits.) Nonprofits may also be able to benefit from the Industry Stability Fund included in the Act, but it is currently unclear whether we qualify. Our national nonprofit advocacy groups are pushing hard to get nonprofits included and will update us with new information as they have it, which we will share with you.

U.S. Small Business Administration (SBA) loans that are available to nonprofits include:

• The Disaster Assistance Program or Economic Injury Disaster Loan (EIDL) Program offers low-interest loans to nonprofits of all sizes in declared disaster areas. This program does not allow loan forgiveness; the interest rate for nonprofits is 2.75%. These loans of up to $2M may be used to pay payrolls, accounts payable, fixed debts, and other bills that can’t be paid because of the impact of COVID-19. The new federal CARES Act expands this program to include an emergency advance, pending a loan application, of up to $10K that the SBA must distribute to the nonprofit within three days. The COVID-19 EIDL application is here.
• The 7(A) or Paycheck Protection Program (PPP), provides loans of up to $10M to nonprofits with no more than 500 employees. These loans can cover expenses incurred between February 15 and June 30, 2020, for payroll, health benefits, rent, interest on mortgages, utilities, and fixed debts. Interest rates are capped at 4%, but portions of the loan (payroll, rent, interest on mortgages, and utilities) can be forgiven, turning the loan into a grant. The amount forgiven, up to 100%, depends on the extent to which the nonprofit retains employees through June 30. A sample application is available here. An online application process is not yet available but should be very soon. In the meantime, please contact your local SBA bank and ask them for information about how to apply.

California Senate Bill 89: This bill, enacted on March 17, authorizes up to $1B in state emergency funds for COVID-19. The bill states that assistance strategies to be included in the Budget Act of 2020 must help nonprofit organizations (as well as individuals and small businesses) experiencing economic hardships due to COVID-19. CalNonprofits is working with lawmakers and with other nonprofit advocates to ensure that the needs of nonprofits are addressed through this bill and through the 2020 state budget process. Right now the best ways to support these efforts are at the end of this bulletin.

2. Aside from getting direct funding, what other financial benefits from the State of California (such as delayed payroll taxes) are available to nonprofits?

Delaying payment of state payroll taxes: If your nonprofit is directly affected by COVID-19, you can request up to a 60-day extension to file your state payroll reports and deposit state payroll taxes without penalty or interest. You will still have to pay the taxes, but you have extra time to do so. Your request must be received within 60 days from the original past-due date of the payment or return.  Apply to the California Employment Development Department (EDD). Talk to your payroll processor for managing the specifics. Key: nonprofits (and all employers) can use their expenses for new leave provisions as credits against payroll taxes.  

Delaying payment of federal payroll taxes: If your nonprofit has closed temporarily or had a significant drop in revenue due to the COVID-19 crisis, you can delay paying the employer portion of Social Security (6.2% of wages). Ordinary deadlines still apply for Medicare and the employee portion of Social Security.

Mortgage and rent payment delays: As of now, there is no relief for nonprofit mortgages or rental/lease payments for businesses, including nonprofits. For individuals, California has instituted a 60-day moratorium on evictions and a 90-day grace period for mortgage payments. There are several efforts pending in Congress and in California to ensure rent and mortgage protections for nonprofits and small businesses, but nothing is in place yet.

Relief for unemployment insurance self-insurers: If your nonprofit uses a self-insured fund such as Unemployment Services Trust (rather than having unemployment insurance), the federal CARES Act includes reimbursement to such employers of up to 50% of their unemployment costs. These group trusts are working to get legislation that will reimburse more; contact your vendor for more info. 

3. Form 990: The CARES Act allows individuals and companies to file their tax returns by July 15 (rather than by the usual April 15). Does this also apply to Federal Form 990?

No. Form 990 is considered an “information return” rather than a “tax return” (because nonprofits are typically exempt from income tax). However, a longstanding provision is that you can apply for a six-month extension by filing Form 8868. This extension is automatically granted if you apply by the date your 990 would have been due.

4. What new benefits can we give to our current staff and to people we’ve laid off?

What can we do for our current staff? 

• A safe environment for staff is essential, especially for staff who are continuing to interact with the public. Cal/OSHA has developed guidelines for specific workplaces (such as health clinics, childcare centers). Some counties may have additional or different guidance; check your county department of public health. You can find fliers for workplace safety in more than 30 languages here (thanks to TranslationServices.com), and fun posters in a few languages from the CDC here.
• Health insurance: if you are not providing health insurance for some or all of your staff, remind them that a good option for them may be Covered California (the Affordable Care Act), which has extended its enrollment period to the end of June.
• Sick and family leaves: The federal Families First Coronavirus Response Act in general expanded on the Family and Medical Leave Act of 1993 (FMLA) to require paid sick leave and paid family leave.   
• Check with your insurance broker to make sure your employees are covered by workers' compensation insurance if they are working at home for the first time. You may be advised to put various risk management systems in place, such as ensuring that your employees understand how to keep their home offices safe. To advocate for self-insured nonprofits, go to:https://accses.org/action-center.

Good news for most student loan borrowers (employed or not): Payments for most borrowers will be suspended through September 30, 2020. Specifically, the CARES Act provisions on student debt apply only to non-defaulted Direct Loans and FFEL loans currently owned by the Department of Education. The suspension will happen automatically, and – crucially – these months will be included in the requirements for Public Service Loan Forgiveness. The Student Borrower Protection Center has more details – including questions we don’t have answers for yet.

What can we do for our laid-off workers?

• Let your laid-off staff know how to apply for unemployment benefits. Let them know that the usual one-week waiting period has been waived and they can apply as soon as they are unemployed, but it may take up to three weeks before the money is deposited into their account. Staff with reduced hours can also apply for unemployment benefits, but if their hours vary from week to week the calculations of payments can be difficult and could result in overpayments that must be repaid. 
• Independent contractors are not eligible for unemployment insurance but they can apply for Disaster Assistance.   
• Some congregations and other religious organizations that have opted not to pay unemployment insurance: your laid-off employees cannot obtain unemployment compensation, but they are eligible for the Disaster Assistance.
• For health insurance: remind your laid-off staff to look at Covered California (Affordable Care Act) program, which has extended enrollment through the end of June.

What about the new charitable tax deduction? 

With the 2018 federal Tax Cuts and Jobs Act, a majority of people who were itemizing on their taxes no longer found it financially beneficial to do so. As a result, for millions of households, donations to nonprofits no longer reduce their taxes. The CARES Act allows – for the 2020 tax year – households to take up to a $300 tax deduction for donations to nonprofits even if they are not itemizing (that is, if they are taking the standard deduction). They will still need to have receipts and documentation of their donations.

Special note: Three types of donations cannot be used for this new deduction: donations to donor-advised funds, donations to private foundations, and non-cash donations. 

There are also expanded charitable tax deductions for corporations and for taxpayers who both itemize and give more than 10% of their income to nonprofits. Encourage these taxpayers to talk to their tax preparers and financial advisors for details. 

BONUS: What are the most pressing advocacy needs and what can I do about them now in less than 10 minutes?

Disparities: COVID-19 and the shelter-in-place rules are clearly hurting some people more than others, and some nonprofits more than others. Hardest hit are communities and their nonprofits in rural areas, in poor areas, and in communities of color. And just as the pandemic is deepening inequality, inequality is intensifying the impact of the pandemic. 

As we advocate for nonprofits during this period, we must also work hard to get resources to nonprofits in rural areas, in poorer areas, and in communities of color. Our elected representatives are key to this, and we are especially happy to work with so many members of our legislature who come from nonprofit backgrounds. 

What you can do:

• Join more than 1,000 nonprofits and sign on to CalNonprofits’ letter to Governor Newsom, Senate President Pro Tem Atkins, Assembly Speaker Rendon, Senate Budget Committee Chair Mitchell, and Assembly Budget Committee Chair Ting.
• Contact your assemblymember and state senator and ask them to advocate for the recommendations in CalNonprofits’ letter. Find contact info for your assemblymember and state senator here and a list of Twitter handles for most of the assemblymembers here.
• If your state assemblymember signed Assemblymembers Rivas’ and Limón’s letter (that includes CalNonprofits’ recommendations and 29 legislators’ signatures) to the Governor, President Pro Tem, and Speaker, call them (leave a message) and thank them.
• Tweet to @GavinNewsom and ask him to heed the call of 29 state assemblymembers and more than 1,000 California nonprofits and include this link to the Rivas/Limon letter. Include @calnonprofits at the end of your Tweet.
• Share this Facebook post from Assemblymember Rivas, thank her, and ask Governor Newsom to address the urgent needs of California's nonprofits.
• Contact your county board of supervisors and city council members to urge them to keep paying nonprofits with county and city contracts and to give nonprofits the flexibility to use existing and new resources to respond to the needs of their communities.

We are making every effort to keep up with the constantly changing environment; if you have corrections or additions to our resources list, please send them to info[at]calnonprofits[dot]org

Our members make this advocacy work possible and transformative; if your organization is not a member, please consider joining today.