Congress acts to lessen cash crunch for nonprofits

• Published date: 01 September 2020
• DOI: http://doi.org/10.1002/nba.30838
• Date: 01 September 2020

SEPTEMBER 2020 NONPROFIT BUSINESS ADVISOR

7

© 2020 Wiley Periodicals LLC • All rights reserved

DOI: 10.1002/nba

Industry News

Congress acts to lessen cash crunch for nonprots

Bipartisan legislation passed by both houses of

Congress by unanimous consent aims to give self-in-

suring nonprots a reprieve from the unexpectedly

large cost of unemployment benets paid out as a

result of mass job losses caused by the coronavirus

pandemic. The legislation was sent to the White

House for signature on July 22, but had not been

signed at press time.

The bill—Protecting Nonprots from the Cat-

astrophic Cash Flow Strain Act—was crafted to

address a provision in federal guidance relating to

the CARES Act that called for nonprots and other

self-insured employers, such as local governments

and Native American tribes, to pay for 100% of the

costs of unemployment benets up front, then apply

to the federal government for reimbursement of 50%

of that, which was promised under the CARES Act

as part of the pandemic stimulus package.

With widespread job losses and resulting unem-

ployment bills coming due, many nonprots feared

a crucial shortage of cash ow that threatened to

force them to close.

The legislation addresses this by clarifying that

the federal government’s promised share of unem-

ployment costs should be requested by states and

applied to the balances owed by individual nonprof-

its, so that when states invoice them, they don’t have

to come up with the full 100%.

According to Tim Delaney, president and CEO of

the National Council of Nonprots, the legislation

may not be perfect, but is certainly a step in the

right direction.

“There is also still much work to do to ensure that

charitable nonprots— our nation’s third largest

employer—can keep their employees on the payroll

and can continue serving communities across the

country,” Delaney said in a statement regarding

the proposal. “There is broad bipartisan support

in Congress for many policies that would enable

nonprot and faith-based organizations to con-

tinue doing their vital work at this time when they

are needed most. We look forward to working with

members of Congress to ensure inclusion of those

solutions in future relief legislation.” ■

New data show PPP loan program saved 4.1 million nonprot jobs

A deep dive into recently released data on the

Paycheck Protection Program, the federal gov-

ernment’s program to help shore-up employment

during the rst few months of the coronavirus

pandemic, shows that the program saved roughly

4.1 million jobs in the nonprot sector, or about

one in three nonprot jobs nationwide.

The analysis, provided by Jeff Williams and

fellow researchers at the Johnson Center at Grand

Valley State University, found that some 181,680

nonprofits received PPP loans, accounting for

about 3.7% of the roughly 4.9 million loans dis-

tributed under the program. The Johnson Center

estimates that about 452,000 nonprofits were

eligible for the program, which means that about

40% of eligible nonprots received PPP funding.

Further analysis shows that nonprots had bet-

ter luck securing larger loans under the program

than their for-prot counterparts. Per the Johnson

Center, 11% of nonprot applicants secured a

loan in the $150,000–$350,000 range compared

with 8% of all other types of applicants; 7% of

nonprot applicants successfully secured a loan in

the $350,000–$1 million range versus 4% of other

applicant types; 3% of nonprot applicants secured

a loan in the $1 million–$2 million range versus

1% of other types of applicants; 2% of nonprot

applicants secured a loan in the $2 million–$5

million range versus 0.5% of other applicant types;

and 0.2% of nonprot applicants secured a loan in

the $5 million–$10 million range, exactly double

the rate of other applicant types.

However, in the $150,000 and below category,

nonprots were less successful than other applicant

groups, securing loans 77% of the time versus 87%

for other applicant types, the data showed.

For additional analysis of the PPP loan program,

visit https://johnsoncenter.org. ■