Nonprofits are scrambling to make the most of the $2 trillion stimulus law, also known as the CARES Act, signed into law last month. The Chronicle gathered a panel of experts in a virtual forum to help navigate the complex web of benefits available for your charity.
Lee Foley, senior adviser at America Forward and partner at Capitol Hill Partners, said it is unusual for nonprofits for be eligible for federal emergency loan programs. So the application process will be unfamiliar for many charity leaders.
Foley also noted that the Small Business Administration typically sponsors about 25,000 loans a year; the new stimulus law makes about 4 million entities available for such loans, and as a result there have been “some serious rollout difficulties.”
Most programs are available to nonprofits of any size; however, the popular Paycheck Protection Program is restricted to nonprofits with 500 or fewer employees
Loans made under the Paycheck Protection Program may be fully forgiven, and many nonprofits have asked how to make sure that happens. Foley said that in the eight week period after the loan is originated, the charity must maintain the same average number of full time employees as in the same period a year ago, on average. It doesn’t have to be the same people though, Foley added.
For any amounts not forgiven, the interest rate is only 1 percent, Foley said.
A Lifeline
Allison Grayson, director of policy development and analysis at Independent Sector, said the benefits of the stimulus law could be a lifeline for many nonprofits, but those benefits will fall far short of filling all the gaps in their finances.
Independent Sector is urging the financial industry to make nonprofits, especially smaller nonprofits, a priority when processing emergency loans.
Another panelist, Peter Fissinger, president and CEO at Campbell & Company, urged nonprofits to look to their boards to find people who might able to lean on local banks for help. “Look for the influence that you may have to get a good steward,” Fissinger said.
Fissinger also explained how fundraisers should adjust their messaging strategies in light of the new “universal deduction” included in the stimulus law. You can read more of what he suggested in our piece on how fundraisers are being urged to seize opportunities during the crisis.
Looking ahead, Grayson said Independent Sector will be pushing Congress in the next round of stimulus legislation to create incentives for banks to prioritize nonprofit loans, and remove size restrictions on some of the programs so that all nonprofits can participate. Independent Sector also would like to see Congress raise the $300 cap on the universal deduction.
