Congress may be in a better position now to enact another round of stimulus spending — something nonprofits say they desperately need — regardless of the outcome of the presidential election, say Washington advocates for nonprofits.
“All sides agree: The need for relief and stimulus are greater than ever,” said David Thompson, vice president for public policy at the National Council of Nonprofits. “Now the parties can agree without worrying about giving the other side a win.”
Reports from across the nation suggest that getting more federal money distributed rapidly is crucial for many nonprofits. The council has compiled state-by-state reports on the financial health of nonprofits amid the pandemic. The reports vary in methodology, but a few highlights include:
- 34 percent of Arizona nonprofits say they are unsure about their survival, and 10 percent reported they are “highly likely” to close, according to an October report based on survey responses from 221 nonprofits in the state.
- 11 percent of North Carolina nonprofits said they will be forced to close within the next six months, according to a September report based on 1,772 responses to an emailed survey.
- 63 percent of South Carolina nonprofits said they will survive for six months or less without more funding, and 29 percent said they can operate for only three more months without additional funds, according to an October report based on 566 responses to an emailed survey. Five percent said they are out of funds now.
- 4 percent of Kentucky nonprofits have shut down, according to responses from 207 groups, and another 5 percent expect to close by the end of the year.
- 69 percent of Arkansas nonprofits reported operating at reduced capacity, and 8 percent said they were not providing services at all, according to 316 responses to an emailed survey conducted in late June and early July.
A key provision in the stimulus package enacted in the spring was the Paycheck Protection Program, which provided forgivable loans to nonprofits and businesses. Nonprofits are pushing for a renewal of that program and an expansion of it, although some are seeking a cash-relief program with a simpler grant application process.
Like Thompson at the National Council of Nonprofits, Jeffrey Moore, chief strategy officer at Independent Sector, said he expects Congress to act soon to provide additional stimulus. “I think it is likely that we will see a Covid relief package debated before the end of the year,” he said.
He added: “Congress has been derelict in its duties in terms of providing the next round of desperately needed support.”
Moore said Independent Sector’s priorities in the next round of stimulus spending include renewing the Paycheck Protection Program with less red tape, eliminating the 500 employee cap on the size of organizations eligible to receive those loans, and expanding and extending the charitable deduction for people who don’t itemize their taxes.
In the spring, Congress approved a provision for the 2020 tax year only that allows taxpayers who don’t itemize to deduct up to $300 in charitable giving. Senate Republicans support legislation that would increase that amount to $600 for individuals and $1,200 for couples, a sign of “momentum to move in the right direction,” Moore said.
Nonprofits that need help the most, he said, include arts organizations, day-care providers, and food banks, where demand is increasing exponentially.
Moore said he’s also concerned about redeploying job-training services where they are needed the most and expanding broadband internet access nationwide — a concern echoed by other nonprofit leaders as schools struggle to educate students who don’t have internet access at home.
Worries About the Long Haul
Diane Drollinger, CEO of Network for Strong Communities, a nonprofit association in Missouri, said nonprofits are sorely in need of a second round of stimulus aid.
“At the beginning of the pandemic, we thought it would be a few months. What you can weather for three to five months is different than what you can weather for six months to a year,” said Drollinger. “We’re watching a lot of nonprofits go, ‘Oh, we’ve got to do this long-term.’”
The stimulus bill enacted in the spring was enormously helpful for nonprofits in Missouri, she said, though she added the process to get funds could have been better. But as those funds run out, Drollinger said several of her struggling member nonprofits are exploring mergers.
“There’s been a few more merger talks than there would have been without the pandemic,” she said.
Drollinger also pressed for an extension of the charitable deduction to people who don’t itemize. “We have to start to stimulate individual donors,” she said. “Over the years, we’ve lost some of those tax benefits from charitable giving. It would be great to have that be a little bit more robust coming down the road.”
Nonprofits also are hopeful that the federal government will boost assistance to the states. Sabeen Perwaiz, CEO of the Florida Nonprofit Alliance, noted that many charities rely on contracts for services with state governments.
“For Florida, the revenues are obviously down. Tourism is down. And as a result, the governor has asked for additional projected cuts for state agencies to prepare for the new budgeting session,” Perwaiz said. “Federal legislation that will address the state component also trickles down to the nonprofit sector.”
Grants, Not Loans
Tasha Anderson, executive director of the West Virginia Nonprofit Association, praised the Paycheck Protection Program’s intent but said many small nonprofits in her state struggled to apply due to a lack of staff and the required reporting schedules to get the loans forgiven.
“A designated grant system for nonprofits similar to what the PPP funded may help smaller nonprofits specifically in our state that didn’t have the experience or capacity to navigate those lending relationships and reporting requirements,” Anderson said.
Jennifer Greuel, executive director of the North Dakota Association of Nonprofit Organizations, said her state is in the grip of a rapidly spreading Covid outbreak.
“Until that is under control, nonprofits will continue to have issues even just trying to keep their clients or their programming safe,” said Greuel.
Anne Hindery, CEO of the Nonprofit Association of the Midlands, which covers Nebraska and Southwest Iowa, said few nonprofits in those regions have been forced to close, but that could change soon. She urged Congress to act fast.
“A lot of organizations that may or may not have been really stable, they applied for a PPP loan and that bought them some time,” said Hindery. “Now that those funds are gone, the reality for some organizations is they need to merge or go out of business.”
