Senate Bill Would Create ‘Universal Deduction’ and Expand in Loans for Nonprofits

The Senate’s $1 trillion coronavirus bailout legislation would create a temporary “universal deduction” that would allow all taxpayers to deduct their gifts to charity regardless of whether they itemize, and would make smaller nonprofits eligible for loans of up $10 million each, much of which would be forgiven.

Under the bill, people who don’t itemize their taxes could deduct up to $300 in cash donations for the 2020 tax year, according to an analysis of bill by the National Council of Nonprofits.

Nonprofits have long sought a universal deduction, especially since the tax law of 2017 roughly doubled the standard deduction.

The bill also would lift the cap on annual giving from 60 percent of adjusted gross income to 100 percent.

Loan Guarantees

The bill would also expand nonprofits’ eligibility for a key Small Business Administration loan program. Nonprofits with 500 or fewer employees would be eligible for guaranteed loans of up to $10 million or a third of their annual operating expenses, whichever is lower, according to an analysis of the legislation by the National Council of Nonprofits.

Currently, nonprofits are limited to loans of $1 million through the program.

Also, for nonprofits seeking expedited processing under the SBA program, the bill would increase the loan limit from $350,000 to $1 million.

The money would have to be used for payroll, including paid leave, facilities costs, and debt service.

Nonprofits would be ineligible for these loans if they receive Medicaid payments, so hospitals, senior living facilities, and many other health nonprofits that accept Medicaid payments wouldn’t qualify.

Repayment of the loans would be deferred for a year, and if employers retain or rehire their employees, much of the amount owed would be automatically forgiven except:

• Amounts paid to workers with annual salaries of more than $33,333.

• Costs for paid sick, medical, and family leave.