Appropriations Act Has Billions for Non-Profits

President Trump signed into law Monday the Consolidated Appropriations Act 2021, which among other provisions provides additional direct Covid-19 pandemic relief for 501(c)(3) tax-exempt entities. 

The law allocates a total of more than $2.3 trillion for nonprofit organizations and businesses, including $284 billion to the Small Business Administration for the Paycheck Protection Program (PPP), $20 billion for Economic Injury Disaster Loan (EIDL) grants and $15 billion for arts organizations, per Inside Charity. 

Under the Act, a new round of PPP loans will be available to nonprofits that have 300 or fewer employees and show an at least 25 percent reduction in gross revenues between the same quarters in 2020 and 2019, with a maximum loan amount of $2 million.

Charities in low-income communities that have suffered an economic loss of greater than 30% and have 300 or fewer employees will be eligible for EIDL loans. The Act also repeals the EIDL advance reduction that occurred when borrowers sought PPP loan forgiveness, which subtracted the advance from the PPP loan forgiveness amount.

The Act simplifies the forgiveness application process for PPP loans up to $150,000 to a one-page form stating that the organization has complied with the terms of the CARES Act and extends forgivable expenses to include personal protective equipment (PPE), among other items. 

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The Consolidated Appropriations Act 2021 reestablishes the $300 above-the-line charitable deduction previously put in place under the CARES Act and increases to $600 the deduction for couples filing jointly. 

Through 2021, there will continue to be no limit on cash contributions made to qualifying charities, meaning individuals can deduct up to 100% of their adjusted gross income. But the Act also imposes a penalty for overstating contributions.

Also extended were refundable payroll tax credits for paid sick and family leave (through March 2021); a 12.5 percent tax credit for paid family and medical leave (through 2025); federal unemployment coverage of the costs of self-insured “reimbursable” employers (through March 14, 2021); and the Employee Retention Tax Credit (through July 1).