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Employee Retention Tax Credit For Nonprofits Has A Chance

A coalition of more than 60 nonprofits has sent a letter to top U.S. elected leaders requesting policies that will help nonprofits continue to serve their communities during the coronavirus pandemic. The letter included several requests, such as instituting financial incentives to increase nonprofit giving, continuing a variety of support programs, and creating new programs to meet upcoming needs.

Its centerpiece, however, was several suggestions that would help the nonprofit sector regain paid workers and volunteers. According to the letter, the nonprofit sector has lost 450,000 employees out of an estimated 12-million-person workforce.

“Many charitable entities are experiencing unprecedented workforce shortages that prevent them from addressing the current relief and future recovery functions they are called on to perform,” according to the letter. “Charitable organizations are also dealing with a drastic decline in volunteers who are unable to provide their usual level of support for the missions they care about.”

Specifically, the nonprofit community called for:

  • Retroactive restoration of the Employee Retention Tax Credit through 2022, and funding of child care and education subsidies to reflect nonprofit organizations’ increased costs as they attempt to maintain or expand services as needed. This request also asked the government to fund high-quality, affordable, dependable, and accessible childcare as befits the largely female nonprofit workforce.
  • Enactment of the core components of the Work Opportunities and Resources to Keep Nonprofit Organizations Well (WORK NOW) Act (S. 740/ H.R. 1987).
  • Reformation and Adoption of various provisions of the Public Service Loan Forgiveness program, including expansion of the types of loans that could be forgiven and modifications to the disqualification rules.
  • Efforts that promote the return of volunteers to nonprofits, such as by issuing capacity-building grants targeted to alleviating volunteer shortages, funding shortfalls in digital infrastructure that would allow nonprofits to connect to potential volunteers, and increasing the volunteer mileage rate for nonprofit volunteer drivers to the business rate of 58.5 cents per mile.
  • Renewing the universal charitable (non-itemizer) deduction, which expired at the end of 2021, at least through the end of 2022 and with a significant increase to the deduction cap.
  • Renewing two giving incentives that were allowed to expire at the end of 2021: permission for individuals who itemize to deduct charitable donations up to 100% of their adjusted gross income, and corporations that deduct charitable donations to do so up to 25% of taxable income.

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The Feb. 14 letter, which listed more than 60 nonprofits as signers, was sent to President Joseph Biden, as well as House Speaker Nancy Pelosi, House Minority Leader Kevin McCarthy, Senate Majority Leader Chuck Schumer, and Senate Minority Leader Mitch McConnell. As of mid-Friday, Feb. 18, there had not been an official spoken or written response from any of the recipients, according to David L. Thompson, vice president of public policy at the National Council of Nonprofits.

But there has been movement on the core concerns listed in the letter. “The best indication that we’re making progress is the introduction of the bipartisan Senate companion bill to restore the Employee Retention Tax Credit for the fourth quarter of 2021,” Thompson wrote in an email to The NonProfit Times. “Four of the five sponsors serve on the Senate Finance Committee, a detail that suggests tacit approval by the leaders of the Committee.”

Additionally, congressional staff members have told representatives from the national council that the tax items included in the letter might be included in a bill likely to move through Congress, such as the omnibus spending bill scheduled for March. These items would include reinstatement of the Employee Retention Tax Credit and renewal of the giving incentives that expired at the end of 2021, Thompson added.

“Increased funding for child care—important to nonprofit employees and employers, as well as providers of child care—is an issue wrapped up in the Build Back Better negotiations; meaning it’s certainly on the table but where it ends up is a huge question,” Thompson wrote. “Less groundwork has been done on the solutions nonprofits propose related to volunteerism, mainly because the scope of the crisis is only now becoming clear.”

This article was originally published by The NonProfit Times. It is reprinted with permission.

The NonProfit Times

Our flagship publication, celebrating 31 years, reaches more than 36,000 executives of the nonprofit community in print and digital format, ranging from C-Suite executives to directors of fundraising, marketing, social media, and human resources departments to accounting and other financial management decision-makers. Nonprofit sector influencers on all levels turn to The NPT for news, information, and insight that consistently helps them achieve their professional goals.