What the COVID Relief Bill means for nonprofits in 2021

After a bit of a back-and-forth, the Consolidated Appropriations Act, 2021 was signed into law by President Trump on December 27, 2020. Alongside the new year, the new law brings new implications for nonprofits across the country continuing operations into 2021.

In July 2020, the National Council of Nonprofits advocated for several specific requests, including the continuation of emergency funding programs, providing low-cost loans to mid-size and larger nonprofits, strengthening charitable giving incentives, and providing full unemployment benefit reimbursement.  

What did they get? On December 21, 2020, the organization published a comparison chart highlighting what made it into the bill. Notably, the tax deduction for charitable donations for non-itemizers will be continued into 2021, and 501(c)(6) organizations are eligible for PPP relief.

Also included in the Act is a rider (unasked for) that continues to prohibit the IRS from finalizing regulations that would clarify the exemption standards for 501(c)(4) organizations.

2020 has been kind to no one, and that is certainly true for nonprofits which faced economic hardship and restrained hope as they see increased demand for their services with decreased supply of support. Future prospects remain grim. FEMA’s  COVID-19’s Impact of the Human and Social Services Sector report emphasizes the dire situation of nonprofits as they continue amidst the pandemic into the new year: “Nonprofit revenues from all sources— government contracts, fee-for-service, and donations— are down and likely to remain so for years. Many organization will face unmanageable revenue declines given their liabilities and fixed expenses. Cash flow challenges will be daunting as near-bankrupt state and local governments struggle to pay their bills on time or may even renege on contracts at the same time as banks are reluctant to renew, let alone increase, lines of credit. Widespread distress will also erode charitable assets— among society’s most precious resources— if struggling organizations use them for mere survival rather than the effective and efficient pursuit of their missions…The COVID-19 crisis will drive many nonprofits into insolvency, unable to pay their bills when due or carrying liabilities in excess of their assets.”

See Also https://www.councilofnonprofits.org/nonprofits-and-coronavirus-covid-19 various information regarding COVID-19 as relating to nonprofits.

[This post was  authored by Cleveland-Marshall Law Student Victoria Kekel and Joseph Mead]