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HEALS Act and impact on nonprofits

Jul 27, 2020

Senate Republicans released several bills referred to as the HEALS (Health Economic Activity Liability protection Schools) Act on July 27 in order to provide economic and COVID-19 relief to communities through the United States.

Our reaction

We concur with the statement issued by the Nonprofit Coalition. To summarize those requests:

  • Expand the charitable deduction for non-itemizers in the CARES Act to ensure sufficient giving to meet increased demand for services. Allowing the deduction to apply to gifts made in 2021 and increasing the annual cap to $4,000 per year would help address the expected decline in giving. The Fundraising Effectiveness Project estimated a 6% drop in giving compared to last year and further decline is expected from COVID-19
  • Continue providing emergency funding to nonprofits and ensure all nonprofits are included. While the HEALS Act does provide some additional funding for loans and makes a second round available to some nonprofits, more funding is needed to support the work of nonprofits of all sizes and nonprofits with more than 500 employees continue to be left out of relief.  
  • Increase the unemployment benefit reimbursement for self-insured nonprofits to 100%. With an estimated 13% job loss in March of 2020 alone, having the necessary cash flow to pay 25% of unemployment benefits will be a challenge for most self-insured nonprofits. Colorado is already leveraging federal funds to pay 100% of costs for nonprofits that pay unemployment premiums. Congress should provide funding to also hold self-insured nonprofits harmless

These requests are part of a Nonprofit Community Letter signed by over 4,000 nonprofits with many solutions supported by both parties. 

How you can help

Ask your Senators to make changes to the bill to expand the charitable deduction, make emergency funding accessible to all nonprofits, and increase the unemployment reimbursement to 100%.

Contact your Senators

Summary

Based on an initial review from National Council of Nonprofits, the bill makes the following changes to federal law relevant to nonprofits and the communities they serve. This webpage will be updated as more information becomes available.

Employment 

  • Nonprofits that self-insure for unemployment benefits - increased to 75% of unemployment costs (currently 50%) for nonprofits that directly reimburse states when claims occur (including unemployment trusts) 
  • Employee Retention Tax Credit - makes changes to this refundable payroll tax credit established by the CARES Act 
    • Increased to 65% of wages (up from 50%) up to $10,000 per quarter (currently per year). Value per employee would be $19,500 ($5,000 currently) 
    • Credit applies to every employee up to 500 (currently 100 employees)
    • Lowers the required decline in gross receipts to 25% (currently 50%) compared to the same quarter in the previous year.
  • Safe and Healthy Workplace Tax Credit  - creates a refundable payroll tax credit to reduce costs incurred for COVID-19 testing, Personal Protective Equipment, and workspace disinfection and reconfiguration
    • 50% credit up to $1,000 per employee (up to 500 employees), $750 (501 to 1,000 employees), and $500 (over 1,000 employees).
    • Applies to qualified expenses from March 2020 through the end of the year
  • Work Opportunity Tax Credit - Makes 2020 qualified COVID-19 unemployment recipients eligible for this elective tax credit of 50% of the first $10,000 of wages 
  • Unemployment insurance benefits
    • Continues supplemental insurance payments at $200 per week through September
    • Implements a benefit  payment ($500 maximum) meant to replace 70 percent of wages when combine with a state UI payment 

Small Employer Loans

  • Paycheck Protection Program (PPP)- $100 billion increase
    • Expands types of forgivable expenses 
    • Allows borrowers to select which eight-week period applies for forgiveness 
    • Simplifies the application process
    • Includes group insurance costs count as payroll costs for forgiveness purposes 
    • Expands loan access to 501(c)(6) organizations 
    • Prohibits use of loan funds for lobbying
    • Allows use of funds for Personal Protective Equipment and investments to comply with public health guidelines 
  • PPP Second Draw Loans - $190 billion increase:
    • Allows a 2nd round of a PPP loan for nonprofits with 300 or fewer employees and a 50% reduction of gross receipts in the first or second quarters of 2020 compared to the same quarter of 2019
    • Loans are 2.5 times average monthly payroll up to $2 million
    • $25 billion is set aside for small businesses with 10 or fewer employees and $10 billion for small community lenders
    • Borrowers that would receive more than $10 million between PPP and PPP Second draw would not be eligible for the latter 
  • $190 billion total for PPP and the PPP Second Draw Loans.

Charitable Deduction

  • The bill does not include language to increase the $300 charitable deduction authorized for non-itemizers in 2020

Liability Protections

  • Temporarily limits liability for personal injuries arising from alleged COVID-19 exposure at a school, college, nonprofit, church, or business
  • To limit liability, entities must have made reasonable efforts to comply with applicable public health guidelines and not engage in willful misconduct or grossly negligent behavior
  • Liability would be limited for provision of health care related to COVID-19 unless gross negligence or willful misconduct has occurred

Temporary Assistance for Needy Families

  • Reimburses states for 80 percent of increased costs of cash assistance and emergency help through the TANF program, up to a cap of $2 billion.

Recovery rebates

  • Provides a rebate of $1,200 to individual taxpayers with incomes up to $75,000 and $500 for their dependents. The amount of the rebate is reduced for taxpayers with income over $75,000 but not exceeding $99,000

Healthcare

  • Medicare- maintaining premiums at 2020 levels, delays repayment of certain loans by providers, expands use of telehealth
  • Flexible Spending Accounts - unused 2020 contributions can be rolled over into 2021
  • Foster youth - $50 million to help youth who recently “aged out” of foster care address immediate COVID-19-related challenges
  • Nursing homes - providing additional support for responding to COVID-19

Funding for state and local governments

  • Coronavirus relief fund- allows use of funds through 90 days following the end of the 2021 fiscal year and allows use of up to 25% for revenue shortfalls
  • Remote and mobile workers- through 2024, employees who work in multiple states would be subject to income tax only in the state of residence and any states in which they are working for 90 days or more 

Government funding (appropriations relevant to nonprofits are noted by bullet points)

  • Agriculture, Rural Development, Food and Drug Administration, and Related Agencies – $20.457 Billion
    • Support for agricultural producers, growers, and processors impacted by COVID-19.- $20 Billion
  • Commerce, Justice, Science, and Related Agencies – $4.747 Billion
    •  Census 2020 field operations and data processing- $448 million
  • Defense – $29.400 Billion
  • Energy and Water Development - $307.3 Million
  • Financial Services and General Government – $2.469 Billion
    • Modernize IRS IT systems to enhance taxpayer service and strengthen cybersecurity protections - $2 Billion 
  • Homeland Security – $3.014 Billion
    • Cleaning and investments in technology in airports to reduce physical contact with travelers- $208 Million
    • Enhanced FEMA operations, networks, and facilities to respond to active disaster declarations - $150 Million
  • Indian Health Service - $1.605 Billion 
    • Support for sanitation, quarantine space, and other medical equipment needs related to COVID-19
  • Legislative Branch - $77.676 Million
  • Labor, Health and Human Services, Education, and Related Agencies –$226.202 Billion
    • Department of Labor- $2.5 Billion
      • Dislocated worker grants, unemployment claim processing, employment services, and paid leave implementation
    • Health and Human Services- $118.4 Billion
      • Centers for Disease Control, for public health and vaccinations- $3.4 Billion
      • National Institutes of Health- $15.5 Billion
      • Substance Abuse and Mental Health Services Administration, for grants and clinics - $4.5 Billion
      • Centers for Medicare and Medicaid Services, for surveys of skilled nursing facilities- $150 Million
      • Administration for Children and Families, for low income energy assistance, child care – $16.7 Billion
      • Administration for Community Living, for services to people with disabilities, older adults – $75 Million
      • Public Health and Social Services Emergency Fund, for contact tracing, community health centers, rural health clinics – $78.1 Billion
    • Education - $105.1 Billion
      • To help get all students back to school and provide for continued learning 
        • Elementary and Secondary Schools- $70 Billion
        • Higher Education- $29 Billion
      • Corporation for Public Broadcasting – $175 million
  • State, Foreign Operations, and Related Programs – $4.435 Billion
    • U.S Agency for International Development, for COVID-19 response - $4.01 Billion
  • Transportation, Housing and Urban Development, and Related Agencies –$13.351 Billion
    • Maintaining operations at airports- $10 Billion
    • Section 8 voucher rental assistance- $2.2 Billion
    • Public housing program assistance- $1 Billion  

More information

Region: 
Nationwide