Times are always challenging when you’re operating a nonprofit organization. However, around mid-March, as COVID-19 began to sweep the nation, stay-at-home orders were implemented, and all of a sudden millions of people lost their jobs and a stable economy became uncertain. While nonprofits have successfully navigated economic downturns in the past, this is an especially difficult situation, so, we’re sharing tips and resources to help you get through this successfully.
Taking Care of Your Team
While you and your organization are most likely caring for others, it may be necessary to take time to check in and care for each other as well. If you’ve all been working remotely, have video conferences and video chats to maintain social connections. Reach out to make sure everyone has what they need – food, medicine, and are in a safe space.
Taking care of mental health is just as important as physical health. It’s important to know that if your team isn’t operating at 100 percent to be understanding to their needs and accommodate them where possible. The same goes for yourself, too. This is not an ordinary situation, and it’s okay to not run things “business as usual.”
Most likely, you’re seeing a massive downturn in fundraising and donations due to the economic uncertainty. Fortunately there are resources available to nonprofits to help you stay solvent. On March 27, 2020, the Coronavirus Aid Relief and Economic Security (CARES) Act went into effect. This $2 trillion dollar aid package is meant to support individuals and small businesses until the nation is able to get back on their feet. While most people think this covers private, for-profit businesses, there’s also significant funding in place for hospitals, schools, social programs, and other organizations. To learn more about each resource, the section of the CARES Act is in bold.
Paycheck Protection Program Loans
Section 1106 – There is an emergency loan program available providing loans of up to $10 million for eligible nonprofits to cover payroll, operations, and debt service. These loans are issued by local financial institutions but backed by the federal government and are available for charitable nonprofits with 500 or fewer employees and does not disqualify organizations eligible for payments under Title XIX of the Medicaid. However, this does require that any of your employees that fall under Title XIX are counted toward the 500 employee limit.
If approved, you may receive $10 million or 2.5 times the average amount of your monthly payroll, including benefits. So, if your average payroll costs are $100,000, you’ll receive $250,000 for your organization. Additionally, this loan may be forgiven if you keep your employees on for eight weeks after receiving the loan or you rehire your team by June 30th.
Economic Injury Disaster Loans
Section 1110 Backed by the Small Business Administration, the current Economic Injury Disaster Loan (EIDL) and Emergeny Grants was expanded for more entities to qualify and ensure rapid payment of grant money. There are normal EIDL loans available for up to $2 million, but there are advances available for dire emergencies of $10,000 that will be paid out within three days of approval. The $10,000 rapid payout can be used for payroll, paid sick time, rent/mortgage, or other operating costs.
Self-Funded Nonprofits Unemployment Benefits
Section 2103 For self-funded nonprofits who have had to lay off employees, the CARES Act will reimburse your organization half of the costs of benefits you’ve had to pay out. While most nonprofits do pay state unemployment taxes (SUTA), which will cover unemployment benefits if you have to lay off workers, small organizations and faith-based organizations are exempt from unemployment laws. However, if the President declares a major disaster (which has been declared in New York, California, and Washington), they may also be eligible for unemployment. Also, states may choose to extend temporary unemployment benefits.
Increasing Donations During an Economic Downturn
In addition to the grans and loan programs, there are also items in the CARES Act that incentivizes charitable giving and donation. There is now a new above-the-line deduction for charitable giving of up to $300.
- Section 2204 also raises the cap on annual contributions for people who itemize deductions, raising it from 60 percent of the adjusted gross income to 100 percent.
- Section 2205 Corporations can now claim 25 percent of deductions.
You can use this information to create a quick marketing campaign to raise donations for your nonprofit organization.
Tracking Your Nonprofit Accounting
With cash flow in and out of your nonprofit organization unstable, tracking your accounting and maintaining your bookkeeping is essential is more important than ever. As you get loans, grants, or donations, having the tools in place to keep up with finances will help you best budget the money most effectively.
To learn what kind of nonprofit accounting software is best for you or how you can get the most out of MIP Fund Accounting or Blackbaud’s Financial Edge/NXT, reach out to our consultants. We offer a wide array of nonprofit accounting solutions and are here to support you in any way we can. Get started by calling us at (888) 249-6008 or filling out our contact form below.