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May 12, 2021
 
Mass. Nonprofits to Benefit from the American Rescue Plan Act
American Rescue Plan

March 13, 2021 — Massachusetts nonprofits stand to gain important financial benefits from the American Rescue Plan Act signed into law on Thursday, regarded as one of the largest economic relief programs in U.S. history.

In addition to providing funding for COVID-19 vaccines, treatment, and testing, as well as direct payments of $1,400 per person, the American Rescue Plan Act (ARPA) provides more funding for food assistance, housing and homelessness prevention.

It also increases the child tax credit and earned income tax credit, and extends the tax credit for nonprofits and other employers that voluntarily provide paid sick leave and paid family and medical leave through Sept. 30, 2021.

The National Council of Nonprofits and Independent Sector cited the following elements of ARPA as being especially helpful to the nonprofit sector:

  • Paycheck Protection Program (PPP) Loans. The law adds $7.25 billion to the program and expands eligibility to nonprofits with more than 500 employees that operate at multiple locations as long as no more than 500 employees work at any one location. In a win for performing arts nonprofits, the bill allows them to apply for funds under both the PPP and Shuttered Venue Operators Grants (SVOG) program, although a SVOG grant would have to be reduced by the amount of any PPP loan. Although Congress just added billions for more PPP loans, it did not extend the March 31 deadline for submitting loan applications.

  • Federal Unemployment Coverage. This latest COVID relief package extends various federal benefits for unemployed workers through September 6, 2021, including a provision that increases from 50% to 75% the federal coverage of the unemployment costs of reimbursing nonprofits. The new law also provides continued coverage for self-employed workers and staff of religious and very small nonprofits.

  • Volunteer Support. The law provides $620 to support an increase in AmeriCorps volunteers to respond to communities impacted by COVID-19. Grants will be prioritized based on grantees serving communities disproportionately impacted by COVID-19 and considering the diversity of communities and participants served by such entities, including racial, ethnic, socioeconomic, linguistic, or geographic diversity.

  • Aid to State, Local, Tribal, and Territorial Governments. The law provides $350 billion in aid but imposes restrictions on how governments may spend the funds. Permissible uses include providing “assistance to households, small businesses, and nonprofits, or aid to impacted industries,” funding services that governments cut due to declines in revenue brought on by the pandemic, and making “necessary investments” in water, sewer, or broadband infrastructure. The money may not be used to subsidize tax cuts or pay public pension obligations.

  • Support for cultural organizations. Increased funding, channeled through state agencies, as well as direct grants, as follows: National Endowment for the Arts – $135 million, 40% to state agencies and 60% direct grants.; National Endowment for the Humanities – $135 million, 40% to state agencies and 60% direct grants; Institute of Museum and Library Services – $200 million; Native American Language Preservation – $20 million

While the new law does not expand incentives for charitable giving, legislation was introduced in Congress on Tuesday, which, if enacted, would allow taxpayers who claim the standard deduction, rather than itemizing deductions, on their tax returns to take a deduction for charitable giving valued at up to one-third of the standard deduction (around $4,000 for an individual filer and $8,000 for married joint filers), according to the National Council of Nonprofits. This added giving incentive would be available for tax years 2021 and 2022.

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