Here’s How the New Relief Legislation Will Impact Exempt Organizations

December 28, 2020 | Article

In addition to the key general provisions, the COVID relief legislation passed this week provided the following provisions that will impact nonprofit and exempt organizations:

Relief for Reimbursing Employers: Extended through March 14, 2021 is a provision to provide federal support to cover 50% of the costs of unemployment benefits for employees of state and local governments, federal instrumentalities and non-profit organizations (reimbursing employers).

PPP Loans: More types of exempt organizations will be eligible for PPP loans in the second round of funding. The legislation expanded the definition of eligible entities to include destination marketing organizations and 501(c)(6) organizations with less than 300 employees if lobbying does not represent more than 15% of revenue or activities or exceed one million dollars. Professional sport leagues are excluded from this provision.

Targeted EIDL Advances: Small businesses and nonprofits in low-income communities that previously received an EIDL advance are eligible to receive the full $10,000 if their original award was less in the first round of grants under the CARES Act.

Grants for Shuttered Venue Operators: A new grant program is available through the SBA to provide up to $15 billion to eligible live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives. Qualifying organizations must have fewer than 500 employees and demonstrate at least a 25% reduction in revenues compared to the same quarter in 2019.

Additional provisions include:

  • $2 billion set aside for eligible entities that employ 50 or fewer full-time employees
  • Initial grants are available for up to $10 million dollars per entity and a supplemental grant is available equal to 50% of the initial grant
  • Recipients will not be eligible for both a PPP loan and shuttered venue grant
  • Program will be implemented in phases starting with organizations who have faced 90% or greater revenue loss, then 70% or greater and then will be open to all other eligible entities.
  • Grants must be used for specified expenses such as payroll costs, rent, utilities, and personal protective equipment.

Employee Retention Credit: This provision clarifies that certain governmental hospitals and colleges and universities are eligible employers for purposes of the employee retention credit.

Charitable Giving Provisions: Non-itemizers will be able to take a $300 individual/$600 joint above-the-line charitable contribution deduction for cash contributions made in 2021 to public charities, other than supporting organizations or donor advised funds (DAF). The bill also extends into 2021 the increased limits on deductible charitable contributions individuals and corporations and the increased corporate food donation cap from 2020.

Funding Provisions: These provisions provide additional grants for hospital and health care providers and higher education institutions. In addition, many of the other funding provisions could potentially result in payments to certain types of nonprofit organizations (e.g. food shelves or childcare organizations).


There are several key exempt organization provisions in the new relief legislation. We can help you make sense of them all.

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