MenuClose

Nonprofit Issues: Coronavirus (COVID-19) Questions and Answers

April 8, 2020


Don Kramer’s Nonprofit Issues has been receiving questions on many topics surrounding the current coronovirus (COVID-19) pandemic, including business continuity, bylaws, meetings, employment issues, and many more. For the foreseeable future, we will be answering questions of the day.

Can we use a Paycheck Protection Program loan to pay salaries of staff who are now being paid through a budget line for salaries in a contract with a governmental agency? 

I don’t think anyone can give you a firm answer to that question today. In a webinar on the Families First and CARES Acts presented by the National Council of Nonprofits yesterday (April 7, 2020), the presenter said that this question had been raised with the Small Business Association, the provider of the PPP loans, but that they were unable to get an answer. Continue Reading…

Which nonprofits are eligible for CARES, Family First benefits?

Only two types of nonprofits are eligible for the Paycheck Protection Programs loans under the CARES Act.  They are tax-exempt organizations that are (1) described as charities under section 501(c)(3) of the Tax Code, including churches that do not have their own recognition letter (because they are not required to obtain a separate recognition), supporting organizations and private foundations, and (2) veterans organizations described in section 501(c)(19).  Other nonprofits may not apply for the loans to cover current payrolls. Continue Reading…

May I claim a deduction when charity cuts my wages?

Unfortunately you can’t claim a deduction for income you do not receive.  If you could, most charity employees could claim significant deductions on their personal tax returns for their “donations” to charity.  According to an employment study conducted for the Pennsylvania Association of Nonprofit Organizations in 2005, nonprofit employees in Pennsylvania earned on average about 6% less than for-profit employees. Continue Reading…

Is our grant-based charity eligible for a CARES loan?

I think you have a good faith basis on which to apply. You have explained exactly how precarious your situation is. The consequences of the current pandemic will cause you to make major changes in your method of operation (which might cost you some money you don’t have) and could jeopardize your funding stream in just a few months. Continue Reading…

How should we deal with funds raised for a cancelled class trip?

It is an oxymoron to say you are 501(c)(3) but not tax-exempt.  A 501(c)(3) charitable organization, by definition, does not have to pay federal income tax (i.e. is tax-exempt) and charitable contributions to it are deductible.  Gifts made to the PTA earmarked to cover the trip costs for specific families, however, are not considered charitable because they are not for the benefit of the student body generally. Continue Reading…

May a homeowners association contribute to hospitals?

Yes. Although it is unusual to have a (c)(3) (charitable) homeowners’ association, a (c)(3) charity may make grants for charitable purposes, and helping a hospital during the current pandemic should certainly be considered charitable. Continue Reading…

May a charity give aid to non-charitable groups?

The short answer is “yes,” you may fund groups that are not recognized charities so long as the grants are for charitable purposes.  The issue is what you have to do to make such grants.  The rules are different for public charities and private foundations. Continue Reading…

How can we encourage contributions now?

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act provides a special deduction for charitable contributions up to $300 for all taxpayers who don’t itemize on their tax returns. Continue Reading…

How do we get a quorum during the coronavirus stay-at-home orders?

As a starter, follow the directives and don’t hold an in-person meeting.  If you really need to meet, under your state law, and probably under the nonprofit corporation law of most states, you can hold a virtual meeting where the members can meet by telephone or other electronic means. Continue Reading…

To view this Q&A and more, please visit Don Kramer’s Nonprofit Issues. Visit the Montgomery McCracken’s Coronavirus (COVID-19) Resource Center for more information and updates on this constantly evolving situation.