Bipartisan Bill Would
Ensure that Nonprofits Receive Federal Help for Unemployment Payments Up Front,
Rather than Being Reimbursed Later
Fix Would Free up
Much-Needed Money to Keep Nonprofits Running, Serving Americans
WASHINGTON – Senate Finance
Committee Chairman Chuck Grassley (R-Iowa) today joined Sens. Sherrod Brown
(D-Ohio), Tim Scott (R-S.C.) and Ron Wyden (D-Ore.) in introducing the Protecting
Nonprofits from Catastrophic Cash Flow Strain Act, bipartisan legislation
to help nonprofits, state and local governments and federally recognized Tribes
remain financially viable during the COVID-19 pandemic.
“The
CARES Act provided substantial relief to nonprofits forced to furlough or lay
off staff. Without this fix, some nonprofits would have to make large payments
to the state now – when they’re least able to afford it – and then wait for a
reimbursement later. This bill would make sure they don’t have to wait for
further relief,” Grassley said.
“Nonprofits
are on the frontlines of the COVID-19 pandemic and our constituents are
increasingly looking to local nonprofits to help feed their families or make
ends meet,” Brown said. “We shouldn’t be putting added financial strains
on nonprofits at a time when they need this money to better serve our
communities.”
“Nonprofit organizations play a vital role in our communities,
especially during this time of uncertainty for so many American families,” Scott
said. “This bipartisan legislation protects these vulnerable organizations
from being placed in unnecessary hardship in the midst of the pandemic. I’m
grateful for the support of my colleagues on this issue and looking forward to
this passing the Senate.”
“Nonprofit groups like food banks have been critical in helping
their communities through the pandemic and economic crisis,” Wyden said.
“Many are struggling to maintain services as they have been forced to furlough
their own employees. Our proposal is a commonsense fix that will help
nonprofits maintain the cashflow needed to survive this crisis and continue
serving others in need.”
Many
nonprofits operate as ‘reimbursing employers,’ which means they pay their share
of unemployment taxes by reimbursing states for 100 percent of the unemployment
benefits collected by their former employees. Recognizing that
reimbursing employers would be unable to cover all of their unemployment costs,
the CARES Act allows nonprofits to reimburse only 50 percent to the
states while the federal government covered the other 50.
Guidance
issued by the Department of Labor in April, however, requires states to
collect 100 percent of unemployment costs from nonprofits up front and
reimburse them later, putting a further strain on organizations hit hard by
COVID-19. The Senators’ bill would clarify that nonprofits are only required to
provide 50 percent in payments up front. The net cost to the employer and the
federal government would remain the same, but would free up much needed money
to help nonprofits stay afloat.
For
many nonprofit employers, the requirement to pay 100% of the UI bill before
securing relief exacerbates the financial impact of historically high claims
triggered by the pandemic, increasing the risk of further layoffs, closures, or
substantial reductions in services. This legislation would enable states to
provide the CARES Act’s 50% emergency relief to reimbursing employers without
requiring these nonprofits or other entities to pay their full bill first.
More
information on the bill can be found HERE.