Coronavirus Aid, Relief, and Economic Security Act

On Wednesday, the Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2.2 trillion emergency relief package in response to the COVID-19 pandemic. The CARES Act includes provisions for individual rebates, small business loans also available to nonprofits, unemployment benefits, and tax breaks. The bill next goes to the House before it goes to the President, who has already vowed to sign it.

Internet and Media Coverage of the Bill

National Council of Nonprofits: Initial Analysis of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (S. 748)

Washington Post: Senate rushes to approve $2.2 trillion coronavirus bill after landmark agreement with White House

New York Times: Coronavirus Live Updates: Senate Passes Aid Package

Forbes: Congress Reaches Agreement On A Coronavirus Relief Package: Tax Aspects Of The CARES Act

Three Highlights for Nonprofits

Small business loans would be available immediately through banks and other SBA-certified lenders to small business employers (whether for-profit or nonprofit) with 500 or fewer employees. These “paycheck protection loans” would be conditioned on employee retention and payroll levels during the covered period (March 1 – June 30, 2020) and would generally be forgiven on a tax-free basis if used for such purposes or for rent, mortgage payments, and/or certain utility payments. Generally, the maximum amount of such loan a qualified small business employer could obtain is the lesser of (1) the average total payroll costs for a one year period ending on the date the loan was made multiplied by a factor of 2.5, and (2) $10 million.

A new above-the-line deduction for one year (2020) was created for cash contributions of up to $300 made to certain qualifying charities. All taxpayers would be eligible to take the deduction unlike the standard charitable contribution deduction which provides a tax benefit only to the approximately 8% of taxpayers who itemize their deductions. The new deduction would not apply to noncash gifts or to gifts contributed to donor advised funds.

For individual taxpayers who itemize their deductions, the limit on deductions for contributions, ordinarily 50% of adjusted gross income (AGI) or 60% for cash, is suspended for 2020. For corporations, the limit on deductions for contributions, ordinarily 10% of AGI, is elevated to 20% for 2020.