Congress Passes Bill to Help Nonprofits Stay Afloat During COVID-19 PandemicJuly 13, 2020
The Senate unanimously passed bipartisan legislation, the Protecting Nonprofits from Catastrophic Cash Flow Strain Act, to help nonprofits remain financially viable during the COVID-19 pandemic by ensuring they receive federal assistance for unemployment payments upfront, instead of being reimbursed later. The House later passed the bill, which is headed to President Trump for his signature.
The legislation allows nonprofits to reimburse states only 50% of the unemployment benefits collected upfront. Usually, employers, including many nonprofits, reimburse states for 100% of unemployment benefits collected by former employees. However, because of the financial challenges brought on by the COVID-19 pandemic, the CARES Act allowed nonprofits to reimburse only 50% to the state while the federal government covered the remaining 50%. Last April the Labor Department issued guidance requiring states to collect 100% of the unemployment costs from nonprofits upfront and reimburse them later, putting a further strain on nonprofits’ resources. This legislation, however, clarifies that nonprofits are only required to provide 50% in payments upfront.
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