Supporting Your Non-Profit Organization Through COVID-19 This Year
May 6, 2021 | Last Updated on: February 10, 2023
May 6, 2021 | Last Updated on: February 10, 2023
As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.
This past year has been difficult for many businesses in the U.S. due to the COVID-19 pandemic. Nonprofits and charities have been hit especially hard. Much of their work involves community organizing and fundraising, which the pandemic has made it very difficult. As we move into year two of the pandemic and virtual events, we wanted to take a look at:
We’re looking at nonprofits and how you can ensure your charitable organization comes out of COVID-19 in a strong position.
This past year has been difficult for businesses, customers, and employees. 83 percent of non-profits have experienced a reduction in revenue. But that does not mean your group can stop working. Instead, now is the time to do three important things:
We’re going to be focusing primarily on the last point. There are a few parts of the COVID-19 economic stimulus bills that are designed to help nonprofit and tax-exempt organizations. There are also other funding opportunities available. Even in this difficult year, you have bills and employees to pay, so you need to make sure you’re generating cash flow.
The Paycheck Protection Program (PPP) is a federally funded loan program. The guidelines released by the SBA after the Economic Aid Act specified which not-for-profit businesses are eligible:
The American Rescue Plan Act expanded eligibility to entities who
More information on the PPP, including loan amounts, covered periods, and forgiveness can be found on our website.
There are three other funding programs to check out:
Targeted Economic Injury Disaster Loan (EIDL) Advances. Forgivable federal grants from the SBA. Businesses can receive up to $10,000. The SBA portal has more information.
States and local governments have relief programs to help small businesses and nonprofits. The National Council of Nonprofits set up a website make funding easier to find.
Start Small Think Big created a list of private sector grants and loan opportunities. It’s not a comprehensive list but provides a lot of resources for small business owners and nonprofit organizations.
The CARES Act, passed in March 2020, incentivized charitable giving and donation by
Marketing campaigns emphasizing these new pandemic changes can help raise money for your nonprofit. Donations can help individuals lower their taxable income on their income tax return.
This year it is important to keep track of cash flow in and out of your nonprofit organization. Record keeping software can be particularly useful to track your organization’s:
Keeping track of all donations and receipts will make tax filing easier. It will also ensure that you have the documents necessary to maintain your nonprofit and tax-exempt status under federal tax law and state tax codes.
Charitable organizations are generally both nonprofit and tax-exempt entities. Nonprofit status is from the group’s incorporation under state law while tax-exempt status is a federal income tax exemption.
It’s easy for a charity to face revocation of its tax-exempt status. This year that could be a blow to a non-profit. Luckily, the Internal Revenue Service (IRS) has a helpful guide with FAQs for how to maintain tax-exempt and nonprofit status. We’re going to run through some of the main points here.
The IRS recognizes certain groups as exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. This includes:
Specifically, these groups cannot be organized for the benefit of private interests or shareholders. An organization must also adhere to at least one of the exempt purposes outlined in Section 501(c)(3).
There are six things to keep in mind:
A Form 990 return is required for tax-exempt organizations, but there are three different types offered by the IRS.
The IRS form you need will depend on gross receipts and total assets. It’s important to check the IRS website to ensure you have the most up-to-date information.
When your nonprofit corporation formed, articles of incorporation had the basic information to qualify for tax-exempt status. After that, bylaws served as an “operating manual.” The bylaws protect you from breaking state laws in your business activities.
Now, it is important now to:
Maintaining non-profit status and keeping the organization running is integral. If you have any questions, consult an attorney for legal advice.
Nonprofits and charitable groups are needed more than ever before as we begin to recover from a global pandemic and economic crisis. Fundraisers in the coming year will be essential.
Back in August, Chris Budnik, the executive director of Healing Transitions, wrote: “My encouragement to you and your team is to stay the course. Don’t give up just yet.” He urged organizations to follow their mission statement. “I believe you’ll find that when you remain true to yourself,” he said, “your donors will remain true to you.”
Nonprofits and charitable groups are integral to the lives of millions of people. They provide life saving services and connect people together. Many non-profits have been at the forefront of the pandemic response while struggling to stay afloat. The past year has highlighted our need for these organizations and the work they do.
As we begin to emerge from the pandemic, nonprofits and charitable organizations are needed more than ever before and can be the light at the end of the tunnel.