Museums Included in Economic Relief Legislation
Congress has passed a massive COVID-19 economic relief bill that includes important support for museums. Late Wednesday night the Senate unanimously approved the bill, and the House approved it today. The president is expected to sign the bill. This is the third round of legislation providing emergency responses, and by far the largest, at an estimated $2.2 trillion. It very likely won't be the last.
"Due to the tireless work of museum advocates, we were successful in ensuring that museums are included in this critical economic relief package," said Laura L. Lott, President and CEO of the American Alliance of Museums. "We estimate that, collectively, museums are losing at least $33 million per day. With our allies across the field, AAM delivered a powerful joint letter to Congress with an audacious ask-$4 billion-as well as a universal charitable deduction. Museum advocates sent over 33,000 messages to Congress, many of them personalized. And we were heard."
Additionally, we collaborated with others in the nonprofit sector to ensure nonprofit organizations, including museums, are eligible for small business loans (with forgiveness provisions) and that the legislation include charitable giving incentives. The Institute of Museum and Library Services (IMLS), the National Endowment for the Humanities (NEH) and the National Endowment for the Arts (NEA) are slated to receive $200 million collectively ($50 million for IMLS and $75 million for each endowment). All three agencies are authorized to provide direct grants to support museum operations and matching requirements are waived. We will continue to work with these agencies to ensure they understand the needs of the museum community.
Letters like those from Senator Cory Booker (D-NJ) and House members from New York City supported $1 billion and $4 billion asks for museums. And advocates were able to reach House and Senate leadership with personal calls, to make the case directly. We are proud of the field and this amazing effort amid this crisis. While we have a long way to go, there is already discussion of a fourth economic relief package. The Alliance will remain engaged in this rapidly developing and fluid situation and will continue to inform and activate the museum community. Thank you for your continued advocacy at this critical time.
In the meantime, the Alliance is a member of the National Council of Nonprofits, which has produced an initial overview of provisions that relate to nonprofit organizations. The full bill text is available online, and the U.S. Senate provides a section-by-section overview of key provisions. The Alliance shares the following highlights with museum advocates.
Highlights of the Coronavirus Aid, Relief, and Economic Security (CARES) Act
These are based on an initial analysis of the nearly 900-page bill. Additional details may become apparent through further analysis.
Emergency Small Business Loans (emergency SBA 7(a) loans): Provides funding for special emergency loans of 2.5 times monthly payroll expenses, up to $10 million for eligible nonprofits and small businesses, permitting them to cover costs of payroll, rent, utilities, and debt service, and provides that the loans be forgiven in whole or in part under certain circumstances. (Title I, Section 1102)
- General Eligibility: Available to entities that existed on March 1, 2020, and had paid employees.
- Nonprofit Eligibility: Available for charitable nonprofits with 500 or fewer employees (counting each individual - full time or part time and not FTEs).
- Loan Use: Loan funds could be used to make payroll and associated costs, including health insurance premiums, facilities costs, and debt service.
- Loan Forgiveness: Employers that maintain employment between February 15 and June 30 would be eligible to have their loans forgiven, essentially turning the loan into a grant. The amount of loan forgiveness would be equal to the amount spent by the borrower during an 8-week period after the origination date of the loan. The portion of the loan that can be forgiven would be reduced by an amount related to positions that have been eliminated and wages that have been reduced, unless those positions and wages are restored by June 30, 2020. (Section 1106)
- Loans will be available through SBA and Treasury approved banks, credit unions, and some nonbank lenders.
Economic Injury Disaster Loans (EIDL): Eliminates creditworthiness requirements and appropriates an additional $10 billion to the EIDL program so that eligible nonprofits and other applicants with 500 or fewer employees can get checks for $10,000 within three days. (Section 1110)
Charitable Giving Incentive: Includes a new above-the-line deduction (universal or non-itemizer deduction that applies to all taxpayers) for total charitable contributions of up to $300. The incentive applies to contributions made in 2020 and would be claimed on tax forms next year. (Section 2204) The bill also lifts the existing cap on annual contributions for those who itemize, raising it from 60 percent of adjusted gross income to 100 percent. For corporations, the bill raises the annual limit from 10 percent to 25 percent. Food donations from corporations would be available to 25 percent, up from the current 15 percent cap. (Section 2205)
Nonprofits that Self-Fund Unemployment: Only reimburses self-funded nonprofits for half of the costs of benefits provided to their laid-off employees, as explained in this recent blog article. (Section 2103)
Employee Retention Payroll Tax Credit: Creates a refundable payroll tax credit of up to $5,000 for each employee on the payroll when certain conditions are met. The entity had to be an ongoing concern at the beginning of 2020 and had to have seen a drop in revenue of at least 50 percent in the first quarter of 2020 compared to the first quarter of 2019. The availability of the credit would continue each quarter until the organization's revenue exceeds 80 percent of the same quarter in 2019. For tax-exempt organizations, the entity's whole operations must be taken into account when determining the decline in revenues. Notably, employers receiving emergency SBA 7(a) loans would not be eligible for these credits. (Section 2301)
Industry Stabilization Fund: Creates a loan and loan guarantee program for industries like airlines to keep them solvent through the crisis. It sets aside $425 billion for "eligible business" which is defined as "a United States business that has not otherwise received economic relief in the form of loans or loan guarantees provided under" the legislation. It is expected, but unclear, whether charitable nonprofits qualify under that definition for industry stabilization loans. Mid-sized businesses, including nonprofits, that have between 500 and 10,000 employees are expressly eligible for loans under this provision. Although there is no loan forgiveness provision in this section, the mid-size business loans would be charged an interest rate of no higher than two percent and would not accrue interest or require repayments for the first six months. Nonprofits accepting the mid-size business loans must retain at least 90 percent of their staff at full compensation. (Section 4003)
Other Significant Provisions
Direct Payments to adults of $1,200 or less and $500 per child ($3,400 for a family of four) to be sent out in weeks. The amount of the payments phases out based on earnings of between $75,000 and $99,000 ($150,000 / $198,000 for couples).
Expanded Unemployment Insurance: Includes coverage for workers who are furloughed, gig workers, and freelancers. Increases payments by $600 per week for four months on top of what state unemployment programs pay.
Amendments to the New Paid Leave Mandates: Lowers the amounts that employers must pay for paid sick and family leave under the Families First Coronavirus Response Act* (enacted March 19) to the amounts covered by the refundable payroll tax credit - i.e., $511 per day for employee sick leave or $200 per day for family leave.
Significant Spending: The bill also calls for large infusions of cash to the following sectors:
- $150 billion for a state, tribal, and local Coronavirus Relief fund
- $130 billion for hospitals
- $30 billion for education
- $25 billion for transit systems
*See: Analysis of the Families First Coronavirus Response Act.