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Considerations for Nonprofits in Response to the Pandemic

In New York State alone there are thousands of not-for-profit organizations that employ over 1 million people and provide services to vulnerable children, adults and families.  As a result of COVID-19 many of these organizations are facing a higher demand for their services.  Some not-for-profits were already struggling financially before the pandemic and are now facing increasing demand for services along with unexpected expenses.  Many organizations rely on contracts with New York State for funding as a major source of revenue.  Due to issues at various state agencies many contracts have not been renewed or have been delayed.  Not-for-profits also rely heavily on contributions from individuals and companies and in many cases donations have slowed down.  Not-for-profits have been forced to come up with new ways of fundraising and many events have been cancelled or switched to a virtual platform.  Meanwhile not-for-profits are still providing services without the funding.

Some organizations are struggling to just keep their doors open.  It’s important to note that if not-for-profits are forced to close, state and local governments may have to fill in the gaps and provide services at a higher cost to taxpayers.  This spring the Payroll Protection Program (PPP) provided some relief to those organizations that qualified however organizations had to be careful not to “double dip” as PPP funds could not be used for the same expenses that were being paid with other government funds.

Currently not-for-profits could be eligible to receive more help.  There are now additional opportunities for a second draw and additional opportunities for a first draw PPP loan.  The PPP loan program has been expanded to include some not-for-profits that were not previously eligible.  Not-for-profits may also qualify for the employee retention credit which was extended to June 30, 2021 and is now available for employers even if they previously received, or will receive, a PPP loan.  For 2021 the potential credit has increased and changes have been made to qualifying for the credit.

More information on PPP loans and the employee retention credit can be found at:

https://www.tbccpa.com/employee-retention-tax-credit/ and

https://www.tbccpa.com/economic-aid-act-expanded-ppp-guidance/

Teal, Becker & Chiaramonte Certified Public Accountants