Nonprofits angle for new round of federal support to speed recovery, serve needy communities

September 28 - October 4, 2020

By Daily Record Staff


Although much debate has been given to the rebound of small businesses and larger corporations from the ongoing health crisis, the once-thriving nonprofit sector is also struggling to regain its footing while providing services to communities largely impacted by COVID-19.


And as Congress again looks to address some of the issues stemming from the ongoing coronavirus pandemic with new talks on a new round of federal funding totaling nearly $2 trillion, the National Council of Nonprofits (NCN) issued a statement pleading for emergency relief for nonprofits across the country.


“An engaged and effective charitable sector is critical to helping our nation’s communities and economy recover. Charitable nonprofits, like the millions of people they serve, are struggling amidst the ongoing turmoil caused by the coronavirus pandemic,” NCN officials said on Sept. 10.


“We appreciate the acknowledgement by the Senate that nonprofits are suffering and believe a proposed increase in the universal charitable deduction is a good start. However, nonprofits offering critical services and supporting jobs in communities across the country need more assistance to keep their doors open and continue to offer support to individuals and families,” said the nation’s largest network of charitable organizations. 


According to the Washington, D.C.-based trade group, the nonprofit sector now represents the nation’s third largest industry with more than 12 million employees working on the frontlines of the pandemic.  These charities, said NCN, provide everything from food and shelter to medical and mental health services to education and cultural and spiritual support. 


“Yet, at a time when Americans need these services the most, donations and other earned revenue sources continue to decline as demand for many services continues to grow NCN officials said in a recent letter to top U.S. House and Senate officials. “It is imperative that Congress enact significant bipartisan coronavirus relief legislation as soon as possible.”


Under the original Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law by President Donald Trump on March 27, Congress overwhelmingly approved legislation that provided some relief to charities through the tax code but did not spell out any specific funding to help those organizations rebound from COVID-19.


Also, the popular Paycheck Protection Program administered by the U.S. Small Business Administration provided forgivable loans up to $10 million to small businesses and some nonprofit left financially distressed by the COVID-19 pandemic. However, most smaller nonprofits did not participate in the program due to early confusion over SBA rules on how much of those funds could be spent payroll, overhead and day-to-day operating expenses.


In addition, the $2.2 trillion CARES Act gave approval to the Treasury Department and Federal Reserve to roll-out the Main Street Lending program to support small business owners and nonprofit employers with between 500 and 10,000 employees. That program was intended for provide loans on reasonable terms to for-profit businesses and nonprofits with less than sterling credit, but as of Sept. 18 the Federal Reserve was still many have labeled as inadequate.


NCN officials said talks on a new round of COVID-19 emergency funding should include not only an increase and extension of the universal charitable deduction through 2021, but it should also provide a new round of PPPs loans specifically to nonprofits of all sizes. The nonprofit advocate group also said new legislation should expand refundable payroll tax credits, provide forgivable loans to mid-size and large nonprofits that have thus far been unable to access this necessary aid, and offer full unemployment benefit reimbursement for nonprofits that self-insure. COVID-19 relief should also continue emergency funding programs to provide nonprofits with financial support to maintain services protecting vulnerable families and frontline responders, the group. 


“These are all provisions with broad bipartisan support in both chambers. These measures would offer immediate and critical relief to a sector that is providing help to people in countless ways during this crisis,” said the NCN, which represents over 4,000 charities in all 50 states. “We look forward to working with Congress to ensure nonprofits can continue their essential work as part of our nation’s social and economic fabric through this pandemic and beyond.”


Charitable organizations near financial distress, Fed says


Closer to home, a new Federal Reserve survey recently noted that demand for services is climbing for many organizations serving low- to moderate-income (LMI) communities in the St. Louis Fed’s district, and some organizations are struggling to meet needs. 


The national pulse survey was conducted in August 2020. Of 1,465 total respondents, 178 were from the St. Louis Fed’s Eighth District, an area comprising all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee. Organizations work on a range of issues in LMI communities, including consumer finance, housing, small business, workforce development and education.


In the Eighth District, organizations reported a significant (28%) or modest (25%) increase in service demand due to COVID-19 since June; a significant (11%) or modest (27%) decrease in their ability to provide services; and 32% reported no change.


The report also noted that organization that serve LMI communities also said they could only operate for six months or less (24%) in the current environment before exhibiting financial distress such as reducing services, laying off staff or closing locations. Sixteen percent said they were not impacted, and 20% did not know how long they could continue operating.


“Listening to the front-line organizations working to support local communities is critical to shaping effective policies and programs. This pulse survey helps amplify their voices as we try to understand the ongoing impact of COVID-19 on vulnerable populations, businesses and community-based organizations,” said Daniel Paul Davis, a report co-author and the St. Louis Fed’s community affairs officer.


When asked about COVID-19’s top impact on LMI communities, organizations most frequently cited income loss, job loss and unemployment. This was consistent with earlier Federal Reserve survey findings from April and June.


Locally, Arkansas Advocates for Children and Families (AACF) on Sept. 17 reported that new Census Bureau data shows that people across Arkansas continue to face dire economic hardship because of the pandemic – particularly Arkansans of color and those with low incomes. That makes the need for bold action at the state and federal levels clearer than ever, the group says.


Heading into the pandemic between 2018 and 2019, Arkansas’s poverty rate fell by 1 percentage point to 16.2%, and median household income rose by 2.4% to $48,952, according to (AACF) data culled from the Census Bureau’s American Community Survey. The report also found that health care coverage declined, and housing costs remained flat amid the ongoing health crisis – trends that accelerated this year’s severe health and housing needs.


More up-to-date data from this summer show a worsening of some trends and a sharper rise in hardship across Arkansas, including 14% of adults reported that their household sometimes or often didn’t have enough to eat in the last seven days; and 21% of adults with children reported that their kids sometimes or often didn’t eat enough in the last seven days because they couldn’t afford it.


The census data also notes that 18% of adults in Arkansas who live in rental housing reported that they were behind on rent, and 29% are behind on their mortgage payments. Another 29% of all children in Arkansas live in a family that is either not getting enough to eat or behind on housing payments.


AACF said this hardship is being felt more acutely by Arkansans of color and people with “very low” incomes, who were already struggling to make ends meet before the pandemic. As a result of current and historic policies contributing to deep inequities, low-income Arkansans and Arkansans of color often lack access to the resources they need to be resilient, like healthy food options, transportation, quality schools, and other needed services.


“As we see every day, people across Arkansas are struggling with paying their bills, putting food on the table, and getting back to work. And many of these same Arkansans are the one that are on the frontlines of this pandemic, working at childcare centers, grocery stores, and in other low-paid jobs,” explained AACF Senior Policy Analyst Bruno Showers. “Our federal and state policymakers must act decisively to help families and individuals facing today’s extreme levels of hardship, especially those in Black, Latino, Indigenous, and immigrant households.”


Like the National Council of Nonprofits, AACF officials said Congress must act soon and swiftly to provide more federal relief that matches the extraordinary need that households and our economy face. That includes boosting vital assistance programs such as SNAP (formerly known as food stamps) and housing assistance, extending enhanced federal unemployment benefits, and allocating additional aid to states and local governments that can help prevent further layoffs and cuts to core public services.


In Arkansas, the statewide nonprofit advocacy group for children said state lawmakers must meet the demands of the moment by advancing bold policies to build antiracist, equitable, and inclusive communities and an economic recovery that extends to all people.  


PHOTO CAPTIONS:  (Photos provided by St. Louis Federal Reserve)


1. Neshanta “Chef Nesee” Larry, owner of North St. Louis (Mo.) County small business That’s So Good, switched from pop-up buffets to delivery and food relief because of the pandemic. A recent St. Louis Federal Reserve report said the COVID-19 pandemic change small business operations and squeeze nonprofits’ finances. 


2. A recent Federal Reserve reported highlighted the Arkansas Community Foundation of Little Rock and Momentum Nonprofit Partners of Memphis on efforts by nonprofits to provide rapid relief during the pandemic. Momentum (pictured) recently prepared supplies such as masks and hand sanitizer for local nonprofits amid the ongoing health crisis.


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