Self-insuring nonprofits are a step closer to getting a reprieve from unemployment benefits costs after Congress gave unanimous consent to legislation in the past week. The legislation was sent to the White House for signature.
Protecting Nonprofits from the Catastrophic Cash Flow Strain Act (S. 4209), sponsored by Tim Scott (R-S.C.), was passed in the House of Representatives by unanimous consent on Thursday, a week after the Senate issued similar approval.
Guidance issued by the U.S. Department of Labor would have forced nonprofits to pay for 100 percent of the costs up front and wait for future reimbursement of 50 percent.
Section 2013 of The CARES Act, passed in April, provided that the federal government would cover only 50 percent of the costs of unemployment benefits paid to laid off or furloughed employees of self-insuring employers. Those reimbursing employers, which include nonprofits, local governments, and federally recognized tribes, elected to pay the state after benefits are paid rather than contribute taxes on a regular basis.
“With a master stroke of bipartisanship, the House today acted to partially reduce the panic that many nonprofits will experience this month when dozens of states send out massive invoices for unemployment compensation costs,” National Council of Nonprofits President & CEO Tim Delaney said via a statement issued on Thursday. “With nonprofit resources plummeting and demand for services rising, nonprofits that have already had to lay off employees could not bear the brunt of another huge bill to pay,” he said.
The Senate also passed the measure by unanimous consent to override what Delaney described as a “misguided, jobs-killing interpretation” by the Department of Labor that was imposing economic burdens on charitable organizations that Congress never intended.
“This legislation is not a complete solution to the problem of unemployment benefits costs that are dragging nonprofits down and forcing them to reduce services to the public, but it is a solid half-step toward the full solution needed,” said Delaney, thanking House leaders for prioritizing the needs of charities during the crisis.
The legislation next goes to the president and comes ahead of #Relief4Charities Week of Action, a joint effort by more than 30 national nonprofits to urge Congress to support policy proposals in the next round of COVID-19 relief legislation. The coalition plans to hold four briefings this week to address policy solutions that help ensure nonprofits can continue frontline services to those in need.
The National Council also organized a campaign to urge Congress to continue emergency funding programs like the Paycheck Protection Program (PPP), provide low-cost loans to medium and large nonprofits, expand charitable giving incentives, and provide full unemployment benefit reimbursement benefits paid to laid off or furloughed employees of self-insured or reimbursing nonprofit employers.
“There is also still much work to do to ensure that charitable nonprofits – our nation’s third largest employer – can keep their employees on the payroll and can continue serving communities across the country,” Delaney said. “There is broad bipartisan support in Congress for many policies that would enable nonprofit and faith-based organizations to continue doing their vital work at this time when they are needed most. We look forward to working with members of Congress to ensure inclusion of those solutions in future relief legislation.”