Leaders of three of the nation’s largest nonprofit organizations outlined what Congress must do in the next COVID-19 pandemic legislation to help charities.
Alejandra Castillo of the YWCA USA, Brian Gallagher of United Way Worldwide and Steven Preston of Goodwill Industries International were joined by U.S. Reps. Jackie Chu (D-Calif.) and Gwen Moore (D-Wisc.) on a conference call Tuesday morning to push for more support for the nonprofit sector. Combined, the three organizations serve almost 98 million people, employ 155,000 people and reach 95 percent of communities in the United States.
The story across the nation is the same: demand is skyrocketing as funding is dwindling, Castillo said. Decreasing revenue is hitting the nonprofit sector in multiple ways. Charitable giving is taking a significant hit as millions of people have been laid off and the threat of economic stability is real and growing for nonprofits. The CARES Act was an important first step but additional steps are needed now and in the future, she said.
The chief executives urged Congress to designate a nonprofit track within the next stimulus bill by expanding nonprofit access to credit, with $60 billion specifically designated for the sector. The majority of local Goodwill organizations are not eligible for one of the most popular programs in the recent CARES Act, the Paycheck Protection Program (PPP), because they have more than 500 employees. Nonprofit leaders advocated for Congress to either remove the employee caps or create a similar program with loan forgiveness for nonprofits with more than 500 employees.
Goodwill has a network of 157 independent, community-based nonprofits that operate 3,300 retail stores and employ 130,000 people. “Virtually all of our stores are closed, meaning a massive workforce is unable to work,” Preston said. “Funding from those stores is significantly diminished, at the very time that communities need that most,” he said, adding that the additional 17 million people who filed for unemployment benefits in the past three weeks has put an enormous demand on responders.
The CARES Act created a temporary charitable tax deduction, capped at $300, for all taxpayers. Chu, a member of the House Ways & Means Committee and the Committee on Small Business, called for the return of the charitable deduction. The 2017 Tax Cuts and Jobs Act (TCJA) doubled the standard deduction, leading to a drop in the number of taxpayers who itemize. Just 8 percent of taxpayers itemized last year, according to Chu.
Any future COVID-19 legislation should increase emergency funding by appropriating funds for targeted state formula grants and programs that can provide an infusion of funding to nonprofits. It also should increase the federal unemployment insurance reimbursement for self-funded nonprofits to 100 percent of costs.
There’s a spike in giving right now though it’s uneven, Gallagher said, but the sector should brace for a drop in giving. Nonprofits that have the wherewithal and marketing arm to be raising money are doing that, he said. “If you’re smaller or not as directly focused on COVID response, you’re challenged even in the short term. In three to six months, I think we’ll hit that wall,” Gallagher said. “Disaster response fundraising has shown me two things: the response required takes months and years, and fundraising takes weeks. If the federal government does not provide significant relief to state governments, you’ll see a significant drop in nonprofits. There’s no question there are nonprofits that will not survive this crisis.”