Which nonprofit organizations are eligible for the Paycheck Protection Program of forgivable loans to cover payroll and other costs until June 30? Are they different from those eligible for the EIDL loans? And are those different from those eligible to recover required costs of mandatory sick leave and family leave under the Families First Coronavirus act?
Only two types of nonprofits are eligible for the Paycheck Protection Programs loans under the CARES Act. They are tax-exempt organizations that are (1) described as charities under section 501(c)(3) of the Tax Code, including churches that do not have their own recognition letter (because they are not required to obtain a separate recognition), supporting organizations and private foundations, and (2) veterans organizations described in section 501(c)(19). Other nonprofits may not apply for the loans to cover current payrolls.
The expanded Economic Injury Disaster Loans (“EIDL”) for organizations seeking to recover from lost revenue during the virus situation and may include a $10,000 grant for eligible agencies are authorized for “private nonprofit organizations” with not more than 500 employees. A private nonprofit organization is (1) one with an IRS recognition of exemption under any subsection of 501(c), including (c)(3) charities, (c)(4) social welfare organizations, (c)(5) unions, (c)(6) trade associations, (c) (7) social clubs, (c)(8) and (c)(10) organizations operating under a lodge system and offering certain benefits to members, like the Masons, Moose, etc. and the rest of the 29 types exempt under 501(c); (2) religious or apostolic organizations exempt under section 501(d); and cooperative hospital service organizations exempt under section 501(e). There does not appear to be a requirement to have employees to qualify for this loan and therefore an all-volunteer nonprofit might qualify.
The mandatory requirements to provide two weeks of paid sick leave, and up to 12 weeks of mandatory family leave under the Families First Coronavirus Response Act apply to all employers, both for-profit and nonprofit, with fewer than 500 employees. There are some possible exclusions for employers with less than 50 employees from the sick leave provisions or 25 from the family leave provisions. The good part of the provisions is that the employer may claim a direct deduction against future payroll taxes so that the cost of paying people on these leaves can be recouped without going through an application process.