Employee retention tax credit for nonprofits has a chance
A coalition of more than 60 nonprofits has sent a letter to top U.S. elected leaders asking for policies that will help nonprofits continue to serve their communities during the coronavirus pandemic. The letter included several demands, such as instituting financial incentives to increase nonprofit giving, continuing a variety of support programs, and creating new programs to meet future needs.
Its centerpiece, however, were several suggestions that would help the nonprofit sector regain paid workers and volunteers. According to the letter, the nonprofit sector lost 450,000 employees out of an estimated workforce of 12 million.
“Many charities are experiencing unprecedented labor shortages that prevent them from carrying out the current relief and future recovery functions they are called upon to perform,” the letter said. “Charities are also facing a drastic drop in the number of volunteers who are unable to provide their usual level of support for the missions close to their hearts.”
Specifically, the nonprofit community called for:
- Retroactively restoring the employee retention tax credit to 2022 and funding childcare and education grants to reflect rising costs for nonprofits as they try to maintain or expand services as needed. This request also called on the government to fund high-quality, affordable, reliable and accessible child care, as befits the largely female nonprofit workforce.
- Principal elements of the Work Opportunities and Resources for the Effective Operation of Nonprofit Organizations (WORK NOW) Act (S. 740/ HR 1987) enacted.
- Reform and adoption of various provisions of the Civil Service Loan Cancellation Program, including expanding the types of loans that could be canceled and changes to disqualification rules.
- Efforts that promote the return of volunteers to nonprofits, for example by providing capacity-building grants aimed at alleviating volunteer shortages, funding gaps in digital infrastructure that would allow nonprofits profit to connect to potential volunteers and increasing the volunteer mileage rate for nonprofit volunteer drivers toward the business rate of 58.5 cents per mile.
- Renewal of the Universal Charitable Deduction (not detailed), which expired at the end of 2021, at least until the end of 2022 and with a significant increase in the limit of the deduction.
- Renewed two donation incentives that were allowed to expire at the end of 2021: allowing retailing individuals to deduct charitable donations up to 100% of their adjusted gross income, and corporations that deduct charitable donations from make it up to 25% of their taxable income.
The Feb. 14 letter, which listed more than 60 nonprofits as signatories, was sent to President Joseph Biden, as well as House Speaker Nancy Pelosi, House Minority Leader Kevin McCarthy, to Senate Majority Leader Chuck Schumer and Senate Minority Leader Mitch McConnell. As of mid-Friday, Feb. 18, none of the recipients had received an official response, oral or written, according to David L. Thompson, vice president of public policy at the National Council of Nonprofit Organizations.
But there was movement on the main concerns listed in the letter. “The best indication that we are making progress is the introduction of the accompanying bipartisan Senate bill to restore the employee retention tax credit for the fourth quarter of 2021,” Thompson wrote in an e-mail. -email to The Nonprofit Times. “Four of the five sponsors sit on the Senate Finance Committee, a detail that suggests tacit approval from the committee’s leadership.”
Additionally, congressional staffers told National Council officials that the tax items included in the letter could be included in a bill that might pass through Congress, such as the planned omnibus spending bill. for March. Those items would include reinstating the employee retention tax credit and renewing donation incentives that expired at the end of 2021, Thompson added.
“Increased funding for child care – important to nonprofit employees and employers, as well as child care providers – is an issue addressed in the Build Back negotiations. Better; which means it’s definitely on the table, but where it ends up is a huge question,” Thompson wrote. “Less preparatory work has been done on the solutions offered by nonprofit organizations regarding volunteering, mainly because the scale of the crisis is only beginning to become clear.”