Charity. Equity. Integrity. When thinking of the values of nonprofit organizations, what words come to mind? Nonprofit organizations are not known for their dedication to financial gain but to improving the quality of life for others at a local, state, and national level. However, as much as COVID-19 shuttered many for-profit businesses, nonprofits arguably faced even greater challenges, focusing on the common good rather than their bottom line.
A successful nonprofit puts their mission first despite the daily firefighting that plagues nearly all nonprofit organizations, and to have survived the past two years of the pandemic, nonprofits witnessed new fires that had the potential of burning down the foundation of values that characterized these principled organizations. With the assistance of the Employee Tax Credit (ERC), many nonprofit organizations were able to retain their employees while remaining resolute in their altruistic mission.
The ERC is a fully refundable payroll tax credit available under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, designed to assist businesses in keeping their employees on payroll, despite the challenges posed by COVID-19. If eligible, employers can receive up to $26,000 per employee in 2020 and 2021 in the form of a refund check from the IRS by amending their previously filed payroll quarterly returns. The ERC program has gone through multiple iterations, including increasing the benefit from up to $5,000 per employee in 2020 to up to $21,000 per employee in 2021. Additionally, employers who received a Paycheck Protection Program (PPP) loan can also retroactively claim ERC, thereby participating in both programs. To qualify for the ERC program, an organization must show a significant decline in gross receipts (compared to pre-COVID-19) or have been fully or partially suspended during the pandemic due to orders from a governmental authority that reduced their ability to provide services in a comparable manner prior to COVID-19.
The term “partial or full suspension of business operations” is often misunderstood, and to qualify, businesses did not need to have been fully shut down or completely unable to operate. If an organization experienced any type of restriction or limitation on their operations or services because of a government mandate, this could potentially qualify them as partially suspended for the ERC program. For example, if a nonprofit was unable to hold fundraisers, group meetings, or conduct certain services in person, these limitations could potentially qualify any essential business as partially suspended for the ERC program. How organizations were impacted may be unique, so it is important to review the potential opportunity with a specialist in this area to ensure a thorough evaluation is performed.
Through detailed interviews and methodical calculations, R&D Incentives Group (RDIG) worked with a multitude of different nonprofit organizations to identify and obtain the maximum ERC refunds to help them continue their business operations. The additional layer of due diligence to review the partial/full suspension of business operations criteria allows RDIG to assist nonprofits to take advantage of the program when businesses did not meet the gross receipts decline, as it was not uncommon for businesses to experience operational inefficiencies and challenges throughout the pandemic. With the aid of the ERC, nonprofits were able to weather the storm of the COVID-19 pandemic.
Through extensive involvement with various nonprofit organizations, RDIG understands the nuances of running a successful nonprofit, such as being mission focused and donor centric. For nonprofits to continue operating in midst of COVID-19 restrictions, a new set of complimentary values emerged, and these were organizations that prioritized the values of resourcefulness, adaptability, and grit.
A particular nonprofit in the Venice area of Los Angeles provides affordable and supportive housing for low-income and formerly homeless people, including property management and social services for tenants. This organization also operates additional social services programs focused on education, job training, and homeless services. In the face of government mandates, this business exhibited resourcefulness with their YouthBuild program by pivoting and moving the entire program online when the stay-at-home restrictions began in March 2020. Business operations continued, but since these modifications had a more than nominal effect (10% or greater) on their ability to provide services in the same manner, RDIG was able to qualify every single employee retained for ERC.
Another nonprofit in Glendale partners with adults with intellectual and developmental disabilities, empowering them to successfully gain independence and attain their desired outcomes through opportunity and choice. This organization provides three residential supported living facilities, community and social integration, workforce development, and opportunities for personal growth. When government mandates began impairing this nonprofit, they displayed adaptability when faced with social distancing requirements. Clients employed at their on-site fulfillment center worked staggered shifts to reduce the number of people in the facility, thereby reducing overall capacity. Revenue received through this fulfillment operation was reduced by 30-40% due to limited staff available to handle pre-pandemic volume levels.
Finally, a youth services nonprofit headquartered in Claremont provides foster care, adoption, residential treatment, and specialty mental health services to children who are unable to reside in their homes. The agency exemplifies grit in their mission to improving children’s lives, and they have made a significant, lasting, and positive impact on the lives of more than 65,000 children since its inception. For this organization, certain and specific information pertaining to their youth clientele is confidential due to the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Maintaining the safety of patient data required this nonprofit to exercise best practices in administration, physical security, and technical security. Despite government guidelines that encouraged telework, client files could not be removed from the agency premises, and certain staff were required to come into the office to work with this data at reduced capacity.
These three nonprofits are examples of organizations that continued operations despite the challenges of the pandemic, and they were able to qualify for the ERC program because of the restrictions from government mandates imposed on their operations and services. RDIG worked with these nonprofits and many others to help them evaluate, identify, as well as substantiate the maximum amount of ERC refunds available to them.
Learn more at rdincentivesgroup.com.
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