Nonprofit Checklist for COVID-19 Response

In times of crisis, nonprofits are often on the front lines helping communities cope and recover. The COVID-19 pandemic finds many of these same organizations sidelined due to mandatory closures, statewide quarantines, decreased donations and their own concerns for employee safety.

As your nonprofit plans its response efforts to recover from the loss of programming, canceled events and impact on your workforce, here are the top action items that your leadership team should be addressing or considering:

Comply with new FMLA and Paid Sick Leave requirements. Effective April 1, nonprofits with fewer than 500 employees will be subject to the new Emergency Paid Sick Leave and Emergency Family Medical Leave Act benefits included in the federal Families First Coronavirus Response (FFCR) Act. It is essential for nonprofits to understand their employer obligations and employee rights when it comes to allowing and paying for leave for employees affected by COVID-19. Learn more from our Human Resources consultants here.

Post mandatory DOL Notice. The Department of Labor has published model notice WH1422 that is required to be provided to employees to inform them of the expanded paid sick leave and FMLA benefits in the FFCR Act. If your employees are working remotely at this time, distribution by email or Intranet is acceptable. Learn more and download the Notice here.

Document emergency Paid Sick Leave and FMLA payments. The FFCR allows for employer tax credits to offset the employer cost of providing the expanded paid sick leave and FMLA benefits. Carefully tracking your expenses in this area will allow for easier substantiation and maximum tax benefit when claiming these tax credits.

Tap into emergency funding sources. The Coronavirus Aid, Relief and Economic Security (CARES) Act allocated $367 billion to loan programs for businesses and nonprofits with less than 500 employees. The two major programs to consider are:

  • Paycheck Protection Program – Eligible 501(c)(3) organizations can apply for a federal loan up to $10 million to help them recover from losses due to the COVID-19 pandemic. The program comes with the possibility of tax-free loan forgiveness (essentially converting the loan to a grant) for employers who meet certain employee retention requirements. Learn more about this loan forgiveness here.
  • Economic Injury Disaster Loans – The CARES Act also infused an additional $10 billion into the Small Business Administration’s Economic Injury Disaster Loan (EIDL) program, which will allow for faster delivery of the low-interest, long-term emergency loans available through the SBA, for all nonprofits. Learn more about the EIDL program here.

In addition, FEMA is extending assistance to nonprofits that fall into certain “critical” and “non-critical but essential” categories. Many foundations are offering grants to help nonprofit recover as well. Contact a Grassi Not-for-Profit advisor to learn more.

Plan tax savings strategies. The CARES Act also includes tax relief that applies to both for-profit and nonprofit organizations, including a refundable payroll tax credit of up to $5,000 per employee and delayed deadlines for depositing employer payroll taxes (deferred and payable over the next two years – half due on December 31, 2021 and half due on December 31, 2022). In addition, Section 139 of the Internal Revenue Code allows employees to fully deduct “qualified disaster relief payments” to employees during a crisis, which could include reimbursed work-from-home, dependent care, medical and transportation expenses.

Assess your workforce. The COVID-19 crisis is bound to have a significant impact on your workforce. During and after the crisis, Workforce Planning can help you evaluate your workforce structure and make any necessary adjustments to sustain your mission and organization and meet the loan forgiveness requirements in the Paycheck Protection program.

Review insurance coverage. Key language in your insurance policies will determine what, if any, insurance coverage your organization may have to cover losses caused by event cancellations and other business interruptions. Learn more from our forensic specialists here.

Plan for sustainability. You may feel somewhat helpless right now, but there are proactive steps that you can take, with help from your business advisors, to plan for and mitigate the damages of the COVID-19 crisis, such as:

  • Forecast expected cash flows
  • Identify other sources of cash flow that will carry the company through constrained periods
  • Seek relief on any current financial arrangements
  • Assess impact on reimbursement
  • Conduct financial forecasting at the agency level and the program level
  • Explore options for current lending arrangements

Through all of these steps, strong leadership will be key. Be strategic when making every business decision, communicate your crisis response with stakeholders timely and empathetically, stay accessible and committed to a fixed cadence of check-ins, empower key members of your organization with decision-making power, and create an efficient knowledge transfer process. And above all – be patient with yourself as you navigate these very unprecedented and unpredictable days.

David M. Rottkamp David M. Rottkamp, CPA, is an Audit Partner and Nonprofit Practice Leader, at Grassi. David has over 36 years of experience providing audit and advisory services to the not-for-profit and health care industries. David focuses on organizations serving individuals with special needs, religious organizations, educational institutions, membership associations, social service providers, healthcare providers, foundations, and the arts and culture world. David’s technical knowledge allows... Read full bio