May 1, 2020
State and local coronavirus relief programs can assist faith-based organizations in managing challenges resulting from the pandemic and its economic repercussions.
While federal coronavirus relief programs have been the primary focus of public attention in the immediate aftermath of the coronavirus pandemic, state and local jurisdictions have also been actively evaluating ways to support small businesses and nonprofits coping with this crisis.
Some common examples of state and local relief programs include: (1) extension of filing deadlines, (2) low-interest loans, (3) waiver of in-person requirements for certain business activities, and (4) privately-sponsored community relief funds.
Many states, including California, Illinois, and New York, have extended standard filing deadlines for a variety of reports and renewal applications which nonprofit corporations must submit periodically to the state.i
Examples of state annual filings include annual reports to the secretary of state, charitable organization registration or renewal, and state tax returns or exemption renewals. Of course, every state has a slightly different set of filings requirements, and which requirements are applicable to a specific organization will further differ based on a given organization’s activities within the state.
Recognizing that shelter-in-place orders and a general reduction in activity have interrupted normal revenue for organizations, many states are also establishing loan programs to respond to the immediate need for capital. For example, Illinois has established a loan program through which the State Treasurer has made up to $500 million in deposits available at near-zero rates to assist Illinois non-profits in responding to the coronavirus pandemic and related economic consequences.
These loan programs are often labelled as “small business” opportunities but are also frequently also available for nonprofits. Organizations considering these funding opportunities should be cognizant of any recipient obligations that accompany the funds.
See our “Religious Liberty” article for examples of the types of concerns which are implicated when faith-based organizations receive government funds.
Shelter-in-place restrictions have shut down many office spaces, scattering organization staff to various states. Ordinarily, employees performing their work responsibilities in states other than the organization’s state of incorporation might trigger business registration requirements and additional state tax obligations. However, some jurisdictions, such as New Jersey, the District of Columbia, and Mississippi, are relaxing the foreign business nexus standards and related tax obligations for the duration of the shelter-in-place orders
States are also taking a creative approach to allow business to continue despite shutdowns. Several states are temporarily allowing online notarizations to keep business transactions on track. Other states, such as New York, have implemented temporary rules permitting electronic board or member meetings, regardless of whether the organization’s existing bylaws permit such methods of meetings during normal seasons.
Many community organizations, both government-sponsored and private, are establishing coronavirus grant and relief programs to help nonprofits survive the economic impact of the pandemic. Small business development initiatives, such as the Los Angeles Small Business Development Center and the U.S. Chamber of Commerce Small Business division, have established dedicated coronavirus response centers featuring a variety of resources to aid small businesses and nonprofits.
Local organizations are also creating special funding opportunities for nonprofits in need. For example, the Arizona Community Foundation is offering short-term and long-term grants to 501(c)(3) organizations whose operations are in jeopardy because of the virus. The nonprofit Candid has developed a consolidated list of grants and similar funding opportunities for nonprofits in need of immediate financial assistance. As with any financial assistance programs, these grants should be evaluated carefully to ensure acceptance of the funds will not require the recipient to take on obligations contrary to the organization’s religious mission. The fundamental questions outlined in NLI’s analysis of religious liberty considerations in SBA funding should also be assessed when considering other sources of funding.
These key highlights are examples of the opportunities offered by state, local, and private relief programs. To learn more about relief efforts in your state, visit the websites of your state agencies, such as the Secretary of State and the State Department of Revenue, and, if applicable, the state’s dedicated coronavirus response website. Working with an attorney or accountant can assist your organization in identifying the assistance the organization needs to emerge stronger from this crisis.