Agenda - Council Work Session - 03/08/2022

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Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4379 requirements and applicable dates for the sector remained 485,000 jobs below and Negative Economic Impacts eligible SLFRF funds would apply to third party its pre-pandemic leve1.226 In addition, use category.229 organizations (like economic some nonprofits may have experienced Reorganization and Cross-References: development organizations)who receive declines in volunteer staffing during the Under the interim final rule,assistance SLFRF funds in order to establish a loan pandemic.L27 to disproportionately impacted fund. In addition, commenters At the same time,nonprofits provide communities was a separate,stand- requested clarification on what a host of services for their communities, alone category. The final rule requirements apply to loan programs including helping Americans weather reorganizes the disproportionate impact with available funds remaining after the multitude of challenges presented analysis within the sections Assistance December 31, 2024. by the pandemic.The ARPA and the to Households,Assistance to Small Treasury Response:SLFRF funds may interim final rule recognized this Business, and Assistance to Nonprofits be used to make loans,including to dichotomy—nonprofits as entities that to better articulate how recipients can small businesses, provided that the loan have themselves been negatively serve disproportionately impacted is an eligible use, and the cost of the impacted by the pandemic and as beneficiaries in each of those categories. loan is tracked and reported in accordance with Treasury's Compliance entities that provide services that As detailed above in the Public Health respond to the public health and subsection,in response to public and Reporting Guidance. Funds that are negative economic impacts of the p unobligated after December 31, 2024 g p comments describing uncertainty on pandemic on households and others which eligible use category should be must be returned to Treasury. See section Treatment of Loans for more —by creating two roles for nonprofits. used to assess different potential uses of information about using SLFRF funds First,under Sections 602(c)(1)(A) and funds,Treasury has re-categorized some for loan programs. 603(c)(1)(A),recipients may"respond to uses of funds in the final rule to provide the public health emergency or its greater clarity.For discussion of c.Assistance to Nonprofits negative economic impacts,"by,among assistance to nonprofits to implement Background:Nonprofits have faced other activities,providing"assistance to COVID-19 mitigation and prevention significant challenges because of the . . .nonprofits."The interim final rule strategies,see section COVID-19 pandemic,including increased demand defined assistance to nonprofits to Mitigation and Prevention in Public for services and changing operational include"loans,grants,in-kind Health. needs.221 Prior to the pandemic,the assistance,technical assistance or other Recipients providing assistance via median U.S.nonprofit reported that it services,that responds to the negative nonprofits involving capital had six months of cash on hand.222 This economic impacts of the COVID-19 expenditures (i.e.,expenditures on varied by sector,however,with some public health emergency," and property, facilities,or equipment) sectors like disaster relief organizations "nonprofit"to mean a tax-exempt should also review the section Capital reporting a median of 17 months cash organization under Section 501(c)(3) of Expenditures in General Provisions: on hand, and others,like mental health the U.S. Internal Revenue Code.228 Other,which describes eligibility and crisis intervention organizations Second, as discussed above,ARPA standards for these expenditures. reporting only three months.223 and the interim final rule provided that Recipients providing assistances in the Evidence suggests that the pandemic nonprofit organizations may also receive form of loans should review the section has damaged the financial health of funds as subrecipients of a recipient Treatment of Loans. nonprofits,with small nonprofits, i ., government that government( 'e a g Public Comment:Eligible Assistance which tend to rely more heavily on received SLFRF funds); subrecipients to Impacted and Disproportionately donations than large nonprofits, carry out an eligible use of SLFRF funds Impacted Nonprofits:A few reporting relatively larger declines in on behalf of a recipient government p donations—42 percent versus 29 p g commenters asked Treasury to be more (e.g., a recipient government that would explicit in the final rule that recipients percent,respectively.224 Among like to provide food assistance to may use funds to provide relief directly nonprofits that collect fees for services, impacted households may rant funds y p y the median revenue amount collected p y g to nonprofit organizations and to to a nonprofit organization to carry out explain how nonprofits might qualify from such fees fell by 30 percent from that eligible use).Recipients generally themselves for assistance and what 2019 to 2020,with arts organization have wide latitude to award funds to experiencing a 50 percent decline.225 expenses SLFRF funds may be used to many types of organizations,including cover.230 Commenters requested that Nonprofits also experienced significant nonprofit or for-profit organizations,as q job losses.While employment in the p p g Treasury note that the pandemic is subrecipients to carry out eligible uses nonprofit sector has recovered from its low point in 2020,as of November 2021, of funds on their behalf. For further 229 The ARPA also states under"Transfer information on distinguishing g g between Authority"that a Recipient may transfer funds to beneficiaries and subrecipients,as well a private nonprofit organization such as those 221 See,e.g.,Federal Reserve Bank of San defined in paragraph 17 of section 401 of the Francisco,Impacts of COVID-19 on Nonprofits in as the impacts of the distinction on p g P ( ) the Western United States(May 2020),https:// reporting and other requirements, see McKinney-Vento Homeless Assistance Act(42 www.frbsf.org/community-development/files/ section Transfers of Funds and section U.S.C.11360(17).See 602&603(c)(3)of the Social Security Act.See section Transfers of Funds for impact- id. Distinguishing Subrecipients versus additional information on other types of entities, 222 Phillanthanthropy and COVID-19:Measuring one including other forms of nonprofits,that may year of giving,Candid and the Center for Disaster Beneficiaries under the Public Health g p Y Y g g receive transfers. Philanthropy.(2021),https://www.issuelab.org/ 230 While not stated specifically in the interim resources/38039/38039.pdf. 226 Chelsea Newhouse,COVID-19 JOBS UPDATE, final rule,the Department does not require or have 223Id. NOVEMBER 2021:Nonprofits add just 5,000 jobs in a preference as to the payment structure for 224 Elizabeth T.Boris et al.,Nonprofit Trends and November,Center for Civil Society Studies at Johns recipients that transfer funds to subrecipients(e.g., Impacts 2021,Urban Institute(October 7,2021), Hopkins University(December 10,2021),http:// advance payments,reimbursement basis,etc.). https://www.urban.org/research/publication/ ccss.jhu.edu/november-2021 jobs/. Ultimately,recipients must comply with the nonprofit-trends-and-impacts-2021/view/full_ 227 Elizabeth T.Boris et al.supra note 224 at p. eligible use requirements and any other applicable report. 38. laws or requirements and are responsible for the 225 jd. 228§35.3 Definitions. actions of their subrecipients or beneficiaries.