Nonprofits Ask for Inclusion in Coronavirus Tax Relief

Why Nonprofits Must Be Included
in a COVID-19 Relief and Economic Stimulus Package

March 11, 2020

Nonprofits Are Significant Employers

Nonprofits employ 12.3 million people (the third largest workforce — tied with manufacturingⁱ), with payrolls exceeding those of most other U.S. industries, including construction, transportation, and finance. A substantial portion of the nearly $2 trillion nonprofits spend annually is the more than $826 billion they spend on salaries, benefits, and payroll taxes every year.ⁱⁱ Yet, in multiple disaster relief laws in the past, Congress has ignored this core economic fact and approved employment-related tax credits that left nonprofit employers and employees out of the provisions.

Most Nonprofits Are Small Businesses

Most nonprofits are relatively small: 97 percent of nonprofits have budgets of less than $5 million annually, 92 percent operate with less than $1 million a year, and 88 percent spend less than $500,000 annually for their work. Thus, the “typical” nonprofit is community-based, serving local needs. Also, relatively few nonprofits have an endowment and most have limited reserves — about 50 percent have less than one month of cash reserves.^iv

Nonprofits Are on the Frontlines of Coronavirus Response

No one doubts that hospitals, community health centers, and senior living communities will continue to be hit hard by the coronavirus. Most of those organizations are charitable nonprofits. And many other nonprofits are responding to the outbreak, such as local Meals on Wheels which are serving their normal community of elderly people and a growing number of individuals under quarantine. The list goes on to include nonprofit food banks, shelters, domestic violence services, houses of worship, early care and education centers, after-school facilities, and more that are being called on to feed, house, and care for people whose lives have been disrupted by closures, job loss, and sickness.

Nonprofits Are Experiencing Declining Economic Activities

Just as travel, restaurant business, and tourism have dropped off, so has the community engagement and related services of many nonprofits that promote and serve a vibrant economy. ASAE reports that meetings convened by all types of nonprofit associations in the United States annually attract more than 250 million attendees, contribute nearly half a trillion dollars to U.S. gross domestic product, and directly support 5.9 million jobs.^v Many of those jobs will likely disappear in the coming weeks. As will the jobs and revenues lost as a result of closed productions at concert halls and theaters large and small, curtailed training sessions and other educational programming, cancelled fundraising events where many nonprofits earn significant mission dollars through attendance and sponsorships, and diminished attendance at cultural, religious, and community events. All of these activities are essential to a healthy economy and deserving of stimulus.

Nonprofits Are in Every Community Ready to Serve

Everywhere in America, charitable nonprofits are already in place serving the needs of residents. Every dollar granted, donated, or earned goes back into the community immediately to address clear and present problems. Nonprofits are our economy's shock absorber when crisis hits. Dollars devoted to nonprofits — whether through new appropriations or expanded charitable giving incentives — will be spent immediately on solutions and recirculated in local communities.