Key Issues

Hot Topic

April 7, 2021

SBA has released a new FAQ on Shuttered Venue Operators Grants, available here.

 

April 5, 2021

The SBA video tutorial on Shuttered Venue Operators Grant program (March 30, 2021) includes a thoroughoverview of eligibility requirements, application process, use of funds,documentation, etc.  Important note:  all applicants may submit their applicationsas soon as the portal opens on April 8, and the SBA will process applications inrolling orderalthough funds will be awarded in tranchesbased on percentage of revenue decline.  Therefore, regardless ofthe tranche into which applicants may fall, they should submit applications as soonas possible.  The application process is complicatedand applicants are advised to begin preparing in advance.

 

March 19, 2021

The SBA announced today that they will begin accepting Shuttered Venue Operators Grant applications on April 8. In advance of that, they are holding an informative webinar on March 30. The press release with more details is available here.

 

March 10, 2021

The full text of the most recent COVID relief legislation, the American Rescue Act, is available here.

SBA has also issued some new guidance on Shuttered Venue Operator grants eligibility:

 

January 28, 2021

SBA has provided new guidance on Shuttered Venue Operator Grants, available here.

The SBA is defining earned revenue and gross earned revenue (the two terms in the law) in accordance with common principals of the accrual method of accounting. Using this, only monies organizations receive from the sale of goods or services are counted as earned revenue. This commonly accepted definition of earned revenue does not include other sources of funds that an organization may receive, such as donations, sponsorships, governmental assistance, or returns on investments. Gross earned revenue is the total of earned revenue from various sales of goods or services, such as admission tickets, merchandise, food and beverages, advertising sales and contracted presentation income.

 

January 27, 2021

AAMD asks its members to join it in signing a group letter from the nonprofit sector to President Biden and the congressional leadership.  The sign-on form, which includes a link to the letter itself, is here.

The letter asks Congress and the Administration to:

  • Provide Nonprofit-Specific Grants, Forgivable Loans, and Refundable Tax Credits for All Nonprofits via a carveout or nonprofit-specific PPP relief that lifts the 500-employee cap and removes the 25% decline in gross receipts in the PPP Second Draw. We further request support for the updated WORK NOW Act and for emergency grants.
  • Strengthen Charitable Giving Incentives by increasing and extending the above-the-line deduction while preserving the itemized charitable contribution deduction, all to ensure that nonprofits have the resources to serve their communities.
  • Provide 100% Unemployment Benefit Reimbursement to nonprofits that self-insure these benefits, both retroactively to 2020 and extended through the first three quarters of 2021.
  • Provide Substantial Financial Aid to State and Local Governments to avoid layoffs and cuts to essential programs and services, and to prevent the imposition of new costs and burdens on their nonprofit partners.

Our thanks to the National Council of Nonprofits for spearheading this effort.

 

January 20, 2021

SBA officials say that the decision that only organizations with up to 50 employees may apply for Shuttered Venue Operators grants in the first 60 days of the program is being revisited.  A change could be announced as early as next week.  This and any other decisions and guidance will be available at the program's website  The agency is working on guidance on how to calculate earned revenue, what constitutes "regular programming", how to define "auditoriums" and "fixed seating," among other things.  They could not speculate as to when the program will commence, or whether applicants will need to apply through grants.gov or some other mechanism, which is being looked at.  For all of these matters, again, they advise that the best source of information and guidance is their website.

 

January 15, 2021

Additional information on PPP second draw and Shuttered Venue programs

SBA has released an application form for second draw PPP as well as preliminary information on Shuttered Venue (which we used to call Save Our Stages) grants.  Please consider the following points carefully:

  1. Many have asked whether they can apply for both programs. The COVID relief bill was clear that an entity will not be allowed going forward to receive funding through both, but not on whether it could apply for both and decide which to accept.  The new PPP application form requires the applicant to certify that it "has not and will not receive a Shuttered Venue Operator grant from SBA."  This would appear to preclude applying for both.
  2. Many have found the language of the "Interim Final Rule" on PPP second draw to be imprecise regarding the definition of gross receipts.  (Eligibility requires a 25 percent decline.)  On the one hand, the IFR said that nonprofits must use the Internal Revenue Code Sec. 6033 definition, as required by the statute.  On the other, it went on to give a long definition of gross receipts, including language to the effect that net capital gains are excluded.  This led some people to believe that a nonprofit could use 6033 and then exclude capital gains.  We are not qualified to give legal advice but we have spoken with counsel who believe that a nonprofit may not exclude them; rather, it must use 6033 as is without modification.  This could prevent organizations, even those who suffered serious losses in revenue, from qualifying for a second draw.
  3. In more bad news, the SBA has decided that only organizations with up to  50 employees may apply during the first sixty days of the Shuttered Venue program. [UPDATE Jan. 20:  SBA may reverse this decision as early as the week of Jan. 25.  They advise those interested to check their website frequently at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/shuttered-venue-operators-grant ]
  4. The new Administration and Congress are working on another relief package, and we and others in the charitable community will advocate for changes to make these programs more useable. Also, the Biden plan released yesterday calls for additional aid for "Black-and Brown-owned small businesses, and those in hard-hit industries like restaurants, hotels, and the arts..."

SBA Shuttered Venue information page

PPP Application Form

 

December 22, 2020

Topline Museum-related Components of December 2020 COVID Relief Bill

The COVID relief bill approved by Congress yesterday includes several provisions of interest to museums, including:

  • Extension of PPP
  • Enactment of Save Our Stages Act, for which some museums likely qualify
  • Extension of federal reimbursement for nonprofits that “self-insure” for unemployment
  • Extension of the Employee Retention Tax Credit
  • Extension and expansion of Universal Charitable Deduction
  • Extension of CARES Act provision allowing donors to deduct up to 100% of Adjusted Gross Income
  • Increased appropriations for cultural agencies

 

PPP:

The bill provides a second PPP forgivable loan (up to $2 million) for nonprofits with 300 or fewer employees that have exhausted their initial PPP loan and that can demonstrate a loss of 25% of gross receipts (based on gross receipts under section 6033 for nonprofits) in any quarter during 2020 when compared to the same quarter in 2019. The new PPP is not identical to the one established by the CARES Act in terms of allowable expenses, etc.

 

Save Our Stages:

Qualifying organizations may receive initial grants from the Small Business Administration of up to $10 million.  Grants will be calculated as a percentage of 2019 gross earned revenue.

Qualifying organizations include live venue operators or promoters, theatrical producers, live performing arts organizations, museums, motion picture theatre operators, and talent representatives.

To qualify, an organization must have experienced at least a 25% decline in gross revenue in at least one quarter of 2020 compared to 2019.

However, to qualify for the high priority grants in the first 14 days of the program, the organization must have experienced a 90 percent drop in revenue during the period April 1 - December 31, and for the second 14 day period, a 70 percent drop. 

Amounts received under the CARES Act are not counted in determining revenue.  Also, the bill requires the SBA to use an accrual method in determining revenue.

Up to 80 percent of program funds are reserved for those applying in the first 28 days.  Only after 28 days will the other qualifying organizations be allowed to apply.  It seems unlikely that the remaining 20 percent of programs funds – at most, $3 billion - will be able to cover the expected demand; by way of context, museums alone (of all types) received about $750 million in the first round of PPP, according to the SBA.

Save Our Stages uses the IMLS definition of museum.  However, for a museum to qualify, it must among other things include indoor exhibition spaces that have been subjected to pandemic-related occupancy restrictions; and it must have at least 1 auditorium, theater, or performance or lecture hall with fixed audience seating and regular programming.   An organization does not qualify if it had more than 500 employees as of 2/29/20 AND operates venues in more than one country, or if it issues securities on a national exchange; it is unclear how many museums, if any, are affected by these latter restrictions.

** An organization may not receive both a new PPP loan and an SOS grant.

Save Our Stages differs from PPP in that it is a direct grant program from the SBA, not a loan program administered by intermediaries.  It is not yet clear when the program will begin, although the bill says SBA is to issue guidance within 21 days of enactment, i.e., in early-mid January. 

 

Unemployment:

The bill extends through March 14, 2021 a provision in the CARES Act to provide federal support to cover 50% of the cost of unemployment benefits for employees of state and local governments and nonprofit organizations. Nonprofit advocates continue to request an increase in federal support to cover 100% of the cost.

 

Employee Retention Tax Credit:

The bill extends and expands the refundable Employee Retention Tax Credit (ERTC), which was established in the CARES Act to provide employers a tax credit against payroll taxes for retaining workers. The changes include:

• Extends the tax credit, through July 1, 2021;

• Increases the credit rate, from 50% to 70%;

• Raises the limit on per-employee creditable wages from $10,000 for the year, to $10,000 for each quarter;

• Expands eligibility for the credit by reducing the required year-over-year decline in gross receipts from 50% to 20%;

• Modifies the threshold for treatment as a ‘large employer’ by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees, and;

• Clarifies the definition of gross receipts for nonprofit employers based on section 6033 and Form 990 definitions.

We thank Independent Sector for providing this description.

 

Universal Charitable Deduction:

The bill extends for one year the CARES Act provision that allows non-itemizers to deduct up to $300 for charitable giving.  Of some interest, the CARES Act only applied to individuals and did not include any language on couples filing jointly.  The new bill allows couples to deduct up to $600.  It also includes a penalty for those who overstate their charitable gifts.

 

Increased AGI limit on charitable gifts:

The bill extends through 2021 the CARES Act provision that allows itemizers to deduct up to 100 percent of their Adjusted Gross Income.  Prior to the CARES Act, the limit had been 60 percent of AGI, as established by the 2017 tax reform legislation.

Taken together with the Universal Charitable Deduction, this means that taxpayers of all income levels will be able to receive a tax benefit for donations. 

 

Cultural agencies appropriations:

In addition to COVID relief, the bill also provides appropriations for the remainder of the 2021 fiscal year.  Up to this point, federal agencies had been operating on a series of temporary resolutions that commenced on October 1.  They are now funded through September 30, 2021. 

The Institute of Museum and Library Services, National Endowment for the Arts, and National Endowment for the Humanities each received a modest increase in funding.  Grants may be used for operating expenses.

The text of the entire bill (all 5,593 pages) can be found here: https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-116HR133SA-RCP-116-68.pdf

PPP begins on page 2042 (page 119 of Section N; SOS begins on page 2124 (page 201 of Section N).

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December 1, 2020

AAMD joins other nonprofits in two efforts to reverse recent actions by the executive branch. 

First, we urge the incoming Biden-Harris Administration to revoke Executive Order 13950, issued by the Trump Administration in September 2020, which banned mention of implicit bias, among other terms, in workforce training carried out by federal agencies and contractors.  The order also requires agencies to decide whether to make grantees attest that they will not use federal funds to carry out such training. 

Second, we ask congressional leaders to recommend that the SBA withdraw a recent form that the agency is using to determine whether PPP borrowers' attestations of financial need were made in good faith.  The form is burdensome, intrusive, reflects a lack of understanding of nonprofit operations, and is not pertinent to evidencing the good faith certification that was envisioned by Congress in the CARES Act.