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Congressional Confrontations: What Do They Mean for Nonprofits?

by Guest Blogger
This article is re-printed with permission from National Council of Nonprofits. MANP’s advocacy work and our partnership with the National Council of Nonprofits is made possible by our members, and especially our Advocacy Network. Thank you!

Last week, Congress passed a law to keep the federal government funded, but so far divisions have blocked it from averting another catastrophic shutdown in about two weeks and from enacting either of President Biden’s infrastructure social agenda legislation. Pundits and partisans are vigorously debating what this means for the economy, the American people, and the 2022 elections.

Let’s focus here on the impact on the work of charitable nonprofits in communities throughout the country.

  • Continuing Resolution: On Thursday, Congress passed and President Biden signed R. 5305, the continuing resolution (or “CR”) that funds the federal government through December 3. This means the federal government will remain open, individuals will receive benefits and services, and payments to nonprofits from federal agencies will continue. The CR also includes nearly $29 billion in disaster aid and $6.3 billion for Afghan resettlement.
  • Debt Ceiling: Congress only has until about October 18 to raise or suspend the debt ceiling before the federal government will default on its past financial obligations, creating “catastrophic economic consequences.” That would not only increase interest rates and inflation and cause a crisis in the U.S. and worldwide credit markets, but also generate trauma for the public and impose unmanageable workloads on nonprofits when the federal government stops paying its bills. Objections to taking appropriate actions are purely political, even though all participants say they don’t want a government default or shutdown. Nonprofits typically are expected to rush in with aid when government offices close, and therefore have a great deal riding on the outcome of the partisan brinksmanship. Read Federal Debt Limit: Why Is It Important?
  • Infrastructure: Due to disagreements between moderates and progressives in the Democratic Party, the House has not voted yet on the Senate-passed bipartisan infrastructure legislation. The bill to spend $1 trillion on roads, bridges, broadband, and other infrastructure projects includes a $50 million grant program to promote nonprofit building energy efficiency. However, it would also end the Employee Retention Tax Credit (ERTC) three months earlier than the scheduled year-end expiration date under the American Rescue Plan Act.
    • Editor’s note re: ERTC: Nonprofits not taking advantage of the ERTC are likely “leaving money on the table.” Let’s change that. The ERTC is a refundable payroll tax credit based on wages paid to employees at organizations that either (1) have been fully or partially shut down due to a government order OR (2) had gross receipts decline a certain percentage less than those in the same calendar quarter of 2019. Yes, you or accounting/payroll professionals have to make some calculations, but the time spent can be well worth it. The maximum credit for 2020 is up to $5,000 per employee, and for 2021 it is up to $7,000 per employee per calendar quarter. Learn more about claiming the credit for 2020 expenses and for 2021 expenses.
  • Budget Reconciliation: Recognizing that the budget reconciliation bill will have to shrink if it is going to pass at all, Democratic congressional leaders and the White House must decide whether to retain a wide array of initiatives, but at lower spending levels, or to focus funding on a few high-profile priorities, such as extending the Child Tax Credit, creating a paid leave program, and tackling climate change. The decision to cut the price tag could leave out Democratic priorities such as providing free childcare and Pre-K, addressing homelessness, and stabilizing and expanding Affordable Care Act benefits. Charitable organizations work in each of these fields, and many others, so the outcome of the reconciliation debate could make a big difference in the ability of nonprofits to advance their missions.

Partisan discord doesn’t just cause stress and delay action on necessary legislation; it creates distrust in all American institutions, including charitable organizations. Nonprofits are paying the price of uncertainty in multiple ways, including increased costs, reluctance of workers to return to work or fully engage, and diversion of limited resources to plan for alternatives. Charitable organizations often step in when times are hard, but the pandemic has strained the ability of nonprofits to rise to address politician-made crises.

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