My Guest:
Gene Takagi: PPP 2.0
Gene Takagi returns with the ins-and-outs of the second round of Paycheck Protection Program help for your nonprofit. He’s our legal contributor and managing attorney at NEO, the Nonprofit & Exempt Organizations law group.
Listen to the podcast
Podcast: Play in new window | Download
Subscribe to get the podcast
Apple Podcasts | Spotify | Google Podcasts | Stitcher
Get Nonprofit Radio insider alerts!
I love our sponsors!
Turn Two Communications: PR and content for nonprofits. Your story is our mission.
Dot Drives: Raise more money. Change more lives.
We’re the #1 Podcast for Nonprofits, With 13,000+ Weekly Listeners
Board relations. Fundraising. Volunteer management. Prospect research. Legal compliance. Accounting. Finance. Investments. Donor relations. Public relations. Marketing. Technology. Social media.
Every nonprofit struggles with these issues. Big nonprofits hire experts. The other 95% listen to Tony Martignetti Nonprofit Radio. Trusted experts and leading thinkers join me each week to tackle the tough issues. If you have big dreams but a small budget, you have a home at Tony Martignetti Nonprofit Radio.
View Full Transcript
Transcript for 520_tony_martignetti_nonprofit_radio_20210111.mp3
non Hello and welcome to tony-martignetti non profit radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite heh abdominal podcast. Oh, I’m glad you’re with me. I’d suffer the effects of Vibe bro Sis, if you infected me with the idea that you missed this week’s show P P P to zero Jean Takagi returns with the ins and outs of the second round of paycheck protection program. Help for your non profit. He’s our legal contributor and managing attorney at Neo. The non profit and exempt organizations law firm Antonis Take two. I’m still optimistic, were sponsored by turn to communications, PR and content for nonprofits. Your story is their mission. Turn hyphen two dot ceo and by dot drives. Prospect to donor, Simplified tony-dot-M.A.-slash-Pursuant demo and a free month. What a pleasure! Genuine pleasure to welcome back Jean Takagi. You know him, for God’s sake, but let’s do the formalities he deserves. Gina is our legal contributor and managing attorney of Neo, the non profit and Exempt Organizations Law group in San Francisco. He edits the wildly popular non profit law blogged dot com, and there’s the American Bar Association’s 2016 outstanding non profit lawyer. He’s a part time lecturer at Columbia University. The firm is that neo law group dot com, and he’s at G Tack g T a k. Welcome back, Jean. Happy New Year. [00:01:52.04] spk_0:
Happy New Year, tony. Great to be back with you. It’s [00:01:54.34] spk_1:
good to have you. Thank you. It’s outstanding, lawyer. Now, that’s five years old now. [00:01:59.14] spk_0:
Yeah, I think that that probably has to go down the wayside. [00:02:25.54] spk_1:
Take that. Actually, Is it more embarrassing now then? It always has done What? What’s he done in the past five years? Exactly. I’ll take that. Alright, we’ll take that out from starting next time. All right, Um, so the paycheck protection program is is back version 2.0. Um, what what’s your what’s your overview of it? The p p p re ducks. [00:04:28.64] spk_0:
So it’s a good thing, of course, and it comes in sort of within the broader context of a kn appropriations act that’s to help stimulate the economy. And we know how hard co vid and, um, all of the shutdowns that have been caused by the coronavirus, all of the health care issues we have presented a huge challenge for our economy and for the nonprofit sector as a whole. I think back in August, The Washington Post had written some article that suggested one third of nonprofits could ultimately shut down at the end of this crisis. I think that might have been a little overblown. Hopefully, the vaccine is going to contribute. Thio Um, the development of several vaccines contributes to a little bit more of a recovery, but we still seem to have a long slog through this. And that’s why more money needed to get out to stimulate the economy and particularly nonprofits who are impacted two ways. One by just less money coming in. Less revenues, less donations. Andi the greater need for so many people who need the service’s of non profit. So the good part of the second kind of draw of the P P P loans is that there’s more money been made available. Um, it’s still not enough in my personal opinion, and hopefully we’ll see more, but 11 of the really good things about this second draw, the P P P loans is that you can go in for a double dip now, So if you are a kn organization. One of the I believe it’s 180,000 non profits that applied and received the first round of loans. Who came, actually, which came into parts? Um, [00:04:29.30] spk_1:
180,000. Sounds low to me. I’m not I’m saying that I heard it was more. But of the 1.51 point six million or so only 180,000. [00:04:40.14] spk_0:
Yeah, I believe that’s the number that that I I have that that actually received loans [00:04:45.13] spk_1:
12% or something like that. [00:04:47.94] spk_0:
Yeah, on dhe. You know, so out of those, the original set of loans under the Cares Act on day one of the amendments to that so you could only come in once, so you get one loan out of them. You can’t go back in for another loan. Um, so this second draw actually allows a nonprofit that took out a loan, used it up, or is going to use it up to come back in for a second loan. And that’s really important with the covert crisis dragging out. [00:05:47.84] spk_1:
So, um, let’s see, just I know you You introduced a second raw, but let’s let’s talk about the folks who maybe did not get a p p p low in the first time. So that so for nonprofits, That s so they they certainly are eligible this time to, um, let’s talk about like, you have to have fewer than 500 employees, which I’m sure all our listeners do. Um What who else is what? Like what else you have to do to be eligible for for a loan first time through. [00:05:50.64] spk_0:
So I think that the numbers actually 300 or fewer on that [00:05:54.93] spk_1:
isn’t that for the, isn’t it? For the second draw? [00:06:59.74] spk_0:
Yeah, I think this whole thing is sort of called. I’m sorry. You’re right, tony. So that that refers to the second draw for for, um, organizations that have received a P P P loan. So it’s 300 or fewer. The original draw was 500 or fewer. Um, and demonstrating at least a 25% reduction in gross revenues between the same quarters in 2020 and 2021. So you took a look at the first quarter. You measure first quarter versus first quarter, second quarter versus second quarter. You can’t mix and match. So the same quarter in two years if you experienced at least 25% reduction in gross revenues. And that’s how you had reported in the 1990 year gross revenues figure, then you would be eligible for for that, that second draw. And I believe that’s the standard for the first draws. Well, um, and it’s subject to a maximum of 2.5 times. The average monthly payroll costs up to $2 million in this round. [00:07:10.94] spk_1:
Okay, Okay. And those payroll costs, you can choose, right? A period between eight weeks and 24 weeks. Correct that. You want that you want to be compensated for And that and, uh okay, that you wanna be compensated for, right? So, between to two months and and six months, [00:07:26.84] spk_0:
right, starting on the origination of the loan. Okay. Yeah. [00:07:37.44] spk_1:
Okay. But but to be eligible, you have to demonstrate a decrease in gross revenue of 25% or more. Correct. Incomparable quarters. Okay. Okay. Now for folks who again, this first draw the first time through it at this point so far, um, they should be going to their bank. Right? You need a bank. That’s that’s s B A Small Business association approved, but it seems like your bank will be the place to start at least looking for where you can find a lender. [00:07:59.74] spk_0:
Yeah, absolutely. That’s that’s the place to go to get the application forms. And yes, the S B A operates the loan through the sort of approved banks that [00:08:09.88] spk_1:
the bank. Yeah, And in my experience, if your bank isn’t an S b a approved lender, I had heard that your your bank can help you find one. You can also just search for them in your area. But you might be able to get a referral from your own bank if they’re not a S B A lender. [00:08:28.06] spk_0:
Yeah, and you can, I think, find that out on the Web as well. If [00:09:18.64] spk_1:
it’s time for a break, turn to communications. The Wall Street Journal, The New York Times You wanna be in papers like that? What about CBS Market Watch? The Chronicle of Philanthropy. Turn two has the relationships with outlets like these. So when they’re looking for experts on charitable giving non profit trends for philanthropy, they call turn to turn two calls, you turn hyphen two dot CEO now back to P P p. To point out now all the all the money you get, even though it’s called paycheck Protection Program does not have to go to a paycheck. There’s other things that you can spend what up to 40% on [00:10:53.34] spk_0:
that’s That’s exactly the number tony. So 60% has to be payroll related expenses that that you are using the funds for but up to 40% could be used for other things. And in the first round of the Cares Act sort of payroll protection plan, program loans or forgivable loans, they had things like mortgage, certain qualified mortgage payments and rent and utility expenses. They didn’t offer a lot more. So this round, this second draw, whether you’re taking it for the first time or not, I’m just going to refer to it is the second draw. Okay, he BP loans. You can use it for four other covered expense areas, and they include operations expenditures, which sort of refer to software and cloud computing service’s for businesses and have to do with payroll H R. Accounting all of those things. So if you need that, you can use it for those things property damage costs if they happened in 2020 and they were not covered by insurance and that might be related to looting or other public disturbances. UM, covered supplier costs which are for purchase of goods that are essential to the operations of the business, generally made pursuant to a contract that was in effect prior to the covered period of the eight or 24 weeks. Ah, nde covered worker protection expenditures, so that’s really important. So that includes the PP, eat of personal protective equipment, face masks and everything else, and also operating and capital expenditures that air related to meeting worker or customer safety requirements. So if you need to put barriers up, you know those plexi barriers between things like that, [00:11:22.27] spk_1:
maybe upgrade your h v a c so that Z Okay, [00:11:23.04] spk_0:
okay, so you want to take a look at what the requirements are in your area. If you need to spend on that, um, this is also going to be available for those type of expenses up to 40% so again, 60%. This is mostly focused on payroll in keeping people in jobs. Andi organizations operational, but 40% realizing that you do have some other costs that you need to have to be able to run the business. It’s not just employees, so this was a little bit more thoughtful in sort of creating that that those uses for P p p loan funds. [00:12:39.04] spk_1:
Let’s talk about forgiveness because that’s a big advantage to these p p p loans that if you do it right, your loan could be 100% forgiven if you do it right. So what do you have to do right now? I know we don’t know about, like, forgiveness forms that even for the first round. I mean, I in my business got a P p p low in the first round, and I’m still waiting for guidance on forgiveness. It Z S B A has gone back and forth many times, and so my bank doesn’t even have the forms ready yet for forgiveness from the first loans, which I got like in March or April or something. So but there are guidelines about what you’re supposed, how you’re supposed to spend to be eligible for the give nous for the forgiveness when the forms and the process do ultimately come out. So what’s What’s what is s b a saying there, [00:12:56.34] spk_0:
So yeah, first, just a comment on whether we’re going to see those forms out soon [00:13:04.68] spk_1:
so we could get the loan forgiveness from from March or April. Yeah, [00:13:09.24] spk_0:
yeah, eso It’s been a long time. The S b A actually has some forms out, and they did come up with a little bit of guidance in December. But the individual financial institutions, the banks haven’t yet developed all of their own forms on DSO. Yes, it’s a combination of looking at both of those forms, and we haven’t seen much happening there across all banks. Yeah, so that I think will be coming pretty soon, but we haven’t seen it just yet. [00:14:03.94] spk_1:
I guess I should be kinder to the S B A to I think overall, they managed a new emergency program pretty well. Eso you know, clearly their priority was getting the money out, not worrying about the forgiveness at the back end. So, uh, not trying to be harsh against SB A. They’re working under short deadlines and people in great need, So they focused on what’s more important getting money out. All right, so what do they say about how you should spend if you wanna have your loan forgiven. [00:14:08.44] spk_0:
So one of the things is what we talked about earlier. About that 60 40 split. Well, that is the requirement for loan forgiveness. So if you don’t want the loan to be forgiven, you don’t actually have to look at that 60 40 split, right? You could just pay back the loan at the interest rate, which I believe is 1%. Um, but I think nonprofits have taken out this loan, have taken it out with the very intent that it be forgivable loan and to use it for those purposes. So in order for it to be forgivable against, 60% must be used for payroll related expenses and 40% for those other covered categories that I mentioned. So, you know, the mortgage, the rent utilities and those four new categories that came out with this second draw that would apply only to the second draw amount. So amounts coming out of this 900 billion that that was part of this new act that came off this new relief act. Um, [00:15:25.04] spk_1:
you wanna make sure you keep your documentation so you can prove when it does come time for the forgiveness application, because you have to apply that you can prove that you spent the money on the bona fide expenses that are allowed. And you didn’t spend more than six more than 40% on the on the non payroll. Correct? Yeah, to be documentation. [00:16:20.94] spk_0:
And what I’m hearing back is from the first application, which you’ll soon see tony. The reports that they asked for are pretty complicated on dhe tough, and they’ve gone back and forth on like what to include and what not to include. But it can be pretty tough. The good thing is about this second draw. This new act that that was signed into law the just a few weeks ago at the end of the year is that if the loan was for 150,000 up to $300,000 or less, it’s going to be a one page one. So they’re going to make it super easy, and it’s really gonna you know, they haven’t released what that form exactly looks like. But they said what they’re going to ask for is the number of employees that you were able to retain the estimated amount spent on payroll costs. So did you meet that 60% basically, the total loan value and an attestation? So you basically you’re signing saying, I attest that I complied with all the requirements of the P P P loan program. So rather than documenting every single thing out, if it’s $150,000 or less, get most of the listeners. They’re probably going to fall into that category. Um, they’re going to be able to do with the one page form. But there are several larger nonprofits that they’re gonna have to file the more complicated forms. And to get you know, to your point, really good records really critically important for this because you do want to get this loan. Forget [00:19:54.44] spk_1:
it’s time for Tony’s Take two. Yes, I’m still optimistic. Even after what happened last Wednesday at our nation’s capital and the Capital building I still am. The optimism is for the whole year. It’s not just for the first 10 days, so I still feel good. Look, they’re already started arresting people for the trespassing and the unlawful entry into the Capitol. They’ve already arrested folks. So and there’s gonna be many more coming, so that gives a little bit of short term, uh, solace. I think that people face justice for their transgressions against our capital. But beyond that, beyond that, I just look forward to new years and I am feeling good that the country will be in a better place. The world will be in a better place this year. Then it was last year 2020. I mean, think about the pandemic to look how much further we’ve come in. Just what? The past 4 to 6 weeks with vaccines rolling out. Okay, Not as fast as they were supposed to have, but vaccines air rolling out. I think it’s gonna be a good year. 2021. I say. It’s gonna be a good year. That is tony Steak, too. Let us return to P P. P to zero with Jean Takagi. There’s something that you and I talked about, um, earlier in 2020 when the first paycheck protection program loans were offered was it was a little complicated Then if you had gotten another kind of loan, the e ideal economic injury disaster loan and you if you gotta an advance on that, which I’m not sure those advances really went out the way they were supposed to, but they were supposed to be, like, up to $10,000. You get in, like, within three days for the e i d l. But I know in my own case, I applied for that. But, um, didn’t didn’t it didn’t end up really being needed. And it was nowhere near the three days. Um, it was more like three months, and it all just came at 11 time. That’s a separate. But so that was related to you know that advance if you if you got it was related to paycheck protection program forgiveness, the S B A. Wasn’t gonna allow you toe be forgiven on ah e ideal loan advance. Now, you don’t have to worry about that anymore, right? [00:19:57.31] spk_0:
Yeah, that’s I mean, that’s one really good thing about this [00:20:01.09] spk_1:
two minutes set up for something that doesn’t matter anymore. [00:21:00.74] spk_0:
But it is important because some some of your listeners may be out there thinking, Oh, I can’t You know I can’t get this. Um uh, advance if I want loan forgiveness on Now it’s like, No, you can you can get both. So that’s really important that they repeal that former restriction on DSO. Now you can get both. Just a reminder for that the ideal stands for economic injury disaster loan on dhe It is alone, except when it’s called an ideal grant, Um, or advance. In which case, the idea is is that you’re going toe Qualify for it If you’re located in a low income community, you suffered an economic loss greater than 30%. So this is a little bit more stringent. And the second drop TPP loans [00:21:04.31] spk_1:
25%. [00:21:05.09] spk_0:
Yeah, and the same requirement that you employ not more than 300 employees. So it’s it’s a different program. I misspoke earlier and talked about $900 billion being the P P. P program, but that 900 billion was actually the total [00:21:19.48] spk_1:
that was the fullest [00:21:47.34] spk_0:
package. Yeah, eso of that 284 billion roughly was for the P P P program. Second draw loans that were coming out again, Whether you’re taking it for the first time or second time again on 20 billion for the e I. D. L grants those ran out very quickly on DSP. A page has still not been updated. Web page has still not been updated. So it will currently say we’ve run out. We don’t have these available, but we’re waiting for the update as a result of this new act, so you have to just keep looking for it. [00:21:56.04] spk_1:
Okay? Okay. The money is there for the the ideal grants, [00:22:10.54] spk_0:
but it’s 20 billion versus 284 billion for the P P P second draw loan. So it is a smaller pool of money. So just toe, be aware that that yeah, you’ll have to go in pretty quick if you’re going to qualify [00:22:21.04] spk_1:
in the second drawer. Loans got, um, expanded with 501 C six is now now eligible. Which they weren’t before. [00:22:31.34] spk_0:
Yeah, you know, I think non profit that’s really wanted, like a za sector. They said, why is it restricted? Just to 501 c three. There’s lots of other types of nonprofits that air doing important work here that are going to get tremendously impacted and small businesses are allowed toe sort of get the benefits of these loans. What about like chambers of commerce, especially for, like small regional areas that could really impact multiple businesses, and not just one or organizations that are focused on the travel business industry. So if you’ve got a trade association of related to travel, they can impact a broader industry and to lose them, um, could be really detrimental thio an entire industry and not just to a single business. So the idea was, let’s get other nonprofits involved or eligible as well. So 501 c six. That was kind of the lobbying for the 501 c six is specifically on. Yes, they become eligible for this P p p round A ZX well, but they have some of the same requirements, so they can’t employ more than 300 persons. But they also have some lobbying limitations. Um, that air there, so s [00:23:42.90] spk_1:
so if you’re a C six, you gotta look closely. [00:24:08.64] spk_0:
Yeah, and one other thing just about this and I won’t go into the details of C six. But generally speaking, um, the government said, if you are a lobbying or political like organization, that was principally into lobbying and political activities. A lot of five but one C four organization social welfare organizations would fall into that category. Um, then you are not eligible for the PP, and that remains still a restriction on participating in this. So the 51 C six is that that participate? They really they’re all sorts of lobbying number restrictions that are involved. But generally speaking, if you’re principally a lobbying organization or political action organization, you will not qualify for these [00:24:31.91] spk_1:
and see fours are not eligible. [00:24:34.24] spk_0:
Yeah, so by and large, yeah. [00:24:54.84] spk_1:
Okay. There was a lot in the press about the deductibility of the expenses that you use the money for. I’m talking now about the the 40% That’s non payroll. Um, initially, you weren’t allowed to deduct what used to be deductible if you spent P p p money on it, which was kind of, Ah, a clawback. You lost the deduction. They have the money was forgiven if you did it right, but you had a but you couldn’t deduct the expenses that you spent it on. So it was like it was like giving and then taking that’s that’s been changed. Those expenses, air now deductible. [00:26:23.41] spk_0:
Yeah. Although let’s sort of frame it to tony that most nonprofits, that we’re talking about our tax exempt in the first place so they don’t have to worry about deductions except with respect to their unrelated businesses. And so, for taxable and for taxable entities. Yeah, Or if, if a non profit does have unrelated business income resulting coming from a specific business and that gets a little bit more complicated, it is really important to know that if you receive the P P p loan and you spent money on some of those expenditures that you can actually deduct from it. So the rationale before is that the government is giving you money so you shouldn’t be able to spend it and then get another tax benefit of a deduction with it, because the government just granted that money to you. But overall, in terms of stimulating the economy, it was just too popular. And just to important to the overall goal, Thio restrict that from happening. So yes, now you can get a P P p loan and you can spend it on legitimate business expenses within that sort of that that range of qualified expenditures that we talked about and you could get a deduction for those things as well. So yeah, good point. [00:27:39.34] spk_1:
Thank you. Thanks for clarifying to time for our last break. Quote. There’s nothing as simple as dot drives. Our executive team meets once per week to sit down and go through our dot drives pipelines. It’s fun to watch them have a healthy dialogue and to see them get excited about their numbers rising toward their goals. Sounds exciting. That drives has allowed us to take those key relationships and bring them to a deeper level. End quote. That’s Wendy Adams, director of donor engagement at Patrick Henry. Family Service is prospect to donor Simplified. Get the free demo from DOT. For listeners, there’s also a free month. Go to the listener landing page at tony dot Emma slash dot We’ve got but loads more time for P P p two. What else? What do you wanna talk about? Tpp Wise way didn’t cover. [00:28:11.94] spk_0:
Well, I thought I’d talk about something a little bit fun just to start off with E. Sure. So there’s the three martini lunch deduction, Um, which is a kn interesting deduction. Um, but basically, you know, I think it’s been since the eighties, where that if you had a business expense and this is again mostly for for profits. But it’s one that puts a little bit of a smile on my face, although there’s some serious consequences that can flow from it. But [00:28:14.03] spk_1:
we’ll go ahead and smile. Gene, allow yourself to smile. Yeah, you have to qualify your given unqualified smile. [00:28:31.04] spk_0:
So since the mid eighties, I think if you are I in our separate businesses tony took somebody out, took each other out for lunch, You know, 50% would be deductible if it was a legitimate business lunch. Um Well, um, President Trump and the outgoing administration really felt important to give back um, Thio 100% deductibility. Eso business lunch is going to be deductible up to 100% for two years s. So this is sort of received the nickname the three martini lunch deduction. Um and yeah, I mean, there implications to this because obviously this will have a tax impact. And I believe the final document that put into the PDP loan in the whole stimulus package in late December with somewhere around 15,000 pages, So I can’t imagine that somebody has read all of this yet. Um, but the impact the economic impact of this will eventually be sort of a judge. But this could cost, you know, the government a billion or $2 billion in lost revenues. So it does have implications there. [00:30:00.14] spk_1:
Can this also have impact for, um, employee of a non profit? Who lets, say, does a ah business lunch and their employer does not reimburse that expense. So then when they’re deducting, they can then deduct that expense if they itemize, and it would now be fully deductible instead of only 50% deductible. Is that is that true for non profit employees? [00:30:32.64] spk_0:
I don’t believe tony. So generally I think, you know, the best interest would would be for the non profit to reimburse, employ. Um, but if the employee is going thio state that it was, ah necessary business expense, it’s going to be a little bit more difficult. Thio do so for them. And I don’t think that they would get um [00:30:33.23] spk_1:
Yeah, like if they took a donor, Suppose they took a donor to a lunch? [00:31:18.14] spk_0:
Yeah, for that again, I would think it would be the nonprofits responsibility. Thio to to reimburse them if they individually took them out. I’m just wondering how that business expense would work out where they don’t have a sole proprietorship. You know, as I think about it a little bit more, tony, I guess the rules would still apply. So it is just a question about whether they could get the deduction in the first place. They can get the deduction in the first place, and it’s possible that the 100% rule might apply. But I’m not sure that it would in this case, because it’s not necessarily their business expense. So I don’t think I have anything definitive for you, but it’s kind of like, you know, the auto expense deduction. So if you know if your business [00:31:28.31] spk_1:
car for business purposes right, you get 57 cents per mile or something like that, whatever it is, [00:31:34.92] spk_0:
yeah, gets adjusted every year. But if you’re doing it for ah, non profit organization, your deduction rate is much, much smaller. It’s I can’t remember the number, but it’s like 14 cents, um, so you don’t get the same benefits when you’re doing it for another organization? [00:31:53.82] spk_1:
Is that for a volunteer or that applies to employees. Also, [00:31:57.84] spk_0:
it would apply to anybody who’s taking that deduction on their own s. Oh, okay. Okay. Yeah. Best for the non profit to reimburse. [00:32:34.54] spk_1:
Yeah. Spitballing. Okay, um, I’m glad you’re smiling over the three martini lunch. That’s good. Let’s go. What? Well, we could cynically say that was a gesture A KN award for focus on Well, doesn’t have to be Wall Street, but we could be most cynical and say it was for the president’s Wall Street friends to now deduct all there all their fancy meals in New York City at 100% instead of only half. [00:32:40.54] spk_0:
Yeah, that’s right. And I I think that’s the cynical viewpoint [00:32:50.54] spk_1:
e. There’s no question of that. That’s time. But then there’s the [00:32:51.25] spk_0:
other side of that. Well, can stimulate the restaurant [00:33:11.14] spk_1:
well, and they stimulate the restaurant economy. Yes, industry. And also there are small businesses. Everybody does not own a Wall Street business in New York City. Of course. All right. Onley only only holds 80% true. Um what? Anything else? Anything else that you think non profit need to know about P p p two point. Oh, [00:33:16.64] spk_0:
well, I think out of the same kind of act where the pee pee pee loans came out of was important provisions regarding the charitable contribution deduction. So as long as we were talking about deductions, I thought it might be important to know that [00:33:30.57] spk_1:
for your donors, [00:33:48.44] spk_0:
Yeah, so for donors. So when we talked about deductions and itemizers, you know, as a result of the Trump Tax Act, um, some years ago, now a tw the start of his administration, we ended up with having, you know, itemizers, um, mhm being reduced from, I think, something like 35% of all taxpayers, down to about 10% of taxpayers. Meaning that 90% of taxpayers would not get the benefit of a charitable contribution deduction because they would take the standard deduction rather than itemize. It would be better for them. So the vast majority of taxpayers, the math, vast majority of small organization donors are not going to get a tax benefit from giving a charitable contribution anymore. So, you know, we’re still relying on them to do it because they believe in the organization and its mission and the people there, and you know what it’s doing but the tax benefits not going to be there anymore until the cares Act provisions last year that said, Well, even if you’re non itemizing, you can deduct up to $300 Is an individual $600 for a married joint filer? Um, above the line, basically. So you can you can get that deduction even if you’re not itemizing. [00:34:55.48] spk_1:
Take the standard deduction, but you can add another up to $300 per person, [00:36:21.13] spk_0:
Right? So what this bill does is it Extended it out. So now we will. The previous bill was going Thio run out and we’ve got now an extension of this for another year, so that is a good thing. So that was only gonna last through 2020 Now, Now we have it for 2021 A ZX well, and and, uh, another thing or are somewhat related thio that are just sort of other relief provision. The measure provides an additional $300 per week and unemployment benefits through March 14th is gonna be helpful. Um, there’s a moratorium on evictions that was going to expire December 31st, 2020. And now that’s, um, uh, going to be extended out for a month. Not very much, but every little bit helps right on $25 billion available in additional federal funding for assistance to renters. So we will see if that if that actually plays out. And finally, there’s an extension of the Cares Act employee retention tax credit through July 1st. So that’s a credit. So versus a deduction, which you take after you figure out what your taxable, you know, um, in determining your taxable income. I’m sorry. And the credit after you figured out what your taxes are that would apply against your taxes. So there’s an employee retention tax credit. Um, that’s been made a little bit simpler. It’s a little too complicated for probably people’s interest on this radio program. But take a look at it as a tax credit might be really valuable to some organizations that might not otherwise qualify for PDP. Forgivable [00:36:46.96] spk_1:
long. Okay. For employee retention. Yeah. Okay. Okay. How about we leave it there? Gene Sound. Okay, [00:36:54.03] spk_0:
That sounds great, tony. [00:37:58.63] spk_1:
Okay. Thank you again. Thank you for doing P p p re ducks. Two point. Oh, uh, course. Gene is managing attorney of Neo. You’ll find the firm at neo law group dot com. He’s at G Tack, and you should be subscribing to the wildly popular non profit lob log dot com. Thank you very much, Jeanne. Always a pleasure, tony. Thanks Next week. The hot sauce principle. If you missed any part of this week’s show, I beseech you find it at tony-martignetti dot com were sponsored by turn to communications, PR and content for nonprofits. Your story is their mission. Turn hyphen two dot ceo and by dot drives Prospect to donor. Simplified for a free demo and a free month. Our creative producer is Claire Meyerhoff Shows Social Media is by Susan Chavez. Mark Silverman is our Web guy, and this music is by Scott Stein. Thank you for that affirmation. Scotty. Be with me next week for non profit radio big non profit ideas for the other 95% Go out and be great
Processed on: 2021-01-10T22:40:39.338Z
S3 bucket containing transcription results: transcript.results
Link to bucket: s3.console.aws.amazon.com/s3/buckets/transcript.results
Path to JSON: 2021…01…520_tony_martignetti_nonprofit_radio_20210111.mp3.454479925.json
Path to text: transcripts/2021/01/520_tony_martignetti_nonprofit_radio_20210111.txt
non Hello and welcome to tony-martignetti non profit radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite heh abdominal podcast. Oh, I’m glad you’re with me. I’d suffer the effects of Vibe bro Sis, if you infected me with the idea that you missed this week’s show P P P to zero Jean Takagi returns with the ins and outs of the second round of paycheck protection program. Help for your non profit. He’s our legal contributor and managing attorney at Neo. The non profit and exempt organizations law firm Antonis Take two. I’m still optimistic, were sponsored by turn to communications, PR and content for nonprofits. Your story is their mission. Turn hyphen two dot ceo and by dot drives. Prospect to donor, Simplified tony-dot-M.A.-slash-Pursuant demo and a free month. What a pleasure! Genuine pleasure to welcome back Jean Takagi. You know him, for God’s sake, but let’s do the formalities he deserves. Gina is our legal contributor and managing attorney of Neo, the non profit and Exempt Organizations Law group in San Francisco. He edits the wildly popular non profit law blogged dot com, and there’s the American Bar Association’s 2016 outstanding non profit lawyer. He’s a part time lecturer at Columbia University. The firm is that neo law group dot com, and he’s at G Tack g T a k. Welcome back, Jean. Happy New Year. [00:01:52.04] spk_0:
Happy New Year, tony. Great to be back with you. It’s [00:01:54.34] spk_1:
good to have you. Thank you. It’s outstanding, lawyer. Now, that’s five years old now. [00:01:59.14] spk_0:
Yeah, I think that that probably has to go down the wayside. [00:02:25.54] spk_1:
Take that. Actually, Is it more embarrassing now then? It always has done What? What’s he done in the past five years? Exactly. I’ll take that. Alright, we’ll take that out from starting next time. All right, Um, so the paycheck protection program is is back version 2.0. Um, what what’s your what’s your overview of it? The p p p re ducks. [00:04:28.64] spk_0:
So it’s a good thing, of course, and it comes in sort of within the broader context of a kn appropriations act that’s to help stimulate the economy. And we know how hard co vid and, um, all of the shutdowns that have been caused by the coronavirus, all of the health care issues we have presented a huge challenge for our economy and for the nonprofit sector as a whole. I think back in August, The Washington Post had written some article that suggested one third of nonprofits could ultimately shut down at the end of this crisis. I think that might have been a little overblown. Hopefully, the vaccine is going to contribute. Thio Um, the development of several vaccines contributes to a little bit more of a recovery, but we still seem to have a long slog through this. And that’s why more money needed to get out to stimulate the economy and particularly nonprofits who are impacted two ways. One by just less money coming in. Less revenues, less donations. Andi the greater need for so many people who need the service’s of non profit. So the good part of the second kind of draw of the P P P loans is that there’s more money been made available. Um, it’s still not enough in my personal opinion, and hopefully we’ll see more, but 11 of the really good things about this second draw, the P P P loans is that you can go in for a double dip now, So if you are a kn organization. One of the I believe it’s 180,000 non profits that applied and received the first round of loans. Who came, actually, which came into parts? Um, [00:04:29.30] spk_1:
180,000. Sounds low to me. I’m not I’m saying that I heard it was more. But of the 1.51 point six million or so only 180,000. [00:04:40.14] spk_0:
Yeah, I believe that’s the number that that I I have that that actually received loans [00:04:45.13] spk_1:
12% or something like that. [00:04:47.94] spk_0:
Yeah, on dhe. You know, so out of those, the original set of loans under the Cares Act on day one of the amendments to that so you could only come in once, so you get one loan out of them. You can’t go back in for another loan. Um, so this second draw actually allows a nonprofit that took out a loan, used it up, or is going to use it up to come back in for a second loan. And that’s really important with the covert crisis dragging out. [00:05:47.84] spk_1:
So, um, let’s see, just I know you You introduced a second raw, but let’s let’s talk about the folks who maybe did not get a p p p low in the first time. So that so for nonprofits, That s so they they certainly are eligible this time to, um, let’s talk about like, you have to have fewer than 500 employees, which I’m sure all our listeners do. Um What who else is what? Like what else you have to do to be eligible for for a loan first time through. [00:05:50.64] spk_0:
So I think that the numbers actually 300 or fewer on that [00:05:54.93] spk_1:
isn’t that for the, isn’t it? For the second draw? [00:06:59.74] spk_0:
Yeah, I think this whole thing is sort of called. I’m sorry. You’re right, tony. So that that refers to the second draw for for, um, organizations that have received a P P P loan. So it’s 300 or fewer. The original draw was 500 or fewer. Um, and demonstrating at least a 25% reduction in gross revenues between the same quarters in 2020 and 2021. So you took a look at the first quarter. You measure first quarter versus first quarter, second quarter versus second quarter. You can’t mix and match. So the same quarter in two years if you experienced at least 25% reduction in gross revenues. And that’s how you had reported in the 1990 year gross revenues figure, then you would be eligible for for that, that second draw. And I believe that’s the standard for the first draws. Well, um, and it’s subject to a maximum of 2.5 times. The average monthly payroll costs up to $2 million in this round. [00:07:10.94] spk_1:
Okay, Okay. And those payroll costs, you can choose, right? A period between eight weeks and 24 weeks. Correct that. You want that you want to be compensated for And that and, uh okay, that you wanna be compensated for, right? So, between to two months and and six months, [00:07:26.84] spk_0:
right, starting on the origination of the loan. Okay. Yeah. [00:07:37.44] spk_1:
Okay. But but to be eligible, you have to demonstrate a decrease in gross revenue of 25% or more. Correct. Incomparable quarters. Okay. Okay. Now for folks who again, this first draw the first time through it at this point so far, um, they should be going to their bank. Right? You need a bank. That’s that’s s B A Small Business association approved, but it seems like your bank will be the place to start at least looking for where you can find a lender. [00:07:59.74] spk_0:
Yeah, absolutely. That’s that’s the place to go to get the application forms. And yes, the S B A operates the loan through the sort of approved banks that [00:08:09.88] spk_1:
the bank. Yeah, And in my experience, if your bank isn’t an S b a approved lender, I had heard that your your bank can help you find one. You can also just search for them in your area. But you might be able to get a referral from your own bank if they’re not a S B A lender. [00:08:28.06] spk_0:
Yeah, and you can, I think, find that out on the Web as well. If [00:09:18.64] spk_1:
it’s time for a break, turn to communications. The Wall Street Journal, The New York Times You wanna be in papers like that? What about CBS Market Watch? The Chronicle of Philanthropy. Turn two has the relationships with outlets like these. So when they’re looking for experts on charitable giving non profit trends for philanthropy, they call turn to turn two calls, you turn hyphen two dot CEO now back to P P p. To point out now all the all the money you get, even though it’s called paycheck Protection Program does not have to go to a paycheck. There’s other things that you can spend what up to 40% on [00:10:53.34] spk_0:
that’s That’s exactly the number tony. So 60% has to be payroll related expenses that that you are using the funds for but up to 40% could be used for other things. And in the first round of the Cares Act sort of payroll protection plan, program loans or forgivable loans, they had things like mortgage, certain qualified mortgage payments and rent and utility expenses. They didn’t offer a lot more. So this round, this second draw, whether you’re taking it for the first time or not, I’m just going to refer to it is the second draw. Okay, he BP loans. You can use it for four other covered expense areas, and they include operations expenditures, which sort of refer to software and cloud computing service’s for businesses and have to do with payroll H R. Accounting all of those things. So if you need that, you can use it for those things property damage costs if they happened in 2020 and they were not covered by insurance and that might be related to looting or other public disturbances. UM, covered supplier costs which are for purchase of goods that are essential to the operations of the business, generally made pursuant to a contract that was in effect prior to the covered period of the eight or 24 weeks. Ah, nde covered worker protection expenditures, so that’s really important. So that includes the PP, eat of personal protective equipment, face masks and everything else, and also operating and capital expenditures that air related to meeting worker or customer safety requirements. So if you need to put barriers up, you know those plexi barriers between things like that, [00:11:22.27] spk_1:
maybe upgrade your h v a c so that Z Okay, [00:11:23.04] spk_0:
okay, so you want to take a look at what the requirements are in your area. If you need to spend on that, um, this is also going to be available for those type of expenses up to 40% so again, 60%. This is mostly focused on payroll in keeping people in jobs. Andi organizations operational, but 40% realizing that you do have some other costs that you need to have to be able to run the business. It’s not just employees, so this was a little bit more thoughtful in sort of creating that that those uses for P p p loan funds. [00:12:39.04] spk_1:
Let’s talk about forgiveness because that’s a big advantage to these p p p loans that if you do it right, your loan could be 100% forgiven if you do it right. So what do you have to do right now? I know we don’t know about, like, forgiveness forms that even for the first round. I mean, I in my business got a P p p low in the first round, and I’m still waiting for guidance on forgiveness. It Z S B A has gone back and forth many times, and so my bank doesn’t even have the forms ready yet for forgiveness from the first loans, which I got like in March or April or something. So but there are guidelines about what you’re supposed, how you’re supposed to spend to be eligible for the give nous for the forgiveness when the forms and the process do ultimately come out. So what’s What’s what is s b a saying there, [00:12:56.34] spk_0:
So yeah, first, just a comment on whether we’re going to see those forms out soon [00:13:04.68] spk_1:
so we could get the loan forgiveness from from March or April. Yeah, [00:13:09.24] spk_0:
yeah, eso It’s been a long time. The S b A actually has some forms out, and they did come up with a little bit of guidance in December. But the individual financial institutions, the banks haven’t yet developed all of their own forms on DSO. Yes, it’s a combination of looking at both of those forms, and we haven’t seen much happening there across all banks. Yeah, so that I think will be coming pretty soon, but we haven’t seen it just yet. [00:14:03.94] spk_1:
I guess I should be kinder to the S B A to I think overall, they managed a new emergency program pretty well. Eso you know, clearly their priority was getting the money out, not worrying about the forgiveness at the back end. So, uh, not trying to be harsh against SB A. They’re working under short deadlines and people in great need, So they focused on what’s more important getting money out. All right, so what do they say about how you should spend if you wanna have your loan forgiven. [00:14:08.44] spk_0:
So one of the things is what we talked about earlier. About that 60 40 split. Well, that is the requirement for loan forgiveness. So if you don’t want the loan to be forgiven, you don’t actually have to look at that 60 40 split, right? You could just pay back the loan at the interest rate, which I believe is 1%. Um, but I think nonprofits have taken out this loan, have taken it out with the very intent that it be forgivable loan and to use it for those purposes. So in order for it to be forgivable against, 60% must be used for payroll related expenses and 40% for those other covered categories that I mentioned. So, you know, the mortgage, the rent utilities and those four new categories that came out with this second draw that would apply only to the second draw amount. So amounts coming out of this 900 billion that that was part of this new act that came off this new relief act. Um, [00:15:25.04] spk_1:
you wanna make sure you keep your documentation so you can prove when it does come time for the forgiveness application, because you have to apply that you can prove that you spent the money on the bona fide expenses that are allowed. And you didn’t spend more than six more than 40% on the on the non payroll. Correct? Yeah, to be documentation. [00:16:20.94] spk_0:
And what I’m hearing back is from the first application, which you’ll soon see tony. The reports that they asked for are pretty complicated on dhe tough, and they’ve gone back and forth on like what to include and what not to include. But it can be pretty tough. The good thing is about this second draw. This new act that that was signed into law the just a few weeks ago at the end of the year is that if the loan was for 150,000 up to $300,000 or less, it’s going to be a one page one. So they’re going to make it super easy, and it’s really gonna you know, they haven’t released what that form exactly looks like. But they said what they’re going to ask for is the number of employees that you were able to retain the estimated amount spent on payroll costs. So did you meet that 60% basically, the total loan value and an attestation? So you basically you’re signing saying, I attest that I complied with all the requirements of the P P P loan program. So rather than documenting every single thing out, if it’s $150,000 or less, get most of the listeners. They’re probably going to fall into that category. Um, they’re going to be able to do with the one page form. But there are several larger nonprofits that they’re gonna have to file the more complicated forms. And to get you know, to your point, really good records really critically important for this because you do want to get this loan. Forget [00:19:54.44] spk_1:
it’s time for Tony’s Take two. Yes, I’m still optimistic. Even after what happened last Wednesday at our nation’s capital and the Capital building I still am. The optimism is for the whole year. It’s not just for the first 10 days, so I still feel good. Look, they’re already started arresting people for the trespassing and the unlawful entry into the Capitol. They’ve already arrested folks. So and there’s gonna be many more coming, so that gives a little bit of short term, uh, solace. I think that people face justice for their transgressions against our capital. But beyond that, beyond that, I just look forward to new years and I am feeling good that the country will be in a better place. The world will be in a better place this year. Then it was last year 2020. I mean, think about the pandemic to look how much further we’ve come in. Just what? The past 4 to 6 weeks with vaccines rolling out. Okay, Not as fast as they were supposed to have, but vaccines air rolling out. I think it’s gonna be a good year. 2021. I say. It’s gonna be a good year. That is tony Steak, too. Let us return to P P. P to zero with Jean Takagi. There’s something that you and I talked about, um, earlier in 2020 when the first paycheck protection program loans were offered was it was a little complicated Then if you had gotten another kind of loan, the e ideal economic injury disaster loan and you if you gotta an advance on that, which I’m not sure those advances really went out the way they were supposed to, but they were supposed to be, like, up to $10,000. You get in, like, within three days for the e i d l. But I know in my own case, I applied for that. But, um, didn’t didn’t it didn’t end up really being needed. And it was nowhere near the three days. Um, it was more like three months, and it all just came at 11 time. That’s a separate. But so that was related to you know that advance if you if you got it was related to paycheck protection program forgiveness, the S B A. Wasn’t gonna allow you toe be forgiven on ah e ideal loan advance. Now, you don’t have to worry about that anymore, right? [00:19:57.31] spk_0:
Yeah, that’s I mean, that’s one really good thing about this [00:20:01.09] spk_1:
two minutes set up for something that doesn’t matter anymore. [00:21:00.74] spk_0:
But it is important because some some of your listeners may be out there thinking, Oh, I can’t You know I can’t get this. Um uh, advance if I want loan forgiveness on Now it’s like, No, you can you can get both. So that’s really important that they repeal that former restriction on DSO. Now you can get both. Just a reminder for that the ideal stands for economic injury disaster loan on dhe It is alone, except when it’s called an ideal grant, Um, or advance. In which case, the idea is is that you’re going toe Qualify for it If you’re located in a low income community, you suffered an economic loss greater than 30%. So this is a little bit more stringent. And the second drop TPP loans [00:21:04.31] spk_1:
25%. [00:21:05.09] spk_0:
Yeah, and the same requirement that you employ not more than 300 employees. So it’s it’s a different program. I misspoke earlier and talked about $900 billion being the P P. P program, but that 900 billion was actually the total [00:21:19.48] spk_1:
that was the fullest [00:21:47.34] spk_0:
package. Yeah, eso of that 284 billion roughly was for the P P P program. Second draw loans that were coming out again, Whether you’re taking it for the first time or second time again on 20 billion for the e I. D. L grants those ran out very quickly on DSP. A page has still not been updated. Web page has still not been updated. So it will currently say we’ve run out. We don’t have these available, but we’re waiting for the update as a result of this new act, so you have to just keep looking for it. [00:21:56.04] spk_1:
Okay? Okay. The money is there for the the ideal grants, [00:22:10.54] spk_0:
but it’s 20 billion versus 284 billion for the P P P second draw loan. So it is a smaller pool of money. So just toe, be aware that that yeah, you’ll have to go in pretty quick if you’re going to qualify [00:22:21.04] spk_1:
in the second drawer. Loans got, um, expanded with 501 C six is now now eligible. Which they weren’t before. [00:22:31.34] spk_0:
Yeah, you know, I think non profit that’s really wanted, like a za sector. They said, why is it restricted? Just to 501 c three. There’s lots of other types of nonprofits that air doing important work here that are going to get tremendously impacted and small businesses are allowed toe sort of get the benefits of these loans. What about like chambers of commerce, especially for, like small regional areas that could really impact multiple businesses, and not just one or organizations that are focused on the travel business industry. So if you’ve got a trade association of related to travel, they can impact a broader industry and to lose them, um, could be really detrimental thio an entire industry and not just to a single business. So the idea was, let’s get other nonprofits involved or eligible as well. So 501 c six. That was kind of the lobbying for the 501 c six is specifically on. Yes, they become eligible for this P p p round A ZX well, but they have some of the same requirements, so they can’t employ more than 300 persons. But they also have some lobbying limitations. Um, that air there, so s [00:23:42.90] spk_1:
so if you’re a C six, you gotta look closely. [00:24:08.64] spk_0:
Yeah, and one other thing just about this and I won’t go into the details of C six. But generally speaking, um, the government said, if you are a lobbying or political like organization, that was principally into lobbying and political activities. A lot of five but one C four organization social welfare organizations would fall into that category. Um, then you are not eligible for the PP, and that remains still a restriction on participating in this. So the 51 C six is that that participate? They really they’re all sorts of lobbying number restrictions that are involved. But generally speaking, if you’re principally a lobbying organization or political action organization, you will not qualify for these [00:24:31.91] spk_1:
and see fours are not eligible. [00:24:34.24] spk_0:
Yeah, so by and large, yeah. [00:24:54.84] spk_1:
Okay. There was a lot in the press about the deductibility of the expenses that you use the money for. I’m talking now about the the 40% That’s non payroll. Um, initially, you weren’t allowed to deduct what used to be deductible if you spent P p p money on it, which was kind of, Ah, a clawback. You lost the deduction. They have the money was forgiven if you did it right, but you had a but you couldn’t deduct the expenses that you spent it on. So it was like it was like giving and then taking that’s that’s been changed. Those expenses, air now deductible. [00:26:23.41] spk_0:
Yeah. Although let’s sort of frame it to tony that most nonprofits, that we’re talking about our tax exempt in the first place so they don’t have to worry about deductions except with respect to their unrelated businesses. And so, for taxable and for taxable entities. Yeah, Or if, if a non profit does have unrelated business income resulting coming from a specific business and that gets a little bit more complicated, it is really important to know that if you receive the P P p loan and you spent money on some of those expenditures that you can actually deduct from it. So the rationale before is that the government is giving you money so you shouldn’t be able to spend it and then get another tax benefit of a deduction with it, because the government just granted that money to you. But overall, in terms of stimulating the economy, it was just too popular. And just to important to the overall goal, Thio restrict that from happening. So yes, now you can get a P P p loan and you can spend it on legitimate business expenses within that sort of that that range of qualified expenditures that we talked about and you could get a deduction for those things as well. So yeah, good point. [00:27:39.34] spk_1:
Thank you. Thanks for clarifying to time for our last break. Quote. There’s nothing as simple as dot drives. Our executive team meets once per week to sit down and go through our dot drives pipelines. It’s fun to watch them have a healthy dialogue and to see them get excited about their numbers rising toward their goals. Sounds exciting. That drives has allowed us to take those key relationships and bring them to a deeper level. End quote. That’s Wendy Adams, director of donor engagement at Patrick Henry. Family Service is prospect to donor Simplified. Get the free demo from DOT. For listeners, there’s also a free month. Go to the listener landing page at tony dot Emma slash dot We’ve got but loads more time for P P p two. What else? What do you wanna talk about? Tpp Wise way didn’t cover. [00:28:11.94] spk_0:
Well, I thought I’d talk about something a little bit fun just to start off with E. Sure. So there’s the three martini lunch deduction, Um, which is a kn interesting deduction. Um, but basically, you know, I think it’s been since the eighties, where that if you had a business expense and this is again mostly for for profits. But it’s one that puts a little bit of a smile on my face, although there’s some serious consequences that can flow from it. But [00:28:14.03] spk_1:
we’ll go ahead and smile. Gene, allow yourself to smile. Yeah, you have to qualify your given unqualified smile. [00:28:31.04] spk_0:
So since the mid eighties, I think if you are I in our separate businesses tony took somebody out, took each other out for lunch, You know, 50% would be deductible if it was a legitimate business lunch. Um Well, um, President Trump and the outgoing administration really felt important to give back um, Thio 100% deductibility. Eso business lunch is going to be deductible up to 100% for two years s. So this is sort of received the nickname the three martini lunch deduction. Um and yeah, I mean, there implications to this because obviously this will have a tax impact. And I believe the final document that put into the PDP loan in the whole stimulus package in late December with somewhere around 15,000 pages, So I can’t imagine that somebody has read all of this yet. Um, but the impact the economic impact of this will eventually be sort of a judge. But this could cost, you know, the government a billion or $2 billion in lost revenues. So it does have implications there. [00:30:00.14] spk_1:
Can this also have impact for, um, employee of a non profit? Who lets, say, does a ah business lunch and their employer does not reimburse that expense. So then when they’re deducting, they can then deduct that expense if they itemize, and it would now be fully deductible instead of only 50% deductible. Is that is that true for non profit employees? [00:30:32.64] spk_0:
I don’t believe tony. So generally I think, you know, the best interest would would be for the non profit to reimburse, employ. Um, but if the employee is going thio state that it was, ah necessary business expense, it’s going to be a little bit more difficult. Thio do so for them. And I don’t think that they would get um [00:30:33.23] spk_1:
Yeah, like if they took a donor, Suppose they took a donor to a lunch? [00:31:18.14] spk_0:
Yeah, for that again, I would think it would be the nonprofits responsibility. Thio to to reimburse them if they individually took them out. I’m just wondering how that business expense would work out where they don’t have a sole proprietorship. You know, as I think about it a little bit more, tony, I guess the rules would still apply. So it is just a question about whether they could get the deduction in the first place. They can get the deduction in the first place, and it’s possible that the 100% rule might apply. But I’m not sure that it would in this case, because it’s not necessarily their business expense. So I don’t think I have anything definitive for you, but it’s kind of like, you know, the auto expense deduction. So if you know if your business [00:31:28.31] spk_1:
car for business purposes right, you get 57 cents per mile or something like that, whatever it is, [00:31:34.92] spk_0:
yeah, gets adjusted every year. But if you’re doing it for ah, non profit organization, your deduction rate is much, much smaller. It’s I can’t remember the number, but it’s like 14 cents, um, so you don’t get the same benefits when you’re doing it for another organization? [00:31:53.82] spk_1:
Is that for a volunteer or that applies to employees. Also, [00:31:57.84] spk_0:
it would apply to anybody who’s taking that deduction on their own s. Oh, okay. Okay. Yeah. Best for the non profit to reimburse. [00:32:34.54] spk_1:
Yeah. Spitballing. Okay, um, I’m glad you’re smiling over the three martini lunch. That’s good. Let’s go. What? Well, we could cynically say that was a gesture A KN award for focus on Well, doesn’t have to be Wall Street, but we could be most cynical and say it was for the president’s Wall Street friends to now deduct all there all their fancy meals in New York City at 100% instead of only half. [00:32:40.54] spk_0:
Yeah, that’s right. And I I think that’s the cynical viewpoint [00:32:50.54] spk_1:
e. There’s no question of that. That’s time. But then there’s the [00:32:51.25] spk_0:
other side of that. Well, can stimulate the restaurant [00:33:11.14] spk_1:
well, and they stimulate the restaurant economy. Yes, industry. And also there are small businesses. Everybody does not own a Wall Street business in New York City. Of course. All right. Onley only only holds 80% true. Um what? Anything else? Anything else that you think non profit need to know about P p p two point. Oh, [00:33:16.64] spk_0:
well, I think out of the same kind of act where the pee pee pee loans came out of was important provisions regarding the charitable contribution deduction. So as long as we were talking about deductions, I thought it might be important to know that [00:33:30.57] spk_1:
for your donors, [00:33:48.44] spk_0:
Yeah, so for donors. So when we talked about deductions and itemizers, you know, as a result of the Trump Tax Act, um, some years ago, now a tw the start of his administration, we ended up with having, you know, itemizers, um, mhm being reduced from, I think, something like 35% of all taxpayers, down to about 10% of taxpayers. Meaning that 90% of taxpayers would not get the benefit of a charitable contribution deduction because they would take the standard deduction rather than itemize. It would be better for them. So the vast majority of taxpayers, the math, vast majority of small organization donors are not going to get a tax benefit from giving a charitable contribution anymore. So, you know, we’re still relying on them to do it because they believe in the organization and its mission and the people there, and you know what it’s doing but the tax benefits not going to be there anymore until the cares Act provisions last year that said, Well, even if you’re non itemizing, you can deduct up to $300 Is an individual $600 for a married joint filer? Um, above the line, basically. So you can you can get that deduction even if you’re not itemizing. [00:34:55.48] spk_1:
Take the standard deduction, but you can add another up to $300 per person, [00:36:21.13] spk_0:
Right? So what this bill does is it Extended it out. So now we will. The previous bill was going Thio run out and we’ve got now an extension of this for another year, so that is a good thing. So that was only gonna last through 2020 Now, Now we have it for 2021 A ZX well, and and, uh, another thing or are somewhat related thio that are just sort of other relief provision. The measure provides an additional $300 per week and unemployment benefits through March 14th is gonna be helpful. Um, there’s a moratorium on evictions that was going to expire December 31st, 2020. And now that’s, um, uh, going to be extended out for a month. Not very much, but every little bit helps right on $25 billion available in additional federal funding for assistance to renters. So we will see if that if that actually plays out. And finally, there’s an extension of the Cares Act employee retention tax credit through July 1st. So that’s a credit. So versus a deduction, which you take after you figure out what your taxable, you know, um, in determining your taxable income. I’m sorry. And the credit after you figured out what your taxes are that would apply against your taxes. So there’s an employee retention tax credit. Um, that’s been made a little bit simpler. It’s a little too complicated for probably people’s interest on this radio program. But take a look at it as a tax credit might be really valuable to some organizations that might not otherwise qualify for PDP. Forgivable [00:36:46.96] spk_1:
long. Okay. For employee retention. Yeah. Okay. Okay. How about we leave it there? Gene Sound. Okay, [00:36:54.03] spk_0:
That sounds great, tony. [00:37:58.63] spk_1:
Okay. Thank you again. Thank you for doing P p p re ducks. Two point. Oh, uh, course. Gene is managing attorney of Neo. You’ll find the firm at neo law group dot com. He’s at G Tack, and you should be subscribing to the wildly popular non profit lob log dot com. Thank you very much, Jeanne. Always a pleasure, tony. Thanks Next week. The hot sauce principle. If you missed any part of this week’s show, I beseech you find it at tony-martignetti dot com were sponsored by turn to communications, PR and content for nonprofits. Your story is their mission. Turn hyphen two dot ceo and by dot drives Prospect to donor. Simplified for a free demo and a free month. Our creative producer is Claire Meyerhoff Shows Social Media is by Susan Chavez. Mark Silverman is our Web guy, and this music is by Scott Stein. Thank you for that affirmation. Scotty. Be with me next week for non profit radio big non profit ideas for the other 95% Go out and be great
Jonah Halper wants you to apply project management principles as you raise money. He’s from 
Matt Barnett explains the benefits and use cases for short videos that grab attention and thrill recipients. Think volunteers, prospects, donors and anyone you want to feel special. Matt is at