The coronavirus (COVID-19) pandemic is front and center for many organizations as they try to adjust to the “new normal.” Although this has negatively impacted nearly every organization, the pandemic has also forced all businesses, including non-profit organizations, to take a hard look at their operations for potential areas of improvement.
Revisions to the Annual Budget
Many organizations establish a budget on an annual basis and once it is approved, it is unchanged for the entire fiscal year. Even though all of the effects of the COVID-19 pandemic are currently unknown, most organizations realize the annual budget is no longer valid. Spending some time now to reexamine the budget may uncover areas where adjustments or cost savings could be made. This process may prove to be so beneficial that your organization may want to establish a policy to review the budget at some interim date on an annual basis.
Effect on Contributions
COVID-19 has resulted in the temporary or permanent layoff of many individuals, some of whom may be regular contributors to your nonprofit. While it may seem to be the “wrong” time to solicit contributions, many individuals respond positively to direct solicitations in times of crisis for nonprofit organizations. Your organization (provided resources allow) should consider a direct appeal to donors to maintain or increase the flow of contributions, which can help to mitigate some of the negative impact from COVID-19. In addition, some areas have community foundations or other similar organizations, which are able to help a wide variety of nonprofits with funding to “bridge the gap” during this time of economic uncertainty.
Federal Assistance
The federal government also has instituted various programs to assist businesses in coping with the fallout from the pandemic. Many nonprofits have taken advantage of the Paycheck Protection Program (PPP) which offers low-interest loans that may be forgiven, provided the recipient follows the regulations issued by the Treasury Department. Recipients should be in contact with their lenders to help them stay on top of the ever-changing aspects of this (and other federal) programs. It is important to realize, even if all of the loan is not forgiven, the amount that needs to be repaid has a low interest rate and a 24-month repayment timeframe.
Even though the PPP appears to be the most popular federal assistance program, it should be noted that there are other available programs that could benefit nonprofit organizations, including provisions under the first coronavirus relief legislation (Families First Act or FFA). These items include emergency family and medical leave and emergency sick leave. Amounts paid by employers under these programs are reimbursed by the federal government through refundable payroll tax credits. As with the other federal assistance programs, there are various rules that must be followed to qualify for the payroll tax credit.
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The pandemic has resulted in sudden changes to operations for nearly all nonprofit organizations, including additional recordkeeping and difficult fiscal decisions. Please contact us if you need guidance in navigating these difficult times or visit our website for information and resources regarding COVID-19.
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Contact us to talk through the challenges your business faces as you navigate through this unprecedented time. No doubt you’ll need help assessing cash flow and making smart projections, reviewing loan covenants, lining up bridge financing, talking to banks and lenders, figuring out staff loads and employee counts, handling disrupted supply chains, and so much more.
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