The first part of this article was featured in the latest issue of Sharpe Group’s bimonthly newsletter Give & Take. Click here to read it.

Here, I will further explain the provisions of the CARES Act as they relate to nonprofits and then offer ideas to help you evaluate whether your current planned giving strategy is designed to help your organization through future crises.

Engage banking experts for guidance

With the passage of the CARES Act, which provided economic relief to both individuals and businesses, including nonprofits, the time is now to explore whether your nonprofit can receive its share of the benefits. There are four provisions that may apply to your organization, and, as always, it is best to seek guidance from experts,

Paycheck Protection Program (PPP)—not your average type of loan: the forgivable kind

•What is it?
o Total of $349 billion available to eligible businesses (including nonprofits).

o Program is administered through local lenders (banks) by the Small Business Administration (SBA).

• Who is eligible?

o Nonprofits with fewer than 501 employees.

o Any affiliations that control the organization must be included with the number of employees in the eligibility count.

• How much can you receive?

o Up to $10 million available, computed as two-and-a-half months of payroll costs.

o Employee compensation for the purposes of the computation is capped at $100,000.

• How can you spend it?

o Compensation to any individual up to $100K.

o Paid sick or medical leave.

o Insurance premiums.

o Mortgage interest and rent.

o Utility costs.

o Other interest payments.

Economic Injury Disaster Loan Emergency Advance (EIDL)

•What is it?
o Administered through the SBA.

o For temporary losses following a statewide economy injury declaration.

o Losses experienced as a direct result of the COVID-19 outbreak qualify.

• How much can you receive?

o Up to $2 million.

o $10,000 in emergency grants (forgivable) of advance payments while organization’s application is pending.

• How can you spend it?

o Paying fixed debts.

o Payroll.

o Accounts payable.

o Other bills that cannot otherwise be paid.

Payroll tax relief (generally cannot be used if your organization uses the PPP)

• Who is eligible?
o Nonprofits that have suspended operations (fully or partially) due to government order related to COVID-19 and that suffer greater than 50% reduction in year-over-year quarterly gross receipts.

• How much can you receive?

o 50% of the wages (max of $5K/employee) who are not working because of the closure during the period of March 13, 2020, to December 31, 2020.

o Nonprofits with fewer than 101 employees may claim a credit for employees who continue to work.

Other emergency relief (designed to help nonprofits with greater than 500 employees up to 10,000 employees)

• The Treasury is directed to implement a loan program that has an interest rate no higher than 2% per year with no payments due the first six months.

• Funds received must be used to retain at least 90% of the organization’s workforce through September 30, 2020.

Evaluate your planned giving strategy

Now is the time to develop a clear vision of the role of planned giving in your organization’s future. When thinking about planned giving, you should consider the following:

• Who is eligible?
o Long-term donors are usually your best prospects.

• How long until we see a return on our investment?

o Consistent investment in planned giving over time is essential as planned gifts begin to mature over a six to 10-year period, on average.

• The million-dollar question: How much can we expect to receive?

o Up to 100% of a donor’s estate, but usually a portion of it.

o It is common to receive more dollars from unknown bequest intentions than from those that are known in advance.

o Average bequests are often around $50,000 nationally

• How can we spend it?

o Donor intent prevails on the method of spending.

o Unrestricted dollars may be spent on operations/programs.

o Careful consideration should be taken on allocating a portion of planned gifts to endowments.

Build a successful planned giving program for the long-term

Whether you are starting a planned giving program or looking for ways to maximize the success of your existing program, there are questions you can ask yourself to evaluate its effectiveness:

• Does your organization currently have a planned giving program?

• How might your organization efficiently invest in a planned giving assessment?

• Can part or all of your planned giving program be outsourced? Or, should you hire someone dedicated to the planned giving role? How can you find that person?

If you have a mature planned giving program, are you redoubling your efforts to communicate and listen to your donors during this crisis and after?

• Are you continually seeking to improve the data in your donor files?

• Are you using Augmented Intelligence to ensure your planned giving messaging is most effective?

As we all continue to navigate through these uncertain times, Sharpe continues to draw on our 50+ years of experience in assisting nonprofits in their fundraising efforts. We would be honored to assist your organization in developing a long-term strategy for the future. Contact us for more information.
 
By Bob Mims, Sharpe Group CFO

 
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