On March 17, the District of Columbia passed the COVID-19 Response Emergency Amendment Act of 2020 (the Act) to provide much-needed relief to distressed nonprofit organizations in the District, including a new "health emergency grant program." The full impact of COVID-19, the disease caused by the novel coronavirus, on American nonprofit organizations may not be fully realized for months or even years. But already nonprofits are facing unexpected challenges that require workforces to be sent home, threaten annual conferences or conventions, hamper in-person fundraising events, and stretch already thin budgets nearly to the breaking point as organizations continue to pursue their missions in the face of the mounting national emergency. While Congress struggles to reach a bipartisan deal to send trillions of dollars of relief to American businesses and nonprofits, the District joined the patchwork of other states' responses to blunt the more immediate negative effects of the health crisis. In addition to the public health emergency grant program, the Act extends deadlines for mandatory reports and renewals, extends the validity of expiring business licenses, and permits businesses to defer sales tax payments without penalties.
Public Health Emergency Grant Program.
The Act creates a public health emergency grant and loan program that authorizes the mayor to issue a grant or loan to a District nonprofit that "demonstrates . . . financial distress caused by a reduction in business revenue due to the . . . public health emergency." Nonprofits may spend grants issued under the program on employee wages and benefits, operating costs including taxes and debt service, and repayment of loans obtained through the U.S. Small Business Administration (SBA). The initial $25 million grant fund will be available to nonprofits located in the District with up-to-date business licenses that have lost at least 25% of revenue due to COVID-19. Applications are available beginning Tuesday, March 24 at https://coronavirus.dc.gov/recovery. The District's guidance recommends that applicants have ready their 2017 and 2018 tax returns, a 2019 profit and loss statement, and a schedule of liabilities to apply. The District's grant and loan program is in addition to the SBA's Disaster Assistance Loan Program, which opened to District businesses on March 17.
Biennial Report Deadline Extensions.
To alleviate their administrative burden, the mayor has extended the due dates to June 1 for nonprofits that are required to file biennial reports in 2020. Typically, all domestic (incorporated in the District) and foreign (incorporated elsewhere) nonprofits that conduct business in the District of Columbia and that are registered with the D.C. Department of Consumer and Regulatory Affairs (DCRA) are required to file a report with DCRA by April 1 every other year. As a result of the extension, nonprofits that file between April 2 and June 1 will not be penalized. The two-month extension also applies to trade name renewals, which expire every two years and must also usually be renewed by April 1.
Business License Extensions.
Any licenses, registrations, permits, or authorizations set to expire during the public health emergency will be automatically extended under the Act. Last week, DCRA announced that business licenses and charitable solicitation licenses that expire during the public health emergency will be considered valid, and an additional 45-day window will be provided from the end of the emergency to renew without penalty.
Sales Tax Extensions.
The Act permits nonprofits that make sales and are subject to collecting and paying the District's sales tax to defer sales tax payments for February and March 2020 until July 20, 2020. Penalties are waived and interest is abated for failure to pay by the usual deadlines.
Conclusion.
The District's public health emergency declaration is currently in effect through April 24, and the Act is effective as of March 11 until at least June 9, 2020. As the first few weeks of the national crisis have shown, the landscape of relief opportunities for nonprofits harmed by the COVID-19 pandemic will continue to evolve rapidly. Venable LLP's COVID-19 Taskforce is consistently monitoring federal, state, and local legislation for additional new opportunities to keep nonprofits on stable footing during this uncertain and tumultuous period.