How Federal Funding is Helping Nonprofits with Unemployment Costs During the COVID-19 Pandemic
Heading into 2020, nonprofits in the United States employed 1 in 10 individuals, according to a 2019 Nonprofit Employment Report issued by Johns Hopkins University Center for Civil Society Studies. There is no doubt that the pandemic has significantly impacted those 12.5 million people. In fact, an April 2020 survey conducted by CharityNavigator and Reuters showed that 83% of respondents indicated they are suffering financially.
Nonprofit organizations are being even more careful with their cashflow due to cancelled fundraising events and a slump in donations. How will these challenges impact their cashflow? They can manage their unemployment claims and work within the temporary parameters of the CARES Act.
The Federal Pandemic Unemployment Compensation (FPUC) Benefit
The FPUC is the additional $600 weekly benefit payment an eligible claimant can receive. The federal governments funds the CARES Act. Reimbursing employers, like most nonprofits, are not charged for FPUC. Additionally, it should have no effect on the amount or timing of the states' unemployment reimbursements.
The Pandemic Emergency Unemployment Compensation (PEUC) Benefit
Similarly, reimburses will not be charged for unemployment benefits disbursed under the PEUC. The PEUC was also established by the CARES Act and allows a claimant to collect benefits for up to 39 weeks. This means an individual can collect benefits for an additional 13 weeks on top of the standard 26 weeks an eligible claimant can collect. Because the federal government is disbursing the funds under PEUC, those payments will not affect the charges or reimbursements requested by nonprofit organizations.
The CARES Act Covers 50% of Unemployment Benefit Costs Through 2020
Section 2013 of the CARES Act provides payment to states for reimbursement to nonprofits, government agencies and Indian tribes for half of the costs they incur through December 31, 2020 to pay unemployment benefits. It is a specific unemployment provision for nonprofit organizations.
This may relieve some of the financial burden to nonprofit employers who have to separate employees. However, it is important to consider the time needed to process the repayment.
As a reimbursing employer, nonprofit organizations will be required to pay the monthly or quarterly bill in full. The state then will request funds from the federal government. After the state receives those funds, it will credit the reimburser account for 50% of the prior payment. This timeline could take up to 90 days.
Some States are Doing More for Reimbursing Employers
In addition to the federal assistance offered through the CARES Act, there are currently nine states relieving reimbursable employers in full for any COVID-19 related claims. They are: Alabama, Iowa, Louisiana, Michigan, Montana, Nebraska, New Hampshire, New Mexico and North Carolina. There are specific processes in place in each state.
The Equifax Unemployment Claims management team recommends researching the specific requirements in the state where your nonprofit operates. Learn more about unemployment claims management for nonprofit organizations.