Community by community, the impact of COVID-19 is variable and rapidly changing. The League of American Orchestras has been a leading voice as orchestras join advocates in the arts and nonprofit sectors nationwide seeking federal relief that will protect their substantial workforce and safeguard their essential service to communities in the wake of unprecedented closures and event cancellations. Forms of federal support that have traditionally been more limited are now expanded to offer opportunities for the nonprofit sector and workers in the gig economy, like many self-employed musicians, to find relief amidst the COVID-19 crisis. While these forms of assistance are meant to be rapidly available, more details will be needed as federal agencies sort out the fine print.
As Congress and the Administration consider new forms of federal economic assistance that may be targeted or widespread, orchestras should continue to contact elected officials to let them know of the unexpected loss of event-dependent revenue, income for musicians, and declines in charitable contributions.
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What's on this page:
- Webinar: Your Orchestra and COVID-19 Federal Relief
- Families First Paid Leave Provisions
- Pandemic Unemployment Benefits
- SBA Economic Injury Disaster Relief and Loan Advance
- Paycheck Protection Program and Loan Forgiveness
- Employee Retention Credits
- Industry Stabilization Fund Loans
- Relief for Nonprofits Self-Insuring Unemployment Benefits
- International Artist Visas
- New Charitable Giving Incentives
- National Endowment for the Arts Funding
The League of American Orchestras has hosted two free webinars, providing a top-line overview of what is known about COVID-19 federal relief, along with insights into the new need for crisis management through mid- and longer-term financial planning and strategic thinking. The webinars included insights from experts at Pryor Cashman, LLP and Susan Nelson, TDC and were moderated by the League’s Heather Noonan, VP for Advocacy. The League is also offering individualized technical assistance on the COVID-19 federal relief opportunities from qualified legal experts from the Pryor Cashman law firm.
Webinar: Your Orchestra and COVID-19 Federal Relief (April 1, 2020)
Webinar: Your Orchestra and COVID-19 Federal Relief (April 8, 2020)
The FFCRA has a central focus on COVID-related paid leave for employees, relief for employers (including nonprofit employers) that provide the paid leave, and comparable leave provisions for self-employed workers. The FFCRA’s paid leave provisions are in place for employers with fewer than 500 employees at the time leave is taken, take effect on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020. A temporary non-enforcement period is in place through April 17 for employers making a good faith effort to adapt to the new rules. Exemptions may be available for employers with fewer than 50 employees.
The U.S. Treasury Department is responsible for writing guidelines to detail how employers will gain access to refundable payroll tax credits equal to paid leave provided, and how similar paid leave relief will be accessible to self-employed individuals.
Unemployment Benefits Guidance was expanded by the federal government on March 12, giving states the flexibility to expand their unemployment benefits coverage to include COVID-19 related worker displacement. Unemployment benefits will be further expanded to provide an additional $600 per week above the amount allowed under state unemployment benefits, for four months. New relief will be available for workers not eligible for state unemployment benefits, including self-employed individuals who are unable to work due to a number of COVID-related reasons, including "the individual's place of employment is closed as a direct result of the COVID-19 public health emergency." Very many musicians and arts workers who otherwise do not have access to state unemployment benefits may find relief through this provision. Unemployment benefits will be available for a total of 39 weeks, and covered dates of unemployment are from January 27, 2020 through December 31, 2020.
U.S. Department of Labor Issues PUA Guidance to States (April 5, 2020)
The SBA's Economic Injury Disaster Loan Program has received additional funding to provide disaster relief loans, related to COVID-19, with eligibility for nonprofit organizations and self-employed individuals. The CARES act adds rapid processing of forgivable loan advances for up to $10,000 in emergency funds. The SBA has informed the League that, as of March 24, 2020, all states are in the process of being granted eligibility, and that all interested loan applicants should originate an application now. Keep in mind that multiple forms of SBA relief may not be used for the same purpose. Guidelines should spell out how the SBA-backed forgivable paycheck protection loans approved in the third relief package will relate to Economic Injury Disaster Loans.
Direct Link to Apply Online (New streamlined process as of March 30, 2020)
Organizations, including 501(c)(3) nonprofits, and self-employed individuals will have access to Paycheck Protection Program (PPP) forgivable loans, through a streamlined application process intended to provide rapid relief that will keep workers on the payroll and help self-employed workers. The U.S. Treasury Department released interim guidelines on April 2, 2020. These "interim final rules" are requirements that go into effect immediately, while the agency takes 30 days to receive public comments. Final rules will be issued after public comments are taken into account. The League will keep orchestra informed as the public comment period opens and will file comments on behalf of the orchestra field.
Loans will be provided by local lending institutions that are authorized by the Small Business Administration (SBA). The Act gives the SBA and the Treasury Department authority to identify additional lenders. Eligible organizations are subject to a size cap of up to 500 employees (counting individuals employed on a full-time, part-time, or other basis). The maximum loan amount is $10 million, and equal to 250% of average monthly payroll for the 12 months beginning February 15, 2019. Seasonal employers have the option of calculating average monthly payroll over the period of March 1, 2019 to June 30, 2019, or May 1, 2019 and September 15, 2019.
On the question of calculating the 500 employee threshold, preliminary U.S. Department of Treasury guidelines to borrowers, refer to the following SBA calculation. Further clarification may follow: “This is the average number of people employed for each pay period over the business’s latest 12 calendar months. Any person on the payroll must be included as one employee regardless of hours worked or temporary status. The number of employees of a concern in business less than 12 months is the average for each pay period that it has been in business.”
Loans may cover expenses incurred beginning February 15, 2020 and ending on June 30, 2020. The loans have a maturity of 2 years, an interest rate of 1%, and payments are deferred for 6 months. Eligible uses of the loans include payroll costs (including salary, wages, compensation, leave, severance, health care benefits, insurance premiums, retirement benefits, and state and local taxes), rent, utilities, and mortgage interest payments.
Guidelines made public on April 2, indicate that, “independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.” The Treasury issued guidelines on April 20 for self-employed applicants outlining the process for calculating maximum loan amounts and detailing further eligibility requirements.
Applicants may apply to their lender for loan forgiveness. The borrower will be eligible for loan forgiveness equal to the amount of allowable costs spent by the borrower during an 8-week period after the origination date of the loan. The portion of the loan that can be forgiven will be reduced by an amount related to positions that have been eliminated and wages that have been reduced, unless those positions and wages are restored by June 30, 2020. The Small Business Administration announced the release of the Paycheck Protection Program loan forgiveness application and instructions on May 15,
and has issued interim loan forgiveness rules.
If these Payroll Protection Program might be an option for your orchestra, you are encouraged to begin a conversation with your lender now.
Interim Treasury Regulations for PPP, Including Q & A (April 2, 2020)
Paycheck Protection Program Frequently Asked Questions (Continuously Updated)
Interim Final Rule for Seasonal Employers (April 28, 2020)
Interim Final Rule for Self-Employed Applicants (April 20, 2020)
Employers that do not make use of the forgivable Payroll Protection Program loans may be eligible for a quarterly refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis, applied to the first $10,000 in compensation per employee (resulting in a credit of up to $5,000). The extent of the credit and eligibility requirements vary depending on whether the employer has more or less than 100 employees.
The CARES Act authorizes the Federal Reserve and the Treasury to create a “mid-size loan” program that may be available to nonprofits with 500 or more employees that commit to restoring 90% or more of their workforce within four months of the end of the national public health emergency. Additional requirements will apply to future workforce conditions--some of them related to collective bargaining agreements--and will merit careful consideration. Loans would be available at an interest rate of 2% or less, and payments would not be required for the first six months. The CARES Act also provides resources for a “Main Street Lending” program, giving broad authority to the Federal Reserve to set the terms for eligibility. As the initial draft of the Main Street program does not include eligibility for nonprofits, the League and our partners in the nonprofit sector are calling for immediate access for 501(c)(3) organizations. The Federal Reserve and Treasury are continuing to write guidelines for loan administration.
Federal Reserve Announces Draft Main Street Lending Guidelines (April 9, 2020)
Some orchestras are among nonprofits that self-insure unemployment benefits rather than pay state unemployment taxes. The federal government will make payments to states to reimburse nonprofits for half of the costs they incur through December 31, 2020 to pay unemployment benefits. Guidance from the Department of Labor indicates that states must first bill nonprofits for 100% of the costs, payment must be made to the states by nonprofits, and only then will the 50% reimbursement be issued to the nonprofit by the state. Nonprofit advocates are seeking revised rules that would streamline this process and relieve nonprofits of the payment burden.
DOL Issues Unemployment Insurance Letter to States (April 27, 2020)
Orchestras in communities of all sizes frequently engage international guest artists. In the wake of COVID-19, policy solutions are needed as arts organizations and global artists pivot to reschedule planned performances. The League and arts sector partners are calling on U.S. Citizenship and Immigration Services and the U.S. Department of State to implement immediate policy solutions that will support the future of international cultural activity. The League hosts www.artistsfromabroad.org, a complete guide to artist visa procedures, where we are posting the latest news on artist visa policies.
Building on years of advocacy by orchestras in partnership with the broader nonprofit sector, a new universal charitable deduction is available, allowing the growing number of taxpayers who do not itemize their returns to receive a tax deduction of up to $300 for cash charitable donations to 501(c)(3) nonprofit organizations during calendar year 2020. For taxpayers that itemize returns, the limit on the total percentage of Adjusted Gross Income (AGI) eligible for the charitable deduction has been lifted. The limit on corporate contributions has been lifted to 25%. The Congressional Joint Committee on Taxation issued a report on CARES Act provisions specifying that the new non-itemizer deduction’s $300 cap applies to each “tax filing unit,” which means the $300 limitation applies per tax return, regardless whether filed individually, or jointly by a couple.
Joint Committee on Taxation Report on CARES Act Provisions (April 23, 2020)
The Coronavirus Aid, Relief, and Economic Security Act (CARES) includes $75 million in funding for the National Endowment for the Arts to administer for COVID-19 assistance. Of the total, 40% of funding will be administered in partnership with state arts agencies, and the remaining resources will be delivered through direct one-time grants to eligible nonprofit arts organizations across the country to help these entities and their employees endure the economic hardships caused by the forced closure of their operations due to the spread of COVID-19. Distribution of critical funds will be expedited at national, regional, state, and local levels to help retain as many jobs as possible, as quickly as possible.
Support is limited to any or all of the following:
- Salary support, full or partial, for one or more positions that are critical to an organization’s artistic mission.
- Fees for artists and/or contractual personnel to maintain or expand the period during which such persons would be engaged.
- Facilities costs such as rent and utilities.
All applicants for direct grants must be previous National Endowment for the Arts award recipients from the past four years. All grants are no cost share/nonmatching and will be awarded for a fixed amount of $50,000. Eligible applicants include nonprofit arts organizations, local arts agencies, statewide assemblies of local arts agencies, nonprofit arts service organizations, units of state or local government, federally recognized tribal communities or tribes, and a wide range of other organizations that can help advance the goals of the NEA and this program. Grants will be made either to organizations for their own operations, or to designated local arts agencies, eligible to subgrant, for subgranting programs to eligible nonprofit organizations. State Arts Agencies (SAAs) and Regional Arts Organizations (RAOs) will receive their partnership funds through the CARES Act in a series of amendments to existing partnership grants.
In addition, the NEA has announced flexibility for current grantees and FY20 applicants:
NEA application guidelines for CARES Act grants (April 8, 2020)
NEA to Distribute $75 million in Relief Aid (March 27, 2020)
Relief Package #1: Coronavirus Preparedness and Response Supplemental Appropriations Act (signed into law 3/6/2020)
Relief Package #2: Families First Coronavirus Response Act (FFCRA) (signed into law 3/18/20)
Relief Package #3: Coronavirus Aid, Relief, and Economic Security (CARES) (signed into law 3/27/2020)
League of American Orchestras CARES Act Overview (March 26, 2020)