Nonprofit organizations across the country are right now assessing their ability to sustain their work in light of COVID-19 closures and—in the case of health and human service organizations—rapidly increasing demand. They are also scrambling to understand the provisions of the CARES Act and whether they qualify for the financial relief it promises. Even with its $2 trillion dollar price tag, potential applicants worry that the legislation doesn’t make sufficient funds available and are rushing to sign up in a first come, first served mindset.
What most nonprofits are ignoring in their determination to survive this crisis are the potential ramifications of accepting government loans and possibly grants. The version of the third relief package prepared by House Democrats with the backing of Speaker Pelosi in response to what emerged from the Senate contained restrictions and reporting requirements for any corporations that received such financial support. These terms and other “wish list” items were not included in the relief bill that passed last month but they are noteworthy for what they reveal about what might pop up again in future legislation.
Among the restrictions on any corporation receiving coronavirus relief loans was a prohibition on lobbying the federal government, an ominous—though quite possibly unconstitutional—threat to First Amendment rights. Mandatory reporting requirements included the gender, race, and ethnic identity of the corporation’s employees and board members; the extent to which the corporation was utilizing minority and woman-owned vendors, professional service suppliers, and financial institutions; pay equity statistics; and the number of staff and amount of budget dedicated to diversity and inclusion initiatives. Finally, the proposed bill mandated that any corporation receiving federal aid related to COVID-19 “must maintain officials and budget dedicated to diversity and inclusion initiatives for no less than 5 years after disbursement of funds.” You can find the proposed bill here.
As the House begins work on a fourth coronavirus relief package, it is important for nonprofits to monitor closely what legislators may have in mind when they express the need for “clearer rules around oversight.”