It is critical that the next phase of relief make these 501(c)(6) non-profits eligible to participate in the Program and provide them with the same much-needed relief as was provided to their 501(c)(3) peers.
In the next round of COVID-19 relief legislation, Congress needs to support trade associations, chambers of commerce, real estate boards, boards of trade, and other 501(c)(6) tax exempt organizations that are vital to help businesses of all sizes to survive and thrive.
As policymakers left Capitol Hill last week after sending an unprecedented $2.2 trillion economic relief package to the President’s desk, the Paycheck Protection Program (Section 1102 of the CARES Act) was widely applauded by small businesses, 501(c)(3) non-profit organizations and self-employed individuals that face financial uncertainty amongst the economic downturn that has followed the COVID-19 pandemic.
Through the Paycheck Protection Program (the Program), eligible small businesses and 501(c)(3) organizations (generally those with 500 or less employees) and self-employed individuals will benefit from access to $349 billion in SBA 7(a) loans with favorable terms, minimal documentation requirements, an expedited review and approval process and the opportunity for the loans to be completely forgiven. This Program will help these organizations receive crucial liquidity to avoid closure, retain employees and cover short-term (2 months) overhead costs while providing a much-needed boost to the broader economy.
Unfortunately, this important loan legislation left 501(c)(6) non-profit organizations – who are crucial to industry and economic growth – on the sidelines without access to the Paycheck Protection Program. It is critical that the next phase of relief make these 501(c)(6) non-profits eligible to participate in the Program and provide them with the same much-needed relief as was provided to their 501(c)(3) peers.
Trade associations, chambers of commerce, real estate boards, boards of trade and other 501(c)(6) tax exempt organizations, as part of their mission, are “devoted to improving business conditions of one or more lines of business” and “direct their efforts at promoting the common economic interests of all commercial enterprises in a trade or community.” These organizations help businesses throughout the country in almost all industries to survive and thrive and are needed now more than ever as businesses of all sizes face economic hardship and, in some cases, difficult decisions about their future.
Just like the business that they support, 501(c)(6) organizations are experiencing financial risk of their own as their own sources of revenue – membership dues (from businesses who are facing financial troubles) and conferences, meetings, and conventions (many of which have had to be canceled) – have been reduced or eliminated.
Of course, the road ahead for relief packages is already crowded as the crisis around COVID-19 continues, but 501(c)(6) organizations should be getting a seat at the table for future relief efforts, especially as they help their member businesses navigate the uncertain economic waters ahead. In order to do so these groups will need to insert themselves proactively into the discussion. They should follow the lead of other groups that were successful in getting relief under the CARES Act: (1) get organized quickly to elevate a message in a noisy and non-traditional messaging environment, (2) connect the work and success of these organizations with the broader future of the industries and interests they are aligned with, and (3) ensure there is a constant and consistent narrative reaching key decision-makers.
As these relief debates evolve, there will be more competition for inclusion and, potentially, a broader population of those in need. It is an important time for 501(c)(6) organizations to elevate their voice to be included in the Program and/or the next round of relief legislation in order for them to survive, keep their employees on the payroll, and continue to support American industries and businesses.
For more information please contact:
Managing Director + Chair, Advocacy Practice
Thomas W. Antonucci
Partner, Corporate Law