From Washington Nonprofits:
We'd like to share some important updates about the American Rescue Plan Act (ARPA) and how it can be spent. These changes are a result of the advocacy we do in coalition with other state associations through the National Council on Nonprofits – your membership dues at work!
The Key Documents
Final Rule for the State and Local Fiscal Recovery Funds, Treasury, Jan. 6, 2022.
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule, Treasury, Jan. 6, 2022.
Treasury Issues Final Rule for State and Local Fiscal Recovery Funds Program to Support the Ongoing COVID Response, Treasury News Release, Jan. 6, 2022.
The SLFRF program, enacted as a part of the American Rescue Plan, promises $350 billion to state, local, and Tribal governments to support their response to and recovery from the COVID-19 pandemic. The 437-page final rule updates the interim final rule published in May. A first scan of the final rule finds that Treasury fixed our overriding concern by including reference to nonprofits everywhere reference is made to small businesses. This is important because some governments misread the interim final rule narrowly to exclude nonprofits due to this omission. The final rule also includes nonprofit examples (e.g., food assistance to low-income families), further clarifying that nonprofits are truly eligible recipients of these funds.
Nonprofit Focus: Accompanying Treasury’s final rule today is an Overview of the Final Rule that provides a page (p. 23) dedicated to Assistance to Nonprofits. It highlights eligibility based on things like decreased revenue (e.g., from donations and fees), financial insecurity, increased costs, capacity issues, and challenges to covering operating costs. A longer version of the explanation appears in the final rule at pages 153-161; it can be a tedious read, but provides valuable insights that will help you explain the program to your folks at the state and local levels.
Nonprofits as Beneficiaries AND Providers: A key correction in the final rule deals with which types of relief nonprofits are eligible to seek. The interim final rule had given some governments the impression that charitable nonprofits could only receive SLFRF funds as recipients of assistance and not as providers of assistance to others. This misperception is corrected in several places, including at page 171 of the final rule:
“Distinguishing Subrecipients versus Beneficiaries, which describes the differences between these two categories. Recipient governments responding to the public health and negative economic impacts of the pandemic may provide assistance to beneficiaries or execute an eligible use of funds through a subrecipient; some types of entities (e.g., nonprofits) could fit into either category depending on the specific purpose of the use of funds.” Emphasis added.
See also pages 27-28 for more examples and pages 208-211 for more technical details.
The Overview of the Final Rule is even clearer at footnote 2:
“Recipients should also be aware of the difference between ‘beneficiaries’ and ‘sub-recipients.’ Beneficiaries are households, small businesses, or nonprofits that can receive assistance based on impacts of the pandemic that they experienced. On the other hand, sub-recipients are organizations that carry out eligible uses on behalf of a government, often through grants or contracts. Sub-recipients do not need to have experienced a negative economic impact of the pandemic; rather, they are providing services to beneficiaries that experienced an impact.” Emphasis added.
In short, governments can use SLFRF money to support nonprofits directly and can hire nonprofits to provided services to others. If you would like to know more about ARPA in Washington State, and what ARPA funding opportunities are available, we are continuing to update our webpage and spreadsheet dedicated to ARPA and nonprofits. ARPA & WASHINGTON