August 4, 2020

PPP: How Proposed Lobbying Restrictions Could Exclude Small 501(c)(6)s

We reported last week on an updated Senate COVID-19 relief measure that would expand eligibility under the Paycheck Protection Program (PPP) to include 501(c)(6) organizations with 300 or fewer employees.

We also highlighted the bill’s proposed, vague lobbying restrictions that would be used to further determine eligibility. We are concerned small organizations that typically do not lobby much at all would be inaccurately labeled as lobbying organizations and that the restrictions could exclude most, if not all, organizations that lobby on a modest basis.

If a 501(c)(6) organization employs 300 or fewer people, it would only be eligible for a PPP loan if:

  • “the organization does not receive more than 10 percent of its receipts from lobbying activities;” and/or
  • “the lobbying activities of the organization do not comprise more than 10 percent of the total activities of the organization.”

Ten percent is a low threshold for any organization, but, unlike for 501(c)(6) organizations, these proposed restrictions would not apply to businesses and other nonprofits.

The lobbying provisions are so vague that we don’t know what exactly will be calculated to determine “receipts” or “lobbying activities.” These provisions would also permit the Small Business Administration (SBA) to create its own definitions, criteria, metrics, etc., to examine “receipts” and “lobbying activities.” SBA could use pre-existing definitions or create their own, which may therefore potentially look beyond what is typically considered lobbying and receipts.

If given the opportunity, we expect SBA will make the application process as stringent as possible.

Bottom line: these provisions could exclude nonprofit associations, chambers of commerce and others from receiving critical financial relief when they need it most. For others, these proposed restrictions would create a significant administrative burden and subsequently delay relief.

Collectively, we must urge as many legislators as possible to ensure 501(c)(6) organizations gain access to PPP funds and that these unfair lobbying restrictions are made more inclusive or eliminated altogether.

Call to Action 

ASAE staff remains in discussion with several key congressional offices regarding these issues, but we still need your help to maximize our community’s outreach.

  1. Use our template Tweet to urge Senators Mitch McConnell, Marco Rubio and Susan Collins – and your legislators – to support PPP expansion on inclusive, equitable terms.
  1. Write your legislators directly with our automated congressional appeal. The automated appeal is ready to send, but feel free to customize your message.

Reminder: Complete ASAE’s Data Request Form

WE NEED DATA to further demonstrate to Congress why these unfair restrictions must be lifted, and that any PPP eligibility expansion should replicate terms provided to other eligible entities. We again respectfully ask for your time and support – please complete our data request form as soon as possible to help us unequivocally demonstrate our community’s need and help save imperiled organizations. While not exhaustive, the form is somewhat long out of necessity. We greatly appreciate your patience as you complete the form to the best of your knowledge. Thank you to the more than 475 organizations who have already completed the form.

Final Thought 

While legislation remains fluid, if PPP expansion to 501(c)(6) organizations indeed passes into law, such entities will need to move fast to secure PPP loans and the financial relief they need. We encourage you to consider your options now so, if needed, you can expeditiously pursue PPP loan funds when the time comes.

On August 18, ASAE will host an education session with experts and leading voices in association law, finance and accounting to examine options and how to apply for a PPP loan. We will share final details and a registration link when they become available.

THANK YOU for your steadfast advocacy to help build support for the 501(c)(6) community.

Email with questions.