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Over the past two years, as communities across America faced enormous challenges and heartache, a critical sector of our economy unfailingly answered the call for help: the nonprofit sector. Whether providing health care, offering food and shelter, job training and education, connection through art or music, or any number of critical community services, nonprofits responded to the COVID-19 pandemic as an integral and irreplaceable partner to federal, state and local governments. The nonprofit sector was there when Americans needed them, and they are always there for us.
Across our nation, the nonprofit sector is composed of 12 million employees, 20 million board members and 63 million volunteers. This is a vital sector of the American economy motivated by service and community impact rather than financial profit. Still, nonprofits have needed help over the past two years themselves. They have been squeezed by lost revenue, labor shortages, disrupted operations and increased demand.
When the federal government developed the Paycheck Protection Program (PPP) to help businesses stay afloat through the worst of the pandemic, we worked in Congress to make sure nonprofits were eligible. Few things could be more counterproductive in a time of need than layoffs of the very people best positioned to help in our communities.
When the Small Business Administration (SBA) opened PPP in April 2020, nonprofit and for-profit entities scrambled to complete the application process while news reports warned of quickly dwindling funding. As nonprofits tried to grasp this lifeline, many were stumped by a section on the application form requiring information about their ownership. Their ownership? Nobody owns a nonprofit. They belong to their community and to all of us. That's part of why they're so effective and so important. Was a nonprofit supposed to list its board members, its executive director, or no one at all? Experts had varying advice, and the clock was ticking.
The SBA's dedicated staff did heroic work in setting up the PPP, but they had little history working with nonprofits. This lack of nonprofit expertise amounted to more than a mere paperwork headache: Researchers estimate that PPP protected fewer nonprofit jobs than expected, with smaller nonprofits disproportionately missing out. Despite relying on the nonprofit sector to help implement programs and serve those in need, the federal government's pandemic response left many nonprofits behind.
It is time the federal government formally recognize the importance of the nonprofit sector. Our landmark bipartisan legislation, the Nonprofit Sector Strength and Partnership Act of 2022, formally establishes a partnership between the federal government and the nonprofit sector. Our legislation gives nonprofits a seat at the table when federal policies are created — instead of being asked impossible questions when they apply for assistance. Specifically, our bill will create a three-part structure:
