Are foundations eligible for the Employee Retention Tax Credit in the CARES Act?

According to the Act, entities that meet certain criteria are eligible, including that they have seen a drop in gross receipts of at least 50 percent in the first quarter of 2020 compared to the first quarter of 2019.

Does that mean that a drop in the market value of a foundation’s endowment could potentially qualify as a drop in “gross receipts”?

The short answer is that we don’t know for sure. The Act is somewhat unclear about whether the reduction in gross receipts test applies to nonprofits or how it may apply, and the IRS FAQs do not appear to provide additional clarification: https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

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