Inflation Reduction Act: What the Pending Act Means for Nonprofits
The Inflation Reduction Act of 2022 is getting close to passage, after the Senate passed it by a tie-breaker vote by VP Harris on Sunday through budget reconciliation (who knew that two of our favorite accounting terms could be so impactful in passing policy?). The House is now considering it, and while there may be some minor changes, we anticipate the bill will largely remain the same.
What does this mean for nonprofits?
As we have spent time with the draft, we are thinking about the impact in three buckets. (While the healthcare portion of the bill will impact individuals served by nonprofits, we don’t anticipate many direct impacts for most nonprofits). Stay tuned for a deeper dive on each of these if the bill passes.
- Environmental-focused organizations: With more than $300B of the bill focused on combatting climate change, nonprofits operating in this space—from those focused on clean water to creating access to solar energy options for marginalized communities—will be heavily impacted. You could see opportunities to scale existing or create new programs, with potential for significant federal dollars to support them.
- Facility-heavy organizations: While many nonprofits minimized or eliminated facilities over the past two years, many of you CFOs also get to oversee property and maintenance in your jobs, as your organizations own and operate buildings as part of your mission. The bill has $5B for facilities upgrades to support and encourage more climate-friendly options. It also expands the 179D tax deduction, which incentivizes building energy-efficient commercial construction, to nonprofits, though the mechanism for remitting the funds to tax-exempt organizations is unclear. Additionally, transit-heavy organizations (e.g., schools that own busses) may be eligible to tap into the $1B for clean heavy-duty vehicles.
- Social justice organizations: Embedded in the energy security and climate change portions of the bill is $60B for environmental justice, which includes grants targeting community-led projects in disadvantaged communities to address those disproportionately impacted by climate change. With so many organizations fully dedicated to this important work, and many others who consider social justice core to the work they do, this funding could have a broad impact for many of our clients.
Does your nonprofit fall in one of these buckets? Will navigating the fun complexities of federal funding (or hitting single audit thresholds) be new to you? Check out some helpful resources while we wait for the final bill…and the inevitable time horizon (months? years?) before these programs are activated and available.
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