The Paycheck Protection Program (PPP), a centerpiece of the Coronavirus Aid, Relief and Economic Security (CARES) Act, as amended by the Economic Aid Act, and subject to future amendments, has been a primary source of aid to not-for-profit (NFP) organizations throughout the United States. Eligible NFPs could obtain a loan for 2.5 times payroll costs, up to $10 million, without the need for collateral, and could have the loan forgiven if the proceeds were spent on eligible costs.
Understandably, many NFPs rushed to apply as soon as the loan was available, under the approach that even if the loan was not forgiven, the low 1% interest rate would provide a much-needed source of liquidity. Furthermore, many organizations have applied for a second round of funding under the second Paycheck Protection Program (PPP2), as part of the Consolidated Appropriations Act (CAA). For purposes of this blog post concerning double dipping, PPP and PPP2 will be considered one and the same.
Since the release of the original PPP guidance, NFPs with other sources of funding are learning best practices to ensure they are not including costs already paid with other federal funds on their PPP forgiveness application. Requesting reimbursement for the same cost from two different funding sources is fondly referred to as “double dipping.” We break down some key considerations around double dipping related to federal, state, local and private funding.
Federal funding
In Memorandum M 20-26, the Office of Management and Budget (OMB) makes clear its position that the federal government prohibits an organization from being reimbursed twice for the same expense. The Department of Defense released an FAQ providing guidance echoing the memo. Funds that may be subject to double-dipping restrictions include the following:
- Cost reimbursement grants
- Fee for service or fixed rate with an expenditure true-up equating to a cost-reimbursement grant
- Medicaid funding received in the form of a grant (funding is not tied to a specific individual with a contract to provide services)
- Federal flow-through grants from the three categories above
- State or local awards with similar guidance in effect
Medicare and Medicaid payments received as a provider would not be considered a federal award.
