In March, Congress passed a law, one section of which allocated $350 billion in COVID-19 recovery funds for state, local, tribal nation, and territorial governments to provide “assistance to households, small businesses, and nonprofits, or to aid impacted industries.” That law, the American Rescue Plan Act (ARPA), and the Treasury Department’s rules and guidance to implement it, make clear that those governments may use the federal funds both to pay nonprofits to deliver services and to help nonprofits recover from COVID-19 and its economic aftermath.
Yet three months later, many on Capitol Hill are trying to claw back much of the $350 billion.