Nonprofits need relief to help the economic recovery, too

Nonprofits need relief to help the economic recovery, too
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Even as Congress has been aggressive in targeting aid to businesses amid the COVID-19 pandemic, there is a category of organization that has been overlooked thus far, but will be critical to initiating a recovery: nonprofit entities that are responsible for local and regional economic development. 

We represent two that are quite different, but equally crucial to our respective jurisdictions: NYC & Company and Discover Puerto Rico, the destination marketing organizations (DMOs) that promote travel to the very tourism-dependent economies we serve.

We share the same fears for the future — for the small businesses that are vital to our communities and for the health and safety of workers and customers alike. We also share goals for the future, and the same belief in the resilience of our destinations and the travel and tourism industry. 

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DMOs, which include convention and visitor bureaus, are tasked with promoting tourism-reliant businesses, attractions and visitor experiences, as well as attracting events that spur economic development such as meetings, trade shows and conventions. It is the work of DMOs that creates demand and brings visitors who patronize the small businesses we know and love, and it is the work of DMOs that will help power the recovery of America’s travel industry, which (pre-pandemic) generated $2.5 trillion in total output and 15.8 million U.S. jobs.

However, most DMOs carry a nonprofit or quasi-governmental tax status, and therefore do not currently qualify for funds under the Paycheck Protection Program (PPP), the key relief vehicle that provides loan forgiveness for payroll costs, group health care benefits and other operating expenses. DMO budgets are largely dependent on travel-related tax revenues — funding streams that have disappeared in the space of weeks — and have been forced into rounds of layoffs and furloughs just like the private sector.

To keep DMOs afloat until the eventual recovery phase, the loan forgiveness aspect of the PPP is critical: If a DMO’s only survival option is to take on loans, every dollar that’s spent repaying those loans over the next few years will be one dollar less that’s spent on supporting small businesses. 

This is essential, because 83 percent of all travel industry companies are small businesses. These are mom-and-pop restaurants, unique shops, boutique inns and independent tour operators — the very businesses the PPP sought to protect. They mostly do not have generous marketing budgets of their own. These businesses are counting on DMOs to help bring back visitors once it is safe to do so. 

Though the current crisis is unique in its shape and scope, our homes are no strangers to catastrophe. After the 9/11 attacks, many predicted that New York City would struggle to recover as a vibrant locale for tourism; recent years thankfully have proven the naysayers wrong, as NYC regularly has competed for the title of most-visited destination in the United States. Hurricanes Maria and Irma likewise devastated the tourism economy in Puerto Rico, whose recovery was really just under way when the pandemic hit. 

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We are proud of the roles our organizations played in sparking the economic rebuild of our respective homes — and we even have faced down adversity together: After Maria, NYC & Company and Discover Puerto Rico forged a partnership to help bring tourism back to Puerto Rico by letting New Yorkers know the island was open for business, while also encouraging Puerto Rican visitation to NYC. 

And when it is safe to do so, NYC & Company and Discover Puerto Rico will be ready to extend a big welcome (and bienvenidos) to the world. But in order to be of service, our organizations first must survive — and for that, we are calling on Congress to expand eligibility of the PPP to nonprofit, quasi-governmental business organizations.

Fred Dixon is the president and CEO of NYC & Company, the destination marketing organization and convention and visitors bureau for New York City. 

Brad Dean is the CEO of Discover Puerto Rico, the island’s official tourism promotion organization.