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Consolidated Appropriations Act provides grant relief for shuttered venue operators — are you eligible?

Jan 11, 2021

By Rachel Most and C. Lynne Smith

Many venue operators have been devastated by the decline in economic activity since the start of the COVID-19 pandemic. Live entertainment venues, nonprofit theaters, museums and other cultural institutions have been hit particularly hard.

The Consolidated Appropriations Act of 2021 provides $15 billion in funding for “Grants for Shuttered Venue Operators.” These grants provide much-needed relief to certain categories of eligible recipients hit hard by the pandemic.

What entities are eligible?

The following categories of entities are eligible to apply for a grant under this program:

  • Live venue operator or promoter
  • Theatrical producer
  • Live performing arts organization operator
  • Relevant museum operator
  • Motion picture theatre operator
  • Certain talent representatives

These categories have specific definitions and qualifications. For example, “relevant museum” is defined as a nonprofit entity that falls within the definition of “museum” in the Museum and Library Services Act. This definition includes aquariums, arboretums, botanical gardens, art museums, children's museums, general museums, historic houses and sites, history museums, nature centers, natural history and anthropology museums, planetariums, science and technology centers, specialized museums, and zoological parks.

Except for relevant museums, which cannot be for-profit, qualifying grantees can operate for-profit,  nonprofit or government-owned. Nonprofit means that the organization is exempt from taxation under section 501(a) of the Internal Revenue Code of 1986.

Applicants should make sure they review the language in the Act when assessing eligibility. 

What are the requirements?

Generally, a potential grantee must meet each of the following requirements:

  • The entity was fully operational on February 29, 2020
  • The entity had gross earned revenue during any calendar quarter in 2020 that fell by at least 25% from the same quarter in 2019
  • As of the date of the grant, the entity is or intends to resume its operational activities (or in the case of a talent representative, is representing or managing artists and entertainers)
  • For each category above, the venues must have certain characteristics (as further described in the the Act).

    For example, some characteristics a live venue operator or live performing arts organization must have is a defined performance and audience space, paid tickets or cover charges to attend performances or, in the case of a nonprofit entity that produces free events, the events are produced and managed primarily by paid employee, not volunteers.

    For a relevant museum operator, a few characteristics are maintaining indoor exhibition spaces that have been subject to the pandemic-related occupancy restrictions and at least one auditorium, theater, or performance or lecture hall with fixed audience seating and regular programming.
  • Grantees also must not be majority-owned or controlled by an issuer of securities listed on a national securities exchange, among other requirements.

There is a long list of very specific operational and venue requirements based on the different categories included in the Act.

What are the allowable expenses for the grant funds?

Allowable expenses under the program include:

  • Payroll costs
  • Payments on any covered rent obligation(s)
  • Any covered utility payments
  • Scheduled payments of interest or principal on covered mortgage obligations, except for any prepayment of principal
  • Scheduled payments of interest or principal on any indebtedness or debt instrument (which shall not include any prepayment of principal) incurred in the ordinary course of business that is a liability of the eligible person or entity and was incurred prior to February 15, 2020
  • Covered worker protection expenditures
  • Payments to independent contractors as reported on Form-1099 MISC not to exceed $100,000 in annual compensation to an individual employee of an independent contractor
  • Maintenance expenses
  • Administrative costs, including fees and licensing costs
  • State and local taxes and fees
  • Operating leases in effect as of February 15, 2020
  • Payments for insurance on any insurance policy
  • Costs related to producing a theatrical or live performance, including advertising, transportation and capital expenditures.

Initial grants may be used for allowable expenses incurred between March 1, 2020, and December 31, 2021, and supplemental grant funds may be used for allowable expenses incurred between March 1, 2020, and June 30, 2022.

How much could your grant be?

Eligible entities may receive a maximum initial grant of 45% of gross earned revenue for the 2019 calendar year, with a cap at $10 million.

If an eligible entity began operations after January 1, 2019, the maximum initial grant available is the average monthly gross revenue for each full month of operation in 2019 multiplied by six.

An eligible entity may qualify for a supplemental grant in the amount of 50% of its initial grant if, as of April 1, 2021, its revenue for the most recent calendar quarter is no greater than 30% of the revenue for the same quarter in 2019 due to the COVID-19 pandemic.

When will you receive your grant?

Grants will be awarded based on the following priority:

First-priority grants: Grants awarded during the first 14 days will go to eligible entities that have faced a 90% or greater loss in gross revenue due to the COVID-19 pandemic during the period April 1, 2020, and ending on December 31, 2020, as compared to the same period for 2019.

Second-priority grants: Grants awarded in the 14-day period immediately following the initial 14-day period will be award to those eligible entities that suffered a 70% or greater loss in revenue due to the COVID-19 pandemic during the period April 1, 2020, and ending on December 31, 2020, as compared to the same period for 2019.

Remaining grants: After the 28-day priority period, grants will be awarded to all other eligible entities. During the 28-day priority period, no more than $12 billion or 80% of the $15 billion appropriated under the Act shall be used to carry out the priority grants.

Supplemental grants will be awarded after the initial grant applications have been processed completely.

Wipfli can assist your organization

If you need assistance navigating this section of the Act or any other sections, contact Wipfli. Our nonprofit specialists have been pouring over the Act's provisions to fully understand its impact to organizations like yours.

For more information on the Act and other COVID-19-related topics, visit our COVID-19 resource center.

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Author(s)

C. Lynne Smith, CPA (FL)
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