Nonprofit Policy News | January 2009
Contents
National Council Delivers Recommendations to President Obama | Federal Legislative and Regulatory Developments | State Policy Developments | About Nonprofit Policy News
National Council Delivers Recommendations to President Obama
Working in close collaboration with its state association members across the country, on December 22, 2008, the National Council submitted its recommendations to the Obama Administration regarding ways the federal government can work better with nonprofits.
The report provides an overview of how the economy is harming nonprofits and includes the following recommendations:
- Create within the first 100 days the Social Entrepreneurship Agency for Nonprofits called for in the Obama Plan - and now part of the White House Service Agenda - so it can help strengthen nonprofits, especially community-based nonprofits because 93% of all charitable nonprofits have revenue under $1 million.
- Focus the economic recovery plan "first on maximizing operating budget relief for state and local governments" to prevent additional state operating budget reductions because "future cuts to state and local governments will greatly exacerbate our nation's current economic crisis."
- Establish a new Community Services Protection Fund to invest in nonprofits that perform work that traditionally has been performed and/or funded by government.
- Eliminate the distinction between the Standard Business Mileage Rate (now 58.5 cents per mile) given to corporate and federal employees and the substandard Charitable Mileage Rate (now just 14 cents per mile) for volunteers.
- Strengthen democracy by restoring the American people’s ability to amplify their voices through nonprofits so the people may participate meaningfully in their government.
Read the full report to learn more.
In addition to the National Council’s input, on January 6, Independent Sector released its nonprofit platform consisting of six policy proposals, while a coalition of service organizations behind the Serve America Act last session have suggested that some of those legislative proposals, such as the Social Investment Fund Network, be included in the economic stimulus package. Read the Chronicle of Philanthropy article.
To learn about how the economy is hurting nonprofits across the country and strategies nonprofits can use, visit the National Council of Nonprofits’ online clearinghouse of information, the Nonprofit Economic Vitality Center.
Federal Legislative and Regulatory Developments
In this section: Economic Stimulus Legislation Focuses on Job Creation | State Children's Health Insurance Program (SCHIP) Updates | GIVE Act Reintroduced | Serve America Act | Clinton Introduces 211 legislation | Nonprofit Thrift Stores and Distributors of Used Children's Products Beware | Twenty New Regulations Under the Bush Administration Take Effect Before the Inauguration | President Obama Will Move Soon to Maintain the Estate Tax in 2010 | National Council Joins ServiceNation | IRS Updates
Economic Stimulus Legislation Focuses on Job Creation
As introduced, the American Recovery and Reinvestment Act (S.1) is intended to create three million new jobs by modernizing the nation’s infrastructure, enhancing America’s energy independence, and improving health care technology. In addition, it will include substantial tax relief for 95% of Americans. House Democratic leaders have begun their review of this historic $825 billion economic stimulus package featuring $550 billion in spending and $275 billion in tax breaks. The House proposal would provide $141.6 billion for education; $124.1 billion for health care; $102 billion in assistance to workers for job training and unemployment benefits; $90 billion for transportation infrastructure; $87 billion to help states with Medicaid costs; $54 billion in energy spending; $16 billion for science and technology-related programs; and $4 billion for state and local law enforcement funding. House Speaker Nancy Pelosi (CA-D) and Senate Majority Leader Reid (NV-D) are aiming for completion of the package before the February 16 President’s Day recess.
President Obama has asked for an overwhelming majority to pass this legislation and he needs the support of moderate Republicans in the Senate and some of the fiscally conservative “blue dog” Democrats in the House. Obama transition team spokesman Mike Strautmanis called for the “full engagement of the American people” to get this legislation passed.
To take action now to support jobs creation, visit the US Action website. To learn more about projected unemployment and increased service demands on nonprofits, visit the Coalition on Human Needs website and read their briefing materials. CQ Today Online News, 1/15/09
State Children’s Health Insurance Program (SCHIP) To Be Among First Bills Passed by New Congress
The House passed HR 2 last week, the SCHIP reauthorization, and the Senate Finance Committee (SFC) has sent its mark-up to the Senate floor. Following a conference, the bill should pass easily and be ready for President Obama soon after inauguration.
The House version would enroll four million more children and adults at a cost of $35 billion over four-and-a-half years, resulting in 11 million enrollees. It contains language to allow children of legal immigrants who have been in the country fewer than five years to enroll in the program. The Senate’s draft legislation, written by SFC Chairman Max Baucus (MT-D), followed prior bills passed with bipartisan support but vetoed by the Bush Administration. It was amended in Committee to allow legal immigrants and new citizens into the program without the standard five-year waiting program to match the House version. Finance Committee Ranking Republican Charles E. Grassley (IA) claimed Democrats had shut them out of the process and betrayed compromises worked out on similar bills in the 110th Congress.
States have been pushing for a five-year reauthorization of the program in order to give them some certainty that funds will be available in the future, as opposed to a shorter reauthorization or extension. CQ Today Print Ed. 1/15/09,1/13/09; New York Times, 1/13/09
GIVE Act Reintroduced in Both Houses and IRS National Taxpayer Advocate Agrees: Let Treasury Determine the Charitable Mileage Rate
Senators Benjamin Cardin (MD-D), Olympia Snowe (ME-R), Chuck Schumer (NY-D), and John Ensign (NV-R) reintroduced the Giving Incentives for Volunteers Everywhere (GIVE) Act (S 243) last week in the new 111th Congress. The press release states that it would “grant the IRS discretion in setting the mileage deduction rate for volunteers and charitable organizations…as high as the business mileage deduction but not lower than the deduction for moving and medical expenses.” Representatives John Lewis (GA-D) and Devin Nunes (CA-R) reintroduced their companion legislation in the House, the Fair Deal for Volunteers Act of 2009 (HR 524).
The National Council actively lobbied last year for reform of the charitable volunteer mileage deduction. Carved in statute, the deduction is 14 cents and provides a substandard tax deduction for charitable volunteers compared to the business and government standard mileage rate set by the IRS – 55 cents today – or even the medical rate of 24 cents.
The National Taxpayer Advocate has joined the chorus for change in the 2008 Annual Report to Congress and urged changing this provision. See Legislative Recommendation 17 in the Executive Summary.
Serve America Act Is Reintroduced
On January 16, Senators Edward M. Kennedy (MA-D) and Orrin Hatch (UT-R) introduced the “Serve America Act,” a bill to expand national and community service opportunities for all Americans. Passage of this Act, along with the reauthorization bill for the Corporation for National and Community Service – the Generations Invigorating Volunteering and Education Act, also known as the GIVE Act and not to be confused with the charitable mileage bill by the same acronym – and implementation of President Obama’s plan for service within the first 100 days will allow service organizations, social entrepreneurs, and nonprofits to respond to our current economic crisis.
The Act will put Americans of all ages and backgrounds to work to help address local and national challenges by:
- Encouraging increased levels of traditional volunteering through a Volunteer Generation Fund;
- Establishing an Opportunity Corps, an Education Corps, a Clean Energy Service Corps, and a Healthy Futures Corps to put Americans to work on pressing issues;
- Deploying national service alumni to respond to natural disasters as members of the National Service Reserve Corps;
- Creating a network of Community Solutions Funds that will support replications of successful initiatives to increase economic opportunity, improve education of economically disadvantaged students, promote healthy child and youth development, expand access to health care and health education, conserve natural resources, enhance energy efficiency, increase civic engagement, and reduce crime; and
- More [PDF]. Read Senator Kennedy's Press Release.
Clinton Introduces 211 legislation
Senator Hillary Clinton (NY-D), prior to resigning her Senate position, introduced S.211 to facilitate the nationwide availability of the 211 telephone information service. United Way of America has been the leader in the development of the 211 movement that has transformed access to human services by providing information and referral on human services and volunteer services. The bill has already attracted 24 bipartisan co-sponsors.
Nonprofit Thrift Stores and Distributors of Used Children’s Products Beware
In February 2009, new requirements of the Consumer Product Safety Improvement Act (CPSIA) take effect. While aimed at manufacturers and importers of goods with lead content that could harm children, the new law also applies to sellers of used children’s products, such as thrift stores. While resalers do not have to meet certification standards, or test children’s products, they cannot sell any that exceed the lead limit, unless they have information to indicate that the products being sold have less lead than the new limit. Those resellers that do sell products in violation of the new limits could face civil and/or criminal penalties. Read the full press release or visit the Consumer Product Safety Commission (CPSC) website for more information.
Twenty New Regulations Under the Bush Administration Take Effect Before the Inauguration
The Bush Administration has left the incoming Obama Administration with a host of new rules it may disagree with: at least 20 controversial “midnight” regulations affecting everything from the environment to health care and worker rights. If you are concerned about access to reproductive health services, loaded guns in national parks, longer driving periods for truck drivers, or privatization of public roads, learn more from OMB Watch.
President Obama Will Move Soon to Maintain the Estate Tax in 2010
Elimination of the estate tax was approved by Congress under President George W. Bush in 2001, with rollbacks phased in slowly and its full elimination in 2010. In 2011, the tax would return to its Clinton-era levels: a $1 million exclusion from taxation with the rest taxed at 55%. (This was the only way the repeal of the so-called “death tax” could be passed in 2001 because of its dramatic impact on future lost revenues and the federal deficit.)
Thus this session is the critical time for reshaping this sizeable revenue source. Under the Obama plan detailed during the campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million -- $7 million for couples -- from any taxation. The value of estates above that would be taxed at 45%. At this level, all but the largest estates -- fewer than 2% of annual deaths -- would escape taxation. Over ten years, the Obama plan would cost the Treasury around $324 billion more than if the Clinton estate-tax levels were maintained, according to the Joint Committee on Taxation. Full repeal would cost more than $500 billion over a decade. Wall Street Journal, 1/12/09
National Council Joins ServiceNation
To lend its support to a movement to increase human capital in the nonprofit sector at a time when financial capital is diminished, the National Council has joined the ServiceNation Organizing Committee. ServiceNation is a campaign to restore the tradition of citizen service; it is a national grassroots movement to inspire widespread public support for increasing voluntary service opportunities.
Most recently, ServiceNation collaborated on Martin Luther King, Jr. Day with the Presidential Inauguration Committee to encourage service projects in an effort called “Renew America Together.” Before that on September 12, 2008, ServiceNation hosted the Service Summit where presidential candidates Obama and McCain spoke their commitments to encouraging national service.
Read and sign the Declaration of Service to join the movement.
- More time provided to get 403(b) plan documents in place. The IRS extended the deadline for 403(b) plan sponsors to adopt new written plans or amend existing plans to satisfy the requirement of the final regulations effective January 1, 2009. The IRS will treat plans as meeting the requirements of 403(b) and the regulations during the 2009 calendar year if operations of the plan follow a reasonable interpretation of 403(b) and the regulations, and by 2009 year-end the plan sponsor has adopted a written plan and made best efforts to correct any operations that occurred during 2009 that did not meet the requirements of the plan adopted by year-end 2009. For more information visit the IRS website.
- Spring Workshops for Small and Midsize Nonprofits. The IRS is conducting one-day workshops designed for those responsible for an organization’s tax compliance: Los Angeles, CA (March 3, 4, and 5), Minneapolis, MN (April 28, 29, and 30), and Boston, MA (June 9, 10, and 11).
- Final 990 Forms. The 2008 Forms 990 and 990-EZ information returns for tax-exempt organizations are now finalized, along with schedules and instructions, for filing in 2009. Learn more from the IRS-provided new online courses on the forms.
State Policy Developments
In this section: Civic Engagement or Political Action? | Coping with Budget Deficits: One County Considers Moratorium on Nonprofit Tax Exemptions | New Bills Introduced
Civic Engagement or Political Action?
Two nonprofits, the New Mexico Youth Organized and the Southwest Organizing Project, have sued the New Mexico Secretary of State to challenge the requirement that they should have registered as political committees. The groups mailed out glossy fliers to voters earlier this year that cast a negative light on a group of mostly veteran incumbents. All but one legislator was up for re-election, and five of the eight targeted in the fliers were ultimately defeated at the polls. The nonprofits claim a responsibility to inform the public about the votes of elected officials and the source of their contributions, and that requiring registration would muzzle civic engagement work. Albuquerque General, 12/17/08
Coping with Budget Deficits: One County Considers Moratorium on Nonprofit Tax Exemptions
Prince William County, Virginia, which has experienced a 30% decline in home values, is grappling with the worst economic challenge it has ever faced, a $190 million budget deficit. An option being considered is a moratorium on tax breaks for nonprofits. Legally mandated exemptions would be honored for religious, charitable, and beneficial 501(c)(3)s. The County Board of Supervisors has to grant exemptions to other types of organizations. At immediate issue in an upcoming hearing will be exemption requests from a “toys for tots” foundation and a residential facility for adults with developmental disabilities. Previously granted exemptions will not be revoked. The Washington Post, 12/4/08,1/08/09
See what Colorado, New York, and North Dakota may do by reading below. Is your state, county or city also challenging nonprofit tax exemptions? If so, please contact us. Need more information on your state’s budget? Find out what your State Fiscal Analysis Institute (SFAI) is doing. A list of SFAIs is on the National Council website.
New Bills Introduced
State legislators regularly introduce dozens of bills that impact all nonprofits in their respective states. Below is a recent sampling of such bills, listed alphabetically by state. Note that the National Council does not do comprehensive tracking of state legislative or regulatory changes. For more detailed information on public policy issues at the state level you can find your State Association’s policy section here. Unless otherwise noted, the bills below have not become law.
CO | Property tax exemptions
SB 042 would clarify property tax law so that only property solely dedicated to a nonprofit’s charitable purpose would qualify for the property tax exemption; and empower the property tax administrator to require property owners to provide financial statements and occupants of the property to provide income tax reports.
CO | Donation bins
HB 1052 would require a disclosure notice on any solicitation container where the donations were not all going to be used for a charitable purpose to the effect that donated items sold for profit are not tax deductible.
FL | Creates Florida Public Charity Campaign
H 195 would create a Florida Public Charity Campaign which would be the sole charity campaign operated during state employee work hours. It would collect state employee donations for different federations of charitable organizations and use the model of the combined federal campaign.
MS | Creates a Sales Tax Exemption
HB 23 would exempt from sales tax any nonprofit registered as a charitable organization that provides nonperishable food to needy individuals.
MT | Revising gambling laws
SB 86 would amend the current gambling laws in several ways, including requiring organizations running games to submit fingerprints for a criminal background check. The law also exempts nonprofit organizations from the $5,000 maximum prize limit and the requirement of owning all raffle prizes.
ND | Property tax
HB 1200 would enable cities and counties to impose property tax levies for fire, law enforcement, and emergency services in 2009 on nonprofit properties otherwise exempt.
NV | Liability Limit for Nonprofits
SB 107 would provide a $100,000 limit on the amount of damages that may be awarded in certain civil actions against a nonprofit. This limit only applies for actions that occur when the organization is engaged in its charitable work, not for commercial activities used to gain revenue.
NY | Weakening Property Tax Exemption
AB 742 would provide New York City the ability to levy a property tax on certain nonprofit organizations including arts organizations, animal benefit organizations, science focused organizations, interdenominational organizations and others.
NY | Seven Year Limit on Certain Property Tax Exemptions
AB 981 would amend property tax exemption laws for mandatory class nonprofit organizations on property that does not generate revenue and is not in use. Currently, such property is exempt as long as the nonprofit is constructing a building or considering in good faith constructing a building. This bill would set a seven year limit on the exemption from the date of the acquisition of the property.
VA | Sales and Use Tax
HB 1779 would allow a nonprofit organization entitled to an occasional exemption to be exempt regardless of the number of times it makes sales throughout the year.
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