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Nonprofit Advocacy Matters | June 16, 2014

Posted: 
June 16, 2014

Federal Issues

Hope, Uncertainty for Summer Action on Tax Reforms

Even as expectations sink for summer passage of significant nonprofit-friendly tax provisions, hope remains that bipartisan progress will be made towards producing passage of the measures by year’s end. In May, the House Ways and Means Committee approved bills to permanently extend three expired charitable giving incentives – the IRS rollover, food inventories, and conservation easements – as well as to permit charitable deductions for the previous year up to April 15 and streamline the foundation excise tax. The votes on the measures were along partisan lines, but for reasons other than the substance of the underlying bills, which remain popular. Earlier this spring, the Senate Finance Committee approved a temporary two-year extension of a package of expired tax incentives that included the three charity provisions. Action on that bill was halted, however, because of a partisan dispute over Senate floor strategy. Importantly, bipartisan support for the substantive policy of the bill remains strong. Senate leaders have vowed to work to come up with a plan to bring the bill back to the Senate floor, perhaps before the July 4 holiday.

Readers can help promote progress on the nonprofit-related bills by signing onto a nonprofit community letter to the House of Representatives urging lawmakers to vote for these key charitable provisions.

State and Local Issues

Illinois Moves to Align Grantmaking Practices with new Federal Standards

On the day before adjourning, the Illinois General Assembly passed and sent to the Governor the Grant Accountability and Transparency Act, a bill to streamline grant processes. The legislation is intended to increase the accountability and transparency in the use of grant funds from whatever source – federal and/or state – and “to reduce administrative burdens on both State agencies and grantees by adopting federal guidance and regulations applicable to such grant funds.” If signed, the bill will align some state grant processes with those recently established in the new OMB Uniform Guidance, particularly those related to auditing. It would also create a Grant Accountability and Transparency Unit within the Governor’s Office of Management and Budget to facilitate the changes. Additionally, it would reconvene the Single Audit Commission, which includes nonprofits, to advise the new Unit in drafting associated rules scheduled for completion by July 1, 2015.

Taxes, Fees, PILOTs

  • Taxes: Bellingham, Washington is considering taxing a nonprofit, Catholic-affiliated hospital to bolster city revenues. The tax would be levied on the 30% of the income the hospital receives from private insurers and would result in a $1.2 million revenue increase for the city. The hospital and its supporters claim that the city is cutting the safety net for the poor in Bellingham and trying to balance the budget on the backs of the sick.
  • Fees: Two nonprofit organizations in New Hartford, New York will not be receiving refunds from sewer maintenance fees that were assessed improperly by the local government. Although the nonprofits are listed as exempt, confusion in coding on the city’s end resulted in the improper charging of fees. Counsel for the government has recommended that a refund not be issued; the nonprofits are being forced to take legal action to recover payments termed “improper taxation” by one reporter.
  • PILOTs: Fall River, Massachusetts is developing a “uniform set of guidelines” that tax-exempt nonprofits will be asked to follow in making payments in lieu of taxes (PILOTs). The formula will likely be based on the controversial PILOT schemes imposed on some nonprofits in Boston and Providence.
  • PILOTs: In lieu of raising taxes, the Mayor of Brockton, Massachusetts is asking 21 nonprofit organizations to make payments of up to 30 percent of the tax bill they would otherwise be required to pay if Commonwealth law did not expressly prohibit taxation of nonprofit properties. Targeted nonprofits go beyond the typical list of nonprofit colleges and hospitals to include Father Bill’s & MainSpring, a homeless shelter and housing advocacy group and the Old Colony YMCA.

Governments Continue to Offload Activities onto Nonprofits

Recent developments suggest there is no let-up in the trend of governments at all levels offloading their responsibilities onto nonprofits. Henderson, Nevada is cutting $200,000 from its payments to ITN Las Vegas’s senior transportation program that provides rides for senior citizens who cannot drive or get to a bus stop to access nutrition programs and go to the City’s senior center. In Pennsylvania, reductions in government funding are forcing nonprofit cultural centers like the Carnegie Science Center, the Phipps Conservatory, and Botanical Gardens to implement new, often burdensome ways to support their normal operations and programs.

Government-Nonprofit Contracting Reform Update

  • Solutions Offered to New Jersey’s Contracting Problems
    Despite dismal rankings in contracting complexities and other problems, New Jersey can become a leader in government-nonprofit contracting reform efforts by adopting a series of common-sense recommendations offered in a new report from a coalition of nonprofits, spearheaded by New Jersey’s Center for Non-Profits. Continue reading...
  • Prompt Contracting Improvements Needed in New York
    New York State government agencies failed to live up to the state’s prompt contracting law 87 percent of the time in 2013, up from a late rate of 78 percent in 2012, according to the New York Comptroller’s 2013 Prompt Contracting Report. Continue reading...

Delaware Town Mandates Charity Events Donate at Least 60% of Proceeds

Organizations running charity fundraisers that use public facilities in Bethany Beach, Delaware must turn over at least 60 percent of gross proceeds to the nonprofit, a new city council resolution mandates. The town’s new rule aims to dissuade organizations looking to make a profit by holding events to raise money for charities. The 60 percent threshold reportedly is based on Charity Watch’s recommended percent of donations nonprofits should spend on mission-advancing programs. Interestingly, Daniel Borochoff, president of Charity Watch, encouraged the town to establish better disclosure requirements rather than regulate the percentage directed to charities, which he correctly observed is constitutionally suspect. 

“Grand Bargain” on Detroit Bankruptcy Advances

The Michigan legislature overwhelmingly approved $195 million in state aid for bankrupt Detroit, a condition of the so-called “Grand Bargain” made with private foundations. Several foundations have pledged $466 million to help Detroit emerge from bankruptcy while preserving intact the art collection of the city-owned Detroit Institute of Arts and helping pay the City’s pension obligations to retired public employees. Automakers in the state also contributed a combined $26 million. As part of the deal, the municipal assets at the Detroit Institute of Arts will be transferred to a charitable trust so that the museum’s collection will be shielded from sale.

New Tool for Accessing Information on Foundation “Democracy Funding”

Foundation Funding for U.S. Democracy is a new, interactive data platform that defines democracy funding and allows users to see which foundations are funding what and where. Developed by the Foundation Center, the platform seeks to track the more than one thousand foundations granting nearly $1.4 billion to nonprofits advocating for “American democracy” improvement. The platform breaks down democracy funding into several categories for easier use, and allows users to explore the tactics that different foundations are using to accomplish their goals in this area. 

Additional State and Local Issues

Advocacy in Action 

Declaring Victory … and Getting Back to Work

At the end of a legislative session, many advocates – at nonprofit and for-profit businesses alike – declare “victory” and go home. Not Nikki Love Kingman at the Hawai`i Alliance of Nonprofit Organizations (HANO), who combines a celebratory message with a to-do list for maintaining momentum in advancing nonprofit missions.

“Congratulations to all nonprofit advocates for surviving another legislative session,” Nikki opens in Next Steps for Summer 2014: Advocacy and Elections, noting that “[o]nce again, nonprofit leaders played important roles in shaping legislation on many topics,” ranging from the environment and education, to government transparency and countless other topics affecting the state.

But no laurel resting is in order, according to HANO’s public policy director, because important work remains. For instance, numerous bills are sitting on the Governor’s desk awaiting action; Nikki gives a short civics lesson and intel on how to make a difference. Next, the article reminds readers that policy action isn’t over for the year, pointing out that “there are many county level issues that impact nonprofits and the communities they serve, so it is important to stay informed and engaged in your county’s policy-making process.” Again, her awareness message includes links to help nonprofits stay informed.

The third item on the to-do list in “Next Steps for Summer 2014” is key: seizing the opportunity of the upcoming primary election “to strengthen our democracy with nonpartisan voter registration and other voter engagement efforts.” Using data from a 2012 Nonprofit VOTE study, she made the case for nonprofit engagement by explaining that “voters contacted by nonprofits had a higher turnout rate than the average for all registered voters, and nonprofits were especially effective at increasing turnout among those who are traditionally underrepresented in elections.” The good idea is accompanied with easy access to the great resources from Nonprofit VOTE.

Victories are good; maintaining nonprofit momentum is better. And this example of Advocacy in Action is excellent at showing what needs to be done and how to do it. 

 


 

 

Worth Reading

How Philanthropy is Changing the Culture of Full Cost Funding, Valerie S. Lies, Huffington Post, June 13, 2014, highlighting innovative approaches by private foundations to support the sustainability of nonprofit organizations and overcome the “starvation cycle” on overhead expenses. See also the Donors Forum “Commitment to Full-Cost Funding.”

5 Steps to Pay for Success, the Urban Institute, June 2014, reviewing the advantages and disadvantages of pay-for-success funding mechanisms in juvenile and criminal justice systems.

Nonprofit Quarterly series on new corporate forms and funding methods

Worth Quoting

“No doubt the Anytown Council was put off by the political risks of a new tax and by the expected pushback from nonprofit organizations.”

- June 4 editorial in the Washington Post acknowledging the advocacy clout of the nonprofit community in opposing a new tax on employees of nonprofits and other organizations proposed by a tax reform commission in Washington, DC.

“In the State Senate, I can get legislation passed while [Congress] is mired in gridlock.”

--Activist Sandra Fluke explaining her decision to run for the California State Senate rather than a seat in Congress, quoted in Governing, June 4, 2014.

Worth Watching

One in Four: America’s Housing Assistance Lottery, Erika Poethig, Urban Institute, May 28, 2014, a 3-minute video employing the fast-draw technique to visually and succinctly explain the challenges of rental assistance data and policy.

Data Visualization

S&P State Credit Ratings, 2001–2014, Pew State and Consumer Initiatives, June 9, 2014, chart showing credit rating trends and rankings for each of the states.

Nonprofit Advocacy Matters | June 2, 2014

Posted: 
June 2, 2014

Federal Issues

House Tax Committee Approves Charitable Giving Provisions

The House Ways and Means Committee approved five bills of interest to the nonprofit and foundation communities on May 29. Each of the bills received bi-partisan support in the debate, but all were approved by party-line votes due to a dispute over whether to pay for the tax provisions. Republicans voted yes to permanently extend the measures but without providing for offsetting revenue raisers to pay for the changes; Democrats voiced support for the policies but voted no on the bills because they did not include “pay fors.” The bills are listed below:

  • Make permanent the enhanced deduction for property donated for conservation easements (HR 2807).
  • Permanently extend the IRA charitable rollover (HR 4619).
  • Make permanent the enhanced charitable deductions for food inventory (HR 4719).
  • Allow individuals to claim a charitable deduction for contributions made up to the date their income tax return is due (usually April 15) (HR 3134).
  • Eliminate the upper tier excise tax and reduce the excise tax on investment income of private foundations from two to one percent (HR 4691). 

IRS to Rewrite Proposed Regulations on 501(c)(4) Election-Related Political Activities

The Internal Revenue Service announced that it is postponing a public hearing on controversial draft regulations defining political activities of 501(c)(4) social welfare organizations. The IRS is not scrapping the first draft, as reported by some organizations and news outlets, but is instead revising the proposal to reflect concerns expressed in more than 150,000 comments submitted to the agency. The IRS plans to publish a revised draft regulation before rescheduling a public hearing. Commentators predict that the revised draft will not be released until after the November elections.

IRS Proposed New Form 1023-EZ Still Pending

In March 2014, the IRS submitted a proposed Form 1023-EZ to the Office of Management and Budget (OMB) for approval under the Paperwork Reduction Act. The proposed form offers an alternative to the normal Form 1023 for those claiming to be a small group (no more than $200,000 in annual gross receipts and no more than $500,000 in total assets, with some exceptions) to use to become recognized as a charitable nonprofit: just a two-page quick checklist. The radical change could lead to chaos for any nonprofits engaged in fundraising as well as for foundations "if the field is suddenly flooded with hundreds of thousands, if not millions, of newly minted c3’s.” The National Council of Nonprofits filed formal Comments opposing the proposed form, noting that "we support efficiency and reducing burdens to applicants, but not at the expense of accountability." The National Association of State Charity Officials (NASCO) also filed official Comments in opposition, noting that its members “uniformly oppose" the proposed Form 1023-EZ because it “will increase opportunity for fraud and heighten the burden on state regulators.” The IRS recently told NASCO that, notwithstanding the serious widespread concerns, it intends to deploy the new form this summer. To date, however, OMB has not approved the proposed form. For nonprofits, donors, and foundations wanting to know more, read this op-ed by Tim Delaney, President & CEO of the National Council of Nonprofits, published today in The Hill: "An Express Lane to More Trouble for the IRS?"

State and Local Issues

States Enact Significant Registration, Voting Reforms

Several state legislatures have taken action this year to ease the voting process by, among other ways, implementing online voter registration and allowing same-day registration. More than half the states, home to over 100 million voters, will have some form of online registration by the end of the summer, reports the National Conference of State Legislatures. Other reforms enacted this year include easing absentee voting (Maryland), relaxing voter ID requirements (Oklahoma), lengthening the early voting period (Florida), authorizing automatic registration systems (Colorado, West Virginia), and removing waiting periods for nonviolent felons to regain their voting rights (Delaware). The reforms are in part a reaction to the restrictive measures many states put in place following the 2010 elections, as well as a favorable response to a bipartisan presidential elections commission report put out in January of this year. In addition to online registration and multiple opportunities for voting, that Commission called for the use of state-of-the-art techniques to assure efficient management of polling places and use of improved voting technology. Nonprofits serve a vital role in many communities by promoting democracy and civic engagement through voter registration, voting, and providing nonprofit voter information. Go to Nonprofit VOTE to learn more. 

North Carolina Modifies Sales Taxes Rules for Nonprofits

North Carolina Governor McCrory signed legislation to revise the 2013 tax reform package that replaced the 3% gross receipts tax on entertainment with a sales tax, and eliminated exemptions for arts nonprofits. The new 2014 law clarifies that the tax on “live entertainment events” will not apply to the greatest number of nonprofit activities: educational events, recreational sports, and fundraising events. In exchange, the newly enacted statute repeals three rarely-used nonprofit sales tax exemptions and adds a narrow exemption for events sponsored by volunteer-only nonprofits and an exemption for any tax-deductible contributions. The measure also exempts nonprofits from local privilege taxes. 

Government-Nonprofit Contracting Reform Update
Federal Non-Health Related Grants to States Decline

While overall federal grantmaking to the states were above pre-recession levels for federal fiscal year 2014, funding for non-health related grants has declined by five percent, according to an analysis of trends by the Pew Charitable Trusts. “Trends in Federal Grants Vary Between Health and Non-Health Programs” found that, adjusted for inflation, grants increased by one percent for income security support while grants declined nine percent for transportation, dropped 10 percent for education, and fell 13 percent for everything else outside of Medicaid and other health grants.

Reconsidering Charitable Checkoffs on California Tax Forms

The California Senate unanimously approved a bill to establish a system and standards for determining which charitable nonprofits may be designated for tax checkoffs on the California income tax form. California Volunteers, the state office that manages programs and initiatives aimed at increasing the number of Californians engaged in service and volunteering, would be tasked with working out the details by 2017, with the goal of making the system fairer and allowing more charities access to the check-off system. The latest version added a "Charitable Giving Fund," which would allow taxpayers who don't want to pick and choose among the organizations listed on the tax form to turn over their designated dollars to California Volunteers to distribute "according to the regulation established for distribution." Reforming tax-form giving appears to be an emerging trend in legislatures; we’d like to know what readers think works and doesn’t work in their states.

Massachusetts AG Supports Nonprofit Buyback Program

Federal policy that prevents qualified nonprofits from purchasing homes from lending banks at market value and then financing the resale to former homeowners conflicts with Massachusetts law, the commonwealth’s Attorney General asserted in a letter to the director of the Federal Housing Finance Agency. Attorney General Coakley urged the agency, which oversees Fannie Mae and Freddie Mac, to change its policy against such buybacks that she believes run counter to Massachusetts’s successful Act to Prevent Unnecessary and Unreasonable Foreclosures. That Act prohibits creditors that sell a property to a 501(c)(3) charitable nonprofit from conditioning that sale on an agreement that the property will not be resold or rented to the former homeowner. 

Michigan Nonprofits Return Economic Benefits

Nonprofits in Michigan were integral in stabilizing the state’s economy during the 2008 economic downturn, according to a new report commissioned by the Michigan Nonprofit Association and the Council of Michigan Foundations. The report, “Economic Benefits of Michigan’s Nonprofit Sector,” found that, since 2006, the nonprofit community has added 12,000 jobs. During this same time period, other industries in the state purged 200,000 jobs. Nonprofits in Michigan employ more than 10 percent of the state's workforce, pay about $5 billion every three months in wages to their employees, and serve as anchor institutions in communities large and small, the analysis reports. Significantly, Michigan charities spent $44 billion dollars in advancing their charitable missions in 2011 alone. Nonprofits in the state provide a “sense of stability that the community can rely upon,” said Donna Murray-Brown, President and CEO of the Michigan Nonprofit Association. She also observed that the new study “helps us inform policymakers and citizens on the great work nonprofits are doing – and can do – for the people of this state.”

Collaborating to Understand Poverty in New York City

What public programs are currently in place in New York City to help people living in poverty and to work towards real and better solutions to the problems these government programs may be trying, but failing, to address? Those are the questions three umbrella groups are asking and studying in a unique collaboration of faith-based organizations. The organizations, the Federation of Protestant Welfare Agencies, Catholic Charities of the Archdiocese of New York, and the United Jewish Appeal–Federation of New York, have tapped the Urban Institute to research various government anti-poverty programs to learn more about what is effective in stamping out poverty. They hope that the results from the study will shed light on the problem of poverty in New York City and that the solutions they decide on will be heard by City Hall.

Detroit Art, Pension Deal Advances

The Michigan legislature overwhelmingly approved $195 million in state aid for bankrupt Detroit, a condition of the so-called “Grand Bargain” made with foundations to preserve intact the art collection of the Detroit Institute of Arts and to help pay the City’s pension obligations to retired public employees. Last year, several private foundations, including the Charles Stewart Mott Foundation, Kresge Foundation, and the Ford Foundation, pledged $370 million to assist the city emerge from bankruptcy. Finding a way for Detroit to “come out of this bankruptcy and to reestablish itself as one of the greatest cities in the world … [is] very important,” said Bill White, President of the Charles Stewart Mott Foundation. 

Advocacy in Action

Changing the Culture on Costs, One Community at a Time

Most nonprofits know the problems caused when governments, funders, and the public incorrectly assume that only program costs are well spent and that overhead costs are undesirable. Some nonprofit leaders in Napa Valley, California are doing something about those attitudes, and providing inspiration for the rest of the nonprofit community.

The Napa Valley Coalition of Nonprofit Agencies recently created an Advocacy Education Committee that is dedicated to two primary goals. First, the committee seeks to promote the sustainability and growth of the nonprofit sector by providing its membership with tools and education to effectively advocate for their mission and clients. Second, the group is educating the community at large about the value of nonprofits. Core to both goals is helping people understand what overhead is and why it is so important for maintaining a vital and effective nonprofit sector.

Sara Cakebread, Co-Chair of the Committee, put it succinctly: “What we’re trying to do is to create a whole program that educates the public: What is overhead, why it is important and why we need to support our nonprofits, if we want them to thrive.” Toward this end, Committee member Becky Peterson reframes how nonprofits should be viewed, “[They] do good work in our community, often filling the gap that government or the private sector doesn’t fill… we need to think about nonprofits as service providers, not as charities.”

This subtle, but important shift supports the growing understanding that to be effective and efficient nonprofits must invest in their infrastructures and a solid base from which to operate.

Cakebread said it well when she observed:

“Donors say we want our money to go to programs, we don’t want to spend anything on overhead. As a donor you can’t do that — you can’t give somebody a lot of money and tell them they can’t pay for somebody to administer it. Or deposit the check. Or pay for an office or pay for utilities. All of those things people don’t think about.”

Jan Masaoka, CEO of CalNonprofits, calls The Napa Valley Coalition of Nonprofit Agencies “a great example of local nonprofits working together to get more funding to the communities they serve and represent, as well as working with county officials to streamline government processes."

For more information on the changing attitudes on overhead costs (also known as administrative or indirect costs), see two reports from the National Council of Nonprofits, Toward Common Sense Contracting; What Taxpayers Deserve (2014) and Investing for Impact: Indirect Costs are Essential for Success (2013).

 


 

 

Worth Studying

This week’s best state in America? Utah, for its generosity, Reid Wilson, The Washington Post, May 23, 2014, providing a chart identifying the most (Utah, Mississippi) and least (New Hampshire, Maine) generous states as measured by charitable giving as a percentage of median discretionary income.

Museums

35,144

The number of museums in the United States, up from 17,500 in 1990s, according to the Institute of Museum and Library Services. Source: Nonprofit Quarterly, May 21, 2014.

State Laws

1,175

The number of laws Minnesota repealed as part of Governor Mark Dayton's "unsession" initiative to erase obsolete laws. Source: Governing, May 29, 2014

State Parks

33 percent

The national average of state park costs covered from state general revenues in fiscal 2012, down from 59 percent in fiscal 1990. Source: Stateline, May 23, 2014.

Nonprofit Advocacy Matters | May 19, 2014

Posted: 
May 19, 2014

Problems Persist, Solutions Abound

Significant aspects of government-nonprofit contracting practices have been proven to be seriously broken, but common sense solutions to the problems are ready for implementation, according to new reports released by the Urban Institute and the National Council of Nonprofits.

The Urban Institute published state-specific data from a nationwide survey documenting the serious and widespread problems experienced by nonprofit organizations (excluding hospitals and higher education) that have contracts and grants with governments at the local, state, and federal levels. The report, National Study of Nonprofit-Government Contracts and Grants 2013: State Profiles, provides essential data on contracting practices for the nation and individual states, and ranks states on several areas of concern. See full data report (with state-specific data) and blog posting.

Toward Common Sense ContractingThe National Council of Nonprofits released Toward Common Sense Contracting: What Taxpayers Deserve, a report that examines the causes and consequences of five recurring problem areas that involve billions of dollars. The report connects data from the Urban Institute with the experiences of front-line nonprofits that are delivering services on behalf of governments at all levels. The report goes on to lay out 16 proven and often readily available solutions to these problems. Read the full reportexecutive summary, and news release.

Also read the early analysis of the data in these states: Illinois; Kentucky; New JerseyNew York; and Washington.

Federal Issues

Extension of Giving Incentives Mired in Politics, Other Priorities

The Senate started action last week on a bill to extend expired tax provisions, including three important provisions relating to charitable giving, but the debate quickly became bogged down in partisan wrangling. At issue in the EXPIRE Act is the extension of 53 tax provisions through 2015; among the tax items is the IRA rollover, and enhanced deductions for donations of food inventories and conservation easements. Senate progress was blocked by a filibuster led by Republicans objecting to the refusal of Democratic leaders to allow additional floor amendments to the bill. The top Senators on the Senate Finance Committee are scheduled to talk early this week to try to overcome the impasse and secure passage of the bill that is generally considered uncontroversial and popular. Over on the House side, action on any of the extenders has been postponed until June, reportedly in part because of the confusion in the Senate and in part due to growing attention on misconduct at Veterans Affairs hospitals.

Nonprofits Seek to Revise Combined Federal Campaign Reforms

The Office of Personnel Management recently finalized reforms to the Combined Federal Campaign that, in the view of many nonprofits participating in the program, will dramatically alter the federal workplace giving program for the worse. Among other things, the new rules require nonprofits wanting to participate as possible recipients of donations to pay an up-front flat application fee, restrict giving options to electronic means, and move administration of the program from local community offices to centralized offices, potentially creating a disconnect between local nonprofits and the federal employees making the donations. The rules were published largely unchanged despite overwhelming opposition from the nonprofit community and the expression of bipartisan concerns at a congressional oversight hearing and a letter in opposition from key Members of the House. Nonprofits are turning to a last option to block the rules: reliance on the expedited procedure in the Congressional Review Act to overturn agency regulations. United Way Worldwide and others have issued a call to action that encourages constituents to ask their Senators and Representatives to pass a resolution to overturn the rules.

State and Local Issues 

Mixed News on Social Impact Bonds

Just as social impact bonds are being taken off the table in the United Kingdom, California prepares for its own Pay-for-Success experiments. In April, the British Ministry of Justice announced that the “payment-by-results” social impact bond pilot program will not be renewed. The first-ever social impact bond experiment was tried at Peterborough Prison, where private investors provided funding for an innovative way of rehabilitating offenders that, if it reduced recidivism rates by a pre-determined level, would pay a premium to the funders. The Ministry cut the pilot program short and is shifting priorities to other methods for reducing incarceration rates. In California this month, the Nonprofit Finance Fund and the James Irvine Foundation advanced their $2.5 million California Pay for Success Initiative, a variation of the social impact bond model, by naming five participating projects. The Initiative is designed to “provide flexible funding and expert support to help nonprofit and government leaders structure Pay for Success agreements in California over the next two years.” As described by the Nonprofit Finance Fund, “Pay for Success is an approach to funding social services to both improve outcomes and ultimately reduce costs,” in which “private investors provide funding for preventative or interventional services up-front, and government reimburses these investors with a return on their investment, only if results are achieved.” 

Taxes, Fees, PILOTs

  • Taxes: The Kansas Legislature approved a property tax reform bill this month, but only after striking a special tax break that would have provided a property tax exemption for certain health clubs.
  • Tax Exemptions: Land conservation nonprofits won a major victory in Massachusetts when the state Supreme Judicial Court rejected a tax bill sent to the New England Forestry Foundation (NEFF) that was grounded in the town’s belief that the nonprofit didn’t do enough to encourage public access. “By holding land in its natural pristine condition and thereby protecting wildlife habitats, filtering the air and water supply, and absorbing carbon emissions, combined with engaging in sustainable harvests to ensure the longevity of the forest, NEFF engages in charitable activities of a type that may benefit the general public,” the court wrote.
  • Tax Exemptions: The Connecticut Senate adjourned without approving the House Speaker’s bill to remove property tax exemption from nonprofit hospitals and colleges/universities. The Speaker made clear, however, that the issue of property tax reform will be the focus of the 2015 session and beyond, having included a two-year study of the Connecticut tax system in the last bill to pass before adjournment prior to midnight on May 7.

California Enacts Campaign Donor Disclosures for 501(c)(4) Organizations

California has taken steps to eliminate secret campaign contributions, or “dark money,” by requiring politically active, non-charitable nonprofits to disclose the names of their donors under certain circumstances. A new law requires social welfare 501(c)(4) organizations and trade groups organized under 501(c)(6) to make public the names of their donors if the organizations spend or contribute more than $50,000 in a year or $100,000 over four years on elections in California. The requirement applies to donors who contribute $1,000 or more for political activity in California. The law also requires committees raising at least $1 million on ballot measures to release a list of the top 10 contributors who gave $10,000 or more. The bill comes in the aftermath of a scandal in 2012 in which social welfare organizations in Arizona funneled millions in undisclosed dollars to support and oppose separate California ballot measures. 

Vermont Nonprofits Support Government Accountability Measure

The Vermont Legislature approved a bill to institutionalize the use of results-based policy making throughout state government and Vermont’s social sector. If signed by the Governor, the legislation would require the establishment of population-level results for the state and outlines an annual reporting process to ensure that state investments are achieving results. Nonprofits in the state, led by Common Good Vermont, have advocated for the bill they believe will have an impact on how Vermont nonprofits interact with state government as recipients of funds and designers of programs.

Government-Nonprofit Contracting News
Hawai`i Creates Contracting Reform Action Team

The Hawai`i State Procurement Office is establishing the Health and Human Services Action Team designed to apply nonprofit and government expertise to streamline and improve government contracting practices. The Action Team’s goals are to facilitate state agencies and nonprofits in collaboratively developing and implementing best procurement practices, sharing information and resources, and developing and revising policies and regulations that lead to more effective procurement of health and human services within the State. Creation of the Action Team is the latest progress in the State’s ongoing efforts to investigate and analyze various contracting issues and then offering recommendations for improvements.

New York Reconsiders Deadline on Governance Reforms

Two newly introduced bills in New York address the actions nonprofits must take to comply with the new Nonprofit Revitalization Act. The first measure would extend the deadline for compliance with certain provisions of the law from July 1, 2014 to March 31, 2015. The reform law enacted in 2013 requires nonprofit boards to perform financial audits and better oversee insider transactions and contracts, and requires nonprofits to adopt conflict of interest policies and prohibit any employee from serving as a board chair. The second bill would prevent nonprofits that are currently in compliance with New York State’s Grants Gateway system from being temporarily disqualified from future grant awards as they submit corporate by-laws amendments and other legal filings in response to the Act’s new requirements.

Additional State and Local Issues

Advocacy in Action 

Keeping Connecticut Nonprofits in the Know

Connecticut is a small state geographically, but its nonprofits have a big interest in what the legislature does and doesn’t do. Good thing the Connecticut Association of Nonprofits, the state association of nonprofits in the Nutmeg State, is on the job … late into the evening.

Moments after the legislature adjourned sine die just before midnight on May 7, members of Connecticut Nonprofits read (or woke up to) an up-to-the-minute, concise report on all of the community’s priorities, provided via email from Jeff Shaw, director of policy for the statewide association of nonprofits. Readers learned of the passage of the State budget, the demise of the House Speaker’s bill to subject some nonprofits to property taxes (see above article), the fate and details of an omnibus “implementer” bill that incorporated scores of policy changes (it passed), and the approval of $50 million for the Nonprofit Grant Program, a bonding pool for capital improvements at nonprofits that contract with the state to provide health and human services. The missive pointed out that more work is needed on tax spending issues, but it is noteworthy that the news – good and bad – couldn’t wait for a good night’s sleep.

Many advocacy organizations are good at encouraging action and asking for help. Providing “the rest of the story,” as Jeff’s wee-hours message did on May 8th, demonstrates the partnership and community spirit fostered by the nonprofit associations. 

 


 

 

Worth Reading

Nonprofit Finance Fund Social Currency Blog series by Beth Bowsky of the National Council of Nonprofits, providing insights on using data from the NFF 2014 State of the Sector Survey to measure and document problems in government-nonprofit contracting systems and highlighting common-sense solutions to contracting challenges. Read Part One (April 28, 2014) and Part Two (May 2, 2014). 

Worth Quoting

“While the government must ensure accountability from nonprofits, limiting organizations’ ability to effectively run programs and make improvements presents challenges for nonprofits and the communities they serve.”

- Maura Farrell, in “The important government-nonprofit relationship doesn’t always work as well as it could,” MetroTrends Blog, Urban Institute, May 15, 2014.

Worth Studying

State and Local Tax Collections: Percentage of Totals, reported in Stateline, May 14, 2014, providing percentages of the reliance of each state government on property tax collections, ranging from a high of 63% in New Hampshire (which has no income tax) to a low of 16% in Delaware and North Dakota.

A 501(c)(3) Guide to Nonprofit Voter Engagement, Nonprofit VOTE, offering a full range of tips and general rules to help charitable nonprofits interested in encouraging voting and voter participation among their staff, board, clients, constituents, and communities.

Numbers in the News

$4.17 billion

The amount the State of Illinois owes contractors – for profit and nonprofit alike – for services already rendered and billed, down from a $5.3 billion backlog last year. Source: Governor’s Office of Management and Budget, Bills Outstanding – Summary, May 14, 2014.

Nonprofit Advocacy Matters | May 5, 2014

Posted: 
May 5, 2014

Federal Issues

A “Pre-cap” of the Congressional Agenda

It’s an even-numbered, election-shortened year for Congress. Typically that means anything that can be done in the non-spending area must occur in May (before Memorial Day) and in the appropriations arena before the month-long August recess. Officeholders of all stripes have already begun calculating the competing urges of doing no harm to themselves and their party versus hurting/embarrassing the other side. Conventional wisdom holds that those urges are more intellectual than visceral prior to August, and then controlling thereafter until Election Day. With those thoughts in mind, here is a summary of what’s scheduled:

  • Spending: For the first time in years, House and Senate appropriators are officially and actually following “regular order,” that is, each of the 12 spending bills that funds federal programs is being proposed and debated in committee and is being scheduled for floor consideration prior to the end of the fiscal year on September 30. The House may pass several of the bills prior to Memorial Day; the Senate usually moves slower, but appears committed to passing as many individual measures as possible. The Labor-Education-HHS bill, which funds the largest number of programs performed in communities through the work of charitable nonprofits, tends to be the most controversial and gets put off until the last.
  • Taxes: Comprehensive tax reform is all but officially off the table for this year and the Senate and House are taking different approaches to restoring some or all of a package of expired tax provisions. Among those are the enhanced deductions for donations of food inventories and land conservation easements, and the IRA charitable rollover. The Senate is scheduled to take up a bill to restore for 2014 and extend through 2015 the package of about four dozen tax provisions. The House, instead, is planning to go through the package on a piecemeal basis, starting with six that are very popular with the business community. No plan has yet emerged to get the two chambers on the same page, suggesting that an end-of-year bill is likely.
  • Social Issues: It remains too soon to say whether several stalled issues will break free of gridlock in the coming weeks, but as time passes, their chances diminish. A Republican-led filibuster blocked action last week on a proposal to raise the federal minimum wage to $10.10 per hour. The Republican majority in the House continues to insist on inclusion of one or more of its priorities, such as reforms to job-training programs, before taking up a Senate-passed bill to restore extended unemployment benefits. Neither chamber has been successful in reaching consensus on immigration reform which may or may not include a form of amnesty or pathway to legal status for individuals who entered the United States illegally. 

Opposition to IRS Proposed Form 1023-EZ and Express-Lane Approvals

The IRS recently proposed a new Form 1023-EZ that would create an express-lane approval process for 501(c)(3) status. Opposition to the proposed two-page form and fast-track process has focused on how it would significantly reduce the amount of due diligence done by the IRS. One executive director forecasts chaos for fundraising and foundations "if the field is suddenly flooded with hundreds of thousands, if not millions, of newly minted c3’s.” 

The National Council of Nonprofits filed Comments in opposition as well. In summary, “We agree with the IRS that the long-established Form 1023 and application process need review and streamlining. However, we are concerned that the proposed new EZ Form and related express-lane approval process go too far and too fast, representing radical departures from proven protocols.” The National Association of State Charity Officials (NASCO) also filed Comments in opposition to the IRS proposal, noting that “State charity officials uniformly oppose a Form 1023-EZ,” and predicting “that the Form 1023-EZ will increase opportunity for fraud and heighten the burden on state regulators.”

State and Local Issues 

Challenges Remain for State Revenues, Spending Priorities

The data for 2014 are mixed on how states are faring with tax revenues and on which programs they are restoring funding that they previously slashed at the depths of the recession. State revenues have experienced growth for 16 straight quarters through the third quarter of 2013, according to the Census Bureau. Governors in 42 states proposed higher spending levels for 2014 than the prior year, the National Association of State Budget Officers (NASBO) reports. Yet an analysis by The Pew Charitable Trusts found that, after adjusting for inflation, only 20 states were back to their peak levels by the second quarter of 2013. The NASBO survey shows that that the vast majority of states are increasing spending on elementary and secondary education, as well as on transportation and infrastructure. Other spending is going to “any kind of program that can be tied to economic development and job creation,” according to a NASBO official. For Florida, that means spending on tourism, while Nebraska is cutting taxes by $412 million. California, on the other hand, is considering devoting additional resources to the state’s rainy day fund. Noticeably absent from the reports is restored funding for human services and other programs that are typically provided through contracts and grants with nonprofit organizations. For a more detailed analysis, read “Lawmakers Jockey Over Budget Surpluses,” published in Stateline.

Taxes, Fees, PILOTs

  • PILOTs: Princeton University agreed to make nearly $22 million in payments in lieu of taxes to Princeton, New Jersey over a seven-year period. The new payments come on top of roughly $3 million in property tax payments the university pays on tax-exempt properties and upcoming contributions to local fire stations. In announcing the new PILOT agreement, the university president stated that the purpose was “to reaffirm both our desire to help sustain the vitality and well-being of our home community and our deep appreciation for the many aspirations and interests we share.”
  • PILOTs: The Hartford Courant has come out in strong opposition to legislation sponsored by the Connecticut House Speaker (and opposed by the Governor) that would impose property taxes on nonprofit hospitals and universities. Calling the proposal unfair and premature, a Courant editorial observed: “just because a college or hospital isn't paying property taxes doesn't mean it isn't contributing to the community. The University of Hartford, for example, offers scholarships to Hartford residents, has made land available for two magnet schools, helps incubate small businesses in the Upper Albany neighborhood and beautifully renovated an empty car dealership into an arts building, among other things.” The editors ask: “If the school was pressed for property tax revenue and had to abandon programs such as these, would Hartford be better off? Is it worth the chance?” The Connecticut House passed a scaled-down version of the Speaker's bill over the weekend; Senate passage is uncertain. 

Vermont Calls for Constitutional Convention on Citizens United

On May 1, Vermont became the first state to call for a convention to amend the U.S. Constitution to reverse the U.S. Supreme Court’s Citizens United decision, which disallowed many restrictions on money in politics. The Legislature formally resolved: “That the General Assembly, pursuant to Article V of the U.S. Constitution, hereby petitions the U.S. Congress to call a convention for the sole purpose of proposing amendments to the Constitution of the United States of America that would limit the corrupting influence of money in our electoral process, including, inter alia, by overturning the Citizens United decision, ….” Congress must convene a constitutional convention if thirty-three other states call for one.

Government-Nonprofit Contracting News
New Jersey Sees Contracting Reform Progress, Continues Streamlining Efforts

The recent progress report from New Jersey’s Red Tape Review Commission includes two items of particular interest to nonprofits. The Department of Children and Families has implemented an electronic system for bidding on contracts that reduces time and duplicative paper submissions. Additionally, the State Board of Social Work Examiners has revised its licensing requirements for greater flexibility, and the Board will now defer to accreditation standards set by national social work organizations, rather than utilizing its own. In recognition of the progress the Review Commission is making in streamlining government contracting and other problem areas, this past week Governor Christie issued an Executive Order extending its operations through 2015. The Order expressly recognizes the contributions and public input of nonprofits in helping the Review Commission analyze the impact of the regulatory environment on job creation, economic growth, and investment in New Jersey. The Review Commission was established in 2010 to address the concerns of for-profit businesses, but quickly added nonprofits as a result of the successful advocacy efforts spearheaded by the Center for Non-Profits, the state association of nonprofits in New Jersey.

Arizona Revises Nonprofit Audit Requirements

Arizona legislatively revised audit requirements for nonprofits with state contracts, increasing the audit threshold as well as adjusting the frequency with which audits conducted by a certified public accountant are necessary. Under the new law, nonprofits with more than $250,000 annually in state contracts must undergo an audit each year. Less stringent financial reporting requirements will apply to nonprofits with $250,000 or less in state contracts for the year. Under previous law, nonprofits were required to secure an audit every other year if they receive between $50,000 and $100,000 in contracts and annually if they receive more than $100,000.

Nonprofit Conservancy Helps Preserve National Park

The Yosemite Conservancy, a nonprofit based in San Francisco, has agreed to pay the lion’s share of a $36 million project to help preserve the giant Sequoias in Yosemite National Park. Past mistakes and declining federal spending on parks reportedly have caused experts to fear that the 2000-year-old trees in the Mariposa Grove at Yosemite may suffer decline. The new project will remove a road and parking lot, build an elevated walkway, and make other improvements to make the trees more resilient. In recent years, nonprofits and private funders have stepped in to underwrite operations or maintain public access to parks in Arizona, California, North Carolina, Wyoming, and elsewhere.

Judge Blocks Clothing Bin Ban

A federal judge granted Planet Aid a temporary restraining order against enforcement of an Ypsilanti, Michigan ban on unattended clothing and shoe collection bins on commercial property. Asserting that the solicitation of clothing and other donations is a form of free speech, the nonprofit argued that the city’s prohibition infringed its First and Fourteenth Amendment rights. The clothing bin ban reportedly was spurred by complaints about dumping near the bins and criticism about the organization's sale of the donated goods overseas. A bill pending in the Michigan Senate would take away from local governments the power to impose bans on clothing bins set up on private property.

Advocacy in Action 

Round One Goes to Maine Nonprofits, Round Two …

Nonprofits in Maine won a stunning legislative victory when they successfully lobbied for a bill to partially remove a cap on charitable giving. While some would be tempted to declare victory and go home, the Maine Association of Nonprofits (MANP) is rallying the advocates for the next phase.

First, the background. In 2013, at the very end of the legislative session, the Legislature, with the Governor’s concurrence, imposed a $27,500 cap on all itemized deductions, including for charitable donations. In April 2014, the Maine House and Senate undid some of the damage by increasing by $18,000 the amount of charitable donations that are deductible in tax year 2016, and removing charitable giving from the cap altogether in 2017 and beyond. The Governor didn’t sign the bill nor veto it; he let it go into law without taking any action. 

Now comes the nonprofit advocacy leadership lesson. In announcing the news about the legislative win, Brenda Peluso of MANP first gave credit where it was due: to the nonprofit leaders who spoke up for the work they perform and the people they serve. Brenda wrote: “If it were not for the calls, emails, and public testimony this community generated, we would not have been as successful as we were.”

And second? Brenda reminded her coalition colleagues that “our work is not done.” Removing charitable deductions from the cap has always been the goal, so she laid out an aggressive advocacy strategy to maintain momentum toward that aim. She encouraged Maine nonprofits to join MANP in engaging candidates throughout the campaign season, encouraging other nonprofits to talk to the candidates, and identifying sponsors and champions for new legislation next year. MANP has a special webpage to learn more.

Brenda didn’t say it, but we will: if at first you succeed in nonprofit advocacy, try, try for more.


 

Worth Reading

Nonprofit Finance Fund Social Currency Blog

By Beth Bowsky of the National Council of Nonprofits

Kansas Rejects Tax-Exempt Status for For-Profit Fitness Clubs,” Rick Cohen, Nonprofit Quarterly, May 5, 2014, providing an update and keen insights on the efforts and mindset of for-profit businesses that only see tax-exemptions, and not the community benefits, of nonprofits providing services that the for-profits consider unfair competitive.

The State of Campaign Finance Policy: Recent Developments and Issues for Congress, Congressional Research Service, April 22, 2014, providing an up-to-date analysis of the history and philosophy of federal campaign finance laws, the effects of the Citizens United Supreme Court decision, and proposals to alter the status quo.

Worth Quoting

“The best thing that can happen in any local jurisdiction is for nonprofits and local governments to sit down together, share insights about needs for the community and what group can best deliver those needs…if out of that dialogue comes a good solution in terms of voluntary (payments in lieu of taxes), then that’s great.”

- Richard Koontz, director of the Iowa Nonprofit Resource Center, quoted in the Des Moines Register, May 4, 2014.

Worth Studying

Electioneering Rules for Private Foundations and Public Charities, a free online resource that walks nonprofit and foundation staff through the basic legal rules around the electioneering prohibition that applies to their organizations. The resource is one of four developed by the legal staff at the Packard Foundation, Gates Foundation, Hewlett Foundation and Moore Foundation.

What you’d need to make in every county in America to afford a decent one-bedroom, Washington Post, April 22, 2014, providing an interactive map of community-specific housing cost data.

Nonprofit Advocacy Matters | April 21, 2014

Posted: 
April 21, 2014

Federal Issues

Action Expected on Expired Giving Incentives, Tax Extenders

The Senate is expected to vote in the coming weeks to restore and extend through 2015 a package of 50-plus expired tax provisions, including three charitable giving incentives: the food donation tax deduction, the enhanced deduction for conservation easement donations, and the IRA charitable rollover. The bill does not include offsetting revenue raisers to pay for the estimated $85 billion cost. The House Ways and Means Committee is taking longer to evaluate and decide whether to extend each of the expired tax provisions, known as “extenders,” before drafting a bill. The Committee held a hearing earlier this month on a series of expired business tax breaks that Chairman Dave Camp (R-MI) included in his tax reform discussion draft. More hearings are expected later in the year.

IRS Likely to Pull, Revise Social Welfare Politicking Rules

The Internal Revenue Service likely will withdraw controversial draft regulations aimed at 501(c)(4) social welfare nonprofit organizations and propose news ones, according to IRS Commissioner John Koskinen. The IRS proposed regulations in November seeking to define the types of political activities that 501(c)(4) social welfare organizations can engage in without running the risk of losing their tax-exempt status. The IRS received a record number of public comments; more than 150,000 submissions provided mostly negative comments from across the political spectrum, as well as from 501(c)(3) charitable nonprofits concerned about the breadth and adverse impact on nonpartisan voter education activities. The IRS Commissioner stated “It’s going to take us a while to sort through all those comments, hold a public hearing, possibly repropose a draft regulation and get more public comments.” He observed, “This means that it is unlikely we will be able to complete this process before the end of the year.”

Government-Nonprofit Contracting Update
Is it a Grant or a Contract?

As a recent court case proves, it is sometimes hard for even government officials to tell whether the written agreement between the government and a nonprofit is a contract or a grant. This distinction matters to nonprofits because whether their work is performed pursuant to a “contract” or a “grant” determines a number of things, including what accounting rules to follow and whether the project is subject to the federal government’s single audit requirements. The new Uniform Guidance from the Office of Management and Budget – despite other improvements for nonprofits – could confuse the contract-or-grant question even further because it changes the definition of “vendor” to “contractor” and presumes, incorrectly, that states and local governments use the same definitions of grants and contracts as the federal government does. Opportunities still exist to warn OMB about the importance of consistent language; readers are asked to share their views on whether the new definition of “contractor” (section 200.330) could create problems for nonprofits.

Nonprofits Object to Combined Federal Campaign Revisions

Changes to the annual federal workplace giving campaign may make it more difficult for federal workers to donate to local charitable organizations of their choice, according to many nonprofit representatives. The new regulations for the Combined Federal Campaign will limit program administration to a few central federal agencies, rather than numerous campaign administrators. Nonprofits leaders have spoken out in opposition, predicting that this centralized process will likely exclude a variety of previously eligible local charities across the country from federal employee donations. “With the centralization, with the lack of authority from the local employee committee, you lose that,” said Steve Taylor, senior vice president of United Way Worldwide, referencing previous regulations in which the campaign was run by local outreach coordinators across over 100 financial centers. Expressing concern “about how the rules are going to reduce giving through the CFC,” Taylor pointed out that “charities like United Way are the experts on charitable giving, and the federal Office of Personnel Management is not.”

State and Local Issues 

Arbitrary Caps on Salary, Administrative Cost Reimbursement Struck Down

Ruling that the New York Governor does not have the power to limit how much the state will reimburse contractors for the salaries of their employees, a judge has struck down regulations implementing Executive Order 38. In January 2012 Governor Andrew Cuomo issued EO 38 to restrict state reimbursement of salaries in excess of $199,000 and limit the amount of administrative (indirect) costs of nonprofit and for-profit contractors to 15 percent effective in 2015. A spokesperson for the New York Attorney General’s Office said the State intends to appeal.

The court decision, if upheld, will remove a potential conflict between New York and federal contracting and grantmaking policies. New Uniform Guidance from the White House Office of Management and Budget will require states to pay nonprofits their negotiated rates for indirect costs when using federal funds. The federal government has recognized that the limitation on reimbursing nonprofits for their indirect costs decreases the nonprofit’s ability to operate efficiently and effectively. 

Kansas For-Profit Competition for Tax Exemptions

The Kansas Legislature voted to resolve a long-standing complaint by a for-profit health club operator by making his operations exempt from property taxes starting next year. The owner of the for-profit Wichita-based Genesis Health Clubs, has argued for years that the property tax exemption of YMCAs and YWCAs gave them an unfair advantage over his business. In recent years, he or his company reportedly contributed to the political campaigns of 22 of the 40 State Senators. Earlier this month, 19 of those 22 beneficiaries voted in favor of an amendment to pending legislation granting Steven’s for-profit business the same exemption from property taxes. The protestations of this for-profit business person notwithstanding, people familiar with the YMCA (For Youth Development, For Healthy Living, For Social Responsibility) and the YWCA (Eliminating Racism, Empowering Women) are aware that every day their community benefits exceed any tax exemption they receive.

Taxes, Fees, PILOTs

  • Taxes: Last week the Georgia Governor signed a measure that, among other things, temporarily exempts from sales and use taxes purchases by qualified food banks. Governor Deal had vetoed a similar exemption last year.
  • PILOTs: Connecticut’s Governor and House Speaker, both Democrats, don’t agree on whether some nonprofits should start paying property taxes. The Speaker is pushing a bill to require nonprofit hospitals and colleges/universities to start paying taxes and receive partial reimbursement from the state (known as a reverse payment in lieu of taxes or “reverse PILOT”). The Governor is opposed to this approach and is predicting that the Speaker’s bill won’t pass anytime soon. "We need to have an honest discussion (about tax reform)," the Governor told the newspaper in the Capitol, but stressed, "It's just not going to take place this year."

Maine Acts to Partially Restore Giving Incentive

Legislation approved last week by the Maine House and Senate will partially alleviate the disincentive to charitable giving created in 2013 when the Legislature enacted a $27,500 cap on all itemized deductions, including the charitable deduction. A compromise bill keeps charitable giving under the cap through tax year 2015, allows taxpayers to deduct an additional $18,000 in charitable donations for tax year 2016, and removes the cap on charitable giving entirely thereafter. The latest report is that the Governor will sign the bill. Visit the dedicated webpage of the Maine Association of Nonprofits for more information.

California Tax Check-off Program Reconsidered

A bill in the California Senate would establish a new system and standards for determining which charitable nonprofits may be designated for tax check-offs on the state income tax form. The legislation reportedly is intended to provide fairer access to the check-off giving program. California Volunteers, a state agency, would administer the new system. Currently there are three separate bills authorizing the addition of specified nonprofits to the list of organizations eligible to receive tax check-off donations.

Advocacy in Action 

Birth of a Nonprofit Advocacy Community

Every person at every charitable nonprofit can advance its mission through advocacy every day. But that doesn’t mean we need to be sector of lone wolves acting by ourselves or free agents wandering off in different directions.

Quite the contrary was brought home to nonprofits in Memphis, Tennessee, recently when the Alliance for Nonprofit Excellence hosted a session on public policy challenges and everyday advocacy. The audience contained an eclectic mix of charitable nonprofits, including those working in the areas of the arts, river conservation, criminal justice, early childhood education, and veterans rehabilitation. The presenter from Washington, DC, spoke of legislation, told stories of nonprofit actions, and answered questions about what the news of the day means to the individual organizations represented in the room. 

But the attendees weren’t converted from inward-looking nonprofits to community problem solvers until one of their own stood up and changed their perspective. A gentleman from an area legal aid society got their attention by stating, “Eighty percent of the challenges we all face are the same.” He said each of the organizations represented has to deal with funding problems, with policymakers who don’t understand how the nonprofits operate and what impact they are having, and with the public. His words were received with momentary contemplation and then enthusiastic applause in relief and recognition that each was a part of the larger whole and that others can and will offer help to advance the missions of all.


 

Worth Reading

Supporting and Engaging in Networks: Partnering for Greater Impact, by Exponent Philanthropy and Grantmakers for Effective Organizations, April 2014, identifying four key components of the network mindset for effective collaborations between nonprofits and funders: 1) mission, not organization, 2) trust, not control, 3) humility, not brand, 4) node, not hub.

Worth Quoting

“I think comparing private health clubs to either the YM or YWCA, quite frankly, is offensive. The Y’s do so much more for the community than do private health clubs.”

- Kansas Senate Minority Leader Anthony Hensley, criticizing an amendment to extend property tax exemption to for-profit health clubs, reported in Nonprofit Quarterly, April 11, 2014.

Worth Studying

Tax Trends in States, Stateline, April 10, 2014, a featured collection of Stateline stories that help explain recent tax developments in the states, from tax cuts to new rules for independent tax preparers.

The Top 5 (Okay, 6) State Tax Charts, compiled by the Center for Budget and Policy Priorities, April 14, 2014, providing the progressive think tank’s visual representations of state revenue, spending priorities, and data on earned income tax credits.

Annual State-Local Tax Burden Ranking FY 2011, Tax Foundation, April 2, 2013, providing the conservative think tank’s annual analysis of state tax burdens, ranking New York as having the highest and Wyoming the lowest.

Nonprofit Advocacy Matters | April 7, 2014

Posted: 
April 7, 2014

2014 State of the Sector Report
Recovery Delayed for Nonprofits and Those They Serve

The economic recovery is leaving behind many nonprofits and communities in need, according to the 2014 State of the Sector Report released today by the Nonprofit Finance Fund. The survey responses from more than 5,000 nonprofits found that four out of five (80%) reported an increase in demand for services, the 6th straight year of increased demand. More than half (56%) of respondents were unable to meet demand in 2013 - the highest reported in the survey's history. As proof of the fragile nature of the social safety net, an alarming 28% of responding nonprofits ended their 2013 fiscal year with a deficit, and 55% have 3 months or less cash-on-hand. Full survey results, along with an interactive survey analyzer and a look at trends over the past six years, are available at the Nonprofit Finance Fund website. See related article in Government-Nonprofit Contracting Reform, below.

Federal Issues 

Wyden to Nonprofits: “You are on the right side of history”

Senate Finance Committee Chairman Ron Wyden (D-OR), speaking April 1 at the annual member meeting of the National Council of Nonprofits, made his clearest statement of support for charitable giving tax incentives and for the work of charitable nonprofits in their communities. Reiterating his observation that the charitable deduction is a “lifeline, not a loophole,” Wyden stated his conviction that reforming the tax code “does not mean throwing overboard the charitable deduction.” He shared that he is troubled by the concept of a “giving floor,” rejecting a proposal in the discussion draft from House Ways and Means Committee Chairman Dave Camp (R-MI) to require giving of at least two-percent of a person’s adjusted gross income before claiming a charitable deduction.

Chairman Wyden demonstrated his respect for the work of charities by telling the audience of State Association leaders, “What you all do allows Americans to make their way up the ladder of economic mobility.” He urged nonprofits to tell their story to policymakers, saying that “your ’word picture’ is the economic multiplier of the work you do and how dollars cycle through in communities. Job growth, preventive nature of work, save money.” He concluded his remarks by stressing, “You are on the right side of history.”

Expired Charitable and Other Tax Incentives on the Agenda

Senate and House tax committees are shifting from comprehensive tax reform debates to consideration of expired tax incentives, including the food donation tax deduction, the enhanced deduction for conservation easement donations, and the IRA charitable rollover. Last week, the Senate Finance Committee approved by voice vote a bipartisan package of incentives that expired at the end of 2013, collectively known as the “tax extenders package.” Under the bill, each tax provision is extended through 2015. In a letter to Senate Finance Committee Chairman Ron Wyden, Feeding America, the Land Trust Alliance, and the National Council of Nonprofits made the case that “the important incentives for giving back to communities represent a significant commitment to families in need, to the conservation of cherished resources, and to the vibrancy and sustainability of community-based organizations.” Scheduling for action by the full Senate is uncertain. The House Ways and Means Committee is expected to take longer to evaluate individual “extenders” before drafting a bill.

State and Local Issues

States Cutting Taxes, but Restoring Charitable Giving Incentives a Tough Sell

In this election year, governors and legislators in more than 30 states are pursuing tax changes, yet only a handful are looking to enhance charitable giving. So far, Indiana, Minnesota, Nebraska, and Wisconsin have enacted a mix of business, individual, and property tax cuts valued at hundreds of millions of dollars. In Maine, legislators have struggled all session with exempting charitable giving from a cap on all itemized deductions enacted in 2013. A recent compromise measure to phase out the cap was unanimously approved by a key committee, but final action remains in doubt (see related article below). Legislation in Michigan seeks to restore tax credits for donations to homeless shelters, food banks, museums, and community foundations. The tax credits were repealed in 2011 to fund a business tax cut. The Ohio House has passed a bill authorizing a tax credit for donations to the permanent endowment fund of eligible community foundations. According to Philanthropy Ohio, the “Endow Ohio” tax credit would “build and retain wealth for the prosperity and vibrancy of Ohio communities, in perpetuity,” and “strengthen the charitable giving in Ohio, which currently ranks 41st in the country in average charitable contributions.”

Taxes, Fees, PILOTs

  • Fees: Nonprofit and other private employers in Washington, DC were relieved to learn that a proposed $100 per employee “local services fee” was not included in the Mayor’s budget for fiscal year 2015. The “fee,” also called a "head tax," had been proposed by the DC Tax Revision Commission as a way of generating $45 million annually in new revenue.
  • Fees: The Maine House finally put to rest a bill that would have authorized municipalities to impose service charges on tax-exempt property owned by certain nonprofit organizations (mainly hospitals and higher education institutions). The measure was tabled several times last year, but returned to the agenda based on recommendations of the Maine Nonprofit Tax Review Task Force. The legislation was rejected on March 28 by a vote of 80 to 57.

Government-Nonprofit Contracting Update
Contracting Challenges Chronicled in NFF Survey

Results of the Nonprofit Finance Fund’s (NFF) 2014 Annual Nonprofit Survey released today indicate that the need for government-nonprofit contracting reform is increasing. Although there are slight variations depending on whether the contracts and grants are federal, state, or local, the responses for all levels of government were relatively similar. The survey finds:

  • More than half (51%) report that governments at all levels pay nonprofits late for the services they perform on behalf of governments;
  • In a troubling trend, a quarter (24%) indicate that reimbursement for indirect costs has decreased over the past 5 years;
  • 45% said they have experienced a decline in government revenues over the past 5 years, with three out of four (74%) stating that government funds have remained the same or declined during the same period.

The National Council of Nonprofits has proposed several common-sense solutions to address these and other problems with government-nonprofit contracting systems. 

Additional State and Local Issues

Advocacy in Action 

Advancing Mission through Data

The Nonprofit Finance Fund annual survey gives nonprofits powerful data points they can use to advance their missions through advocacy. For instance, the National Council of Nonprofits has used the NFF survey results in recent years in support of the charitable giving incentive (federal and state testimony), in opposition to efforts at the local level to impose new taxes or fees, or demand payments in lieu of taxes (PILOTs) (advocacy campaign), in highlighting the effects of across-the-board sequestration cuts on nonprofits (news article), in demonstrating the shift of public burdens onto the backs of charitable nonprofits (speeches, articles), and in identifying the challenges to philanthropy (article). State Associations of nonprofits have likewise woven state-specific data from NFF into their narratives about the impact and condition of the nonprofits in their states.

Our colleagues at NFF collect, analyze, and distribute this information – both nationwide data and state-specific data – so charitable nonprofits can put it to use. How else can nonprofits use this new data to tell their stories? We’d like to learn how readers incorporate the NFF data and other resources to advance their missions through advocacy.


 

Worth Reading

Philanthropy Is No Substitute for Government Funding,’ March 25, 2014, New York Times editorial making the case for government spending on science research, a message that applies to the work of all fields served by charitable nonprofits.

Worth Quoting

“Organizations and churches give back in so many different ways. They give back to citizens and provide services towns can’t do. We get what we can get. It’s a win-win situation for both of us.”

- Huntersville, North Carolina Town Manager Greg Ferguson discussing the desirability of having nonprofits in town, quoted in the local Herald Weekly on April 4, 2014.

Worth Studying

Nonprofits, Voting and Elections: A 501(c)(3) Guide to Nonpartisan Voter Engagement, Nonprofit VOTE. This free, downloadable Guide covers all the basics, from general rules to voter registration, voter education, candidate engagement, and getting out the vote. Each section contains links to additional resources on each topic to help further your work.

Worth Citing

$18.93 - $27.00 per hour

The range (from Arkansas to Massachusetts) of the value of volunteer services in the states in 2013, according to Independent Sector. The nationwide average hourly rate for 2013 was $22.55, up 41 cents from 2012. 

Nonprofit Advocacy Matters | March 24, 2014

Posted: 
March 24, 2014

Federal Issues

Senate Action Likely on Expired Giving Incentives

The Senate Finance Committee reportedly will consider legislation in the coming weeks to renew a package of several dozen expired tax incentives, including the following three provisions that promote giving to the work of charitable nonprofits. The food inventory enhanced tax deductions allowed individuals, businesses, and corporations to donate wholesome food to nonprofits and deduct their cost basis plus one-half the difference between their cost and the market value of the donated goods. The enhanced tax deduction for conservation easement donations permitted landowners to donate or sell certain rights associated with his or her property, such as the right to subdivide or develop, and a private organization or public agency agrees to hold the landowner’s promise not to exercise those rights. The IRA charitable rollover allowed individual taxpayers older than 70 ½ years to donate up to $100,000 from their individual retirement accounts (IRAs) and Roth IRAs to charitable nonprofits without having to treat the withdrawals as taxable income. The three provisions are expected to be included in legislation likely to come before the Finance Committee by early April.

Federal Agencies Shifted Sequestration Burdens on Nonprofits, Others

In 2013, the arbitrary, across-the-board spending cuts known as “sequestration” reduced assistance for education, housing, health, and nutrition, according to a new report from the Government Accountability Office (GAO). Among other things, GAO found that “sequestration reduced the size and number of grants, vouchers, and other forms of assistance provided to states and localities, nonprofits, and other partner entities that assist in carrying out federal missions.” Of concern to charitable nonprofits is that sequestration not only reduced direct grants to nonprofits, but that nonprofits also had to fill the void created by cuts to other programs. Perhaps most telling, GAO found that “many of the effects of sequestration could not be quantified or will not be known until future years, if at all, for a number of reasons including the timing of when funds are disbursed (such as grant cycles that start late in the fiscal year), challenges in isolating the effects from other factors, and the lack of currently available performance data for some programs.” Read the full report: 2013 Sequestration: Agencies Reduced Some Services and Investments, While Taking Certain Actions to Mitigate Effects, GAO, March 2014.

Congress May (Again) Tighten State Trigger for Food Benefits

Governors in six states so far — Connecticut, Montana, New York, Oregon, Pennsylvania, and Rhode Island — have taken steps to reclaim more than a combined $800 million in annual Supplemental Nutrition Assistance Program payments from the federal government by increasing energy subsidies to individuals in need, Governing reports. Eight other states — California, Maine, Massachusetts, Michigan, New Jersey, Vermont, Washington, and Wisconsin — are considering taking similar actions, according to Stateline. The federal Farm Bill, enacted earlier this year, was supposed to cut the cost of the food stamp program by preventing states from triggering eligibility by providing a mere $1 a year in heating assistance aid. U.S. House Speaker John Boehner (R-OH) has complained that “states have found ways to cheat, once again.” He and other House Republicans are promising to investigate the actions of the states and move legislation, if necessary, to prevent what they consider circumvention of the goal of the Farm Bill. 

State and Local Issues 

Connecticut Reconsiders Support for Some Nonprofit Property Exemptions

Connecticut, the state that actually reimburses towns and cities for tax revenues lost due to state property tax exemptions for governments and nonprofits, is roiling with competing bills to increase how much money the municipalities actually receive. Current law calls on the state to pay 77 percent of the tax bills that nonprofit hospitals and colleges/universities would otherwise pay; yet lately the legislature has appropriated only about 32 percent of that amount. One pending bill would require the state to pay at least 50 percent of the tax bills directly to the largest cities and a lesser percentage to smaller communities. The Governor is proposing an additional $8 million in funding for cities in his budget to address the concerns raised by this bill’s supporters. The Speaker of the Connecticut House has taken a different approach by introducing a bill to dramatically alter the existing state “grant in lieu of taxes” program. The Speaker’s bill would effectively repeal the property tax exemption of nonprofit higher education institutions and hospitals and call for the state to reimburse the “Eds and Meds” at a reduced rate of up to 77 percent. See recent testimony of the Connecticut Association of Nonprofits.

Public University Pegged for “PILOTs”

A local government in Iowa has secured an unusual promise from the publicly-owned University of Iowa –payments of over $1 million per year to match the taxes that a private landowner would have been required to pay to all overlapping jurisdictions. The University system purchased a 150,000-square-foot parcel of property from the city on which to build a health clinic. The payment amount reportedly is based on the taxes that all overlaying taxing bodies would assess annually on the property, yet the city will be keeping the whole amount for itself, causing some politicians to complain. The same issue – cities negotiating payments that cut out other taxing bodies – is the subject of legislation in Wisconsin that would force cities in that state to share a proportion of voluntary payments.

The Relationship Between Cities and Nonprofits: It’s Complicated

Is it just us or do the following two situations demonstrate the push-pull relationship with governments that nonprofits experience every day? In these, one city sees nonprofits as a problem-solver for a chronic local problem; the other finds that its need for cash trumps its desire to solve local problems through nonprofits.

  • The St. Louis Public Schools Superintendent will soon be issuing requests for proposals to turn underperforming public schools into “contract schools” run independently by charitable nonprofits. The nonprofits would hire staff and set curricula, but the schools would still belong to the public school district. The approach reportedly has also been tried in Chicago, Philadelphia and New York.
  • San Diego is considering a plan to keep for itself a larger share of federal funds under the Community Development Block Grant program, and cut funding to projects managed by nonprofits. Citing infrastructure needs such as replacing street lights and repairing sidewalks, city officials reportedly would divert over $1 million in federal funds that normally are used by nonprofits to leverage outside resources for community improvement projects. This plan is currently undergoing a 30-day public comment period prior to final approval.

Additional State and Local Issues

Advocacy in Action 

Advancing Your Mission Through … Compelling Data

People advocating on behalf of their nonprofit’s mission – to funders, journalists, public officials, volunteers, etc. – are used to telling compelling stories of impact and need in their communities. So much the better when they have compelling data to back up their narrative stories. New Jersey’s Center for Non-Profits has mastered the fine art of data collection, and reporting o n those data points.

The New Jersey Non-Profits 2014: Trends and Outlook, published this month, reports on the responses from the Center’s annual survey of the experiences of the nonprofit community for 2013. The current survey found that New Jersey nonprofits reported some modest signs of improvement in their circumstances compared to 2012, but rising demand for services and flat or uncertain funding streams continue to create a cautious outlook for 2014. Here are some of the specific findings:

  • Four-fifths (82%) of responding organizations reported that demand for services had increased during the past year, and a similar percentage (80%) expected demand to continue rising in 2014.
  • Nearly half (46%) reported relatively level funding in 2013 vs. 2012, but 31% acknowledged that expenses exceeded revenue during their most recently completed fiscal year. 
  • Seventy-four percent expected their total expenses to increase in 2014, but only 58% expected total 2014 funding to increase.  

When New Jersey nonprofits get questions (or need to correct presumptions) from the news media, politicians, the public, and others, they have this data to tell their story. Check out, and use, the data from State Sector Economic Impact reports for your state, posted on the National Council of Nonprofits website. 


Worth Reading

Advocacy by Charitable Nonprofits: Flipping the Accountability Lens to Focus on Government ActionsTim Delaney, President and CEO, National Council of Nonprofits, in an article published by Columbia Law School, providing a purposefully provocative explanation of how five hidden-in-plain-sight trends of government actions are harming the ability of nonprofits to serve individuals and local communities.

Worth Quoting

“Connecticut rightly recognizes both that nonprofits earn their property tax exemptions through community impact and that those exemptions mean lost tax receipts for municipalities. The benefits of creating jobs, revitalizing neighborhoods and encouraging vibrant growth of host communities outweigh the forgone revenue.”

- Jeff Shaw, Director of Public Policy, Connecticut Association of Nonprofits, in testimony before a Joint Committee of the Connecticut Legislature, March 21, 2014.

“The lesson is that if you want to have an impact, and to protect the interests of your organization, you need to participate actively in large regulatory changes.” 

- Henry Flood, Senior Advisor,The Super Circular: Who Benefits?, The Grantsmanship Center, making the point that the most engaged and vocal organizations secured the most favorable terms in the new OMB Uniform Guidance on federal grants reforms.

Worth Watching

The OMB Super Circular: What the New Rules Mean for Nonprofit Recipients of Federal Awards, Venable LLP law form webinar, March 20, 2014, presenting an overview of the new OMB Uniform Guidance emphasizing noteworthy changes that will have important implications for nonprofit recipients of, and applicants for, federal grants and cooperative agreements.

Worth Studying

The story of the recession, as told through 8 beautiful Atlanta Fed graphicsWashington Post, March 19, 2015, highlighting visuals from a recent report of the Atlanta Federal Reserve that present a highly visual mix of graphics, charts and text that describe “where the labor market stands, what’s holding it back and what can be done.” 

Nonprofit Advocacy Matters | March 10, 2014

Posted: 
March 10, 2014

Federal Issues

Budget Season Opens in Earnest

President Obama kicked off the official annual budget and spending season with the release of his fiscal year 2015 budget proposals and House and Senate committees are now getting busy attending to spending priorities. The President’s budget, released on March 4, mostly follows the spending limits that Congress approved in December. It once again calls for limiting the value of itemized deductions (including the charitable deduction) for higher-income taxpayers. It also includes increased spending on some programs that are of interest to nonprofits. Congress is not expected to act on the President's budget blueprint, but it could factor into appropriation discussions. The budget deal reached in December answered the question of how much the federal government will spend in FY 2015, an issue that has frustrated recent appropriations decisions. With that question resolved, the spending committees are pursuing “regular order,” the process of picking which programs to fund and by how much. While optimistic by past experience, the chairs of the Appropriations Committees in the House and Senate are pushing their colleagues to move the 12 spending bills out of committee by June and approved by either chamber of Congress by early August.

Tax Reform Draft Made Public

Like the President’s FY2015 budget blueprint (see above article), House Ways and Means Committee Chairman Dave Camp (R-MI) released a draft tax reform plan that is full of interesting details and ideas, but by all accounts has no chance of becoming law this year. The proposal calls for lowering top tax rates for individuals and corporations and modifying or eliminating thousands of existing tax provisions. It proposes changes to standard and itemized deductions that Camp projects will reduce itemizing to only five percent of taxpayers. It would also levy an excise tax on some nonprofit salaries that exceed $1 million, impose pay-out requirements for Donor Advised Funds, alter how unrelated business income taxes are calculated, and eliminate most forms of supporting organizations. Go to the National Council of Nonprofits website to see our statement and a summary of the Camp tax reform proposal.

Proposal to Regulate Social Welfare Nonprofits Draws Record Response

A record-setting 143,730 respondents submitted comments to the Internal Revenue Service on proposed regulations relating to political activities of 501(c)(4) social welfare organizations. By most analyses, the comments are predominantly negative, whether submitted by conservatively or progressively leaning individuals and organizations. The draft proposals seek to define the types of political activities that 501(c)(4) social welfare organizations can engage in without running the risk of losing their tax-exempt status. They do not ban any such activities, provide a spending limit, or remove donor confidentiality for partisan spending that would otherwise be made public by entities organized under different sections of the Tax Code. Comments submitted by the National Council of Nonprofits focus on the unintended and harmful impact that the proposed regulations would have on the legitimate and essential nonpartisan advocacy activities of 501(c)(3) charitable nonprofits such as nonprofit lobbying, work on ballot measures (initiatives, referenda, and bond measures), and nonpartisan election-related activities such as voter guides, candidate forums, and voter registration activities.

State and Local Issues 

Cities Seek to Tax Employers, Employees

Across the country, cities are looking to expand their revenues beyond property tax receipts by imposing new taxes and fees on individuals and businesses, including nonprofits. Cities ranging from New York City to Johnstown, Pennsylvania reportedly are considering implementing commuter taxes. The Adjustment Plan to address the debts of bankrupt Detroit confides that the “City is considering the enactment of a local ordinance that would require employers to withhold City income taxes of reverse commuters.” Washington, DC, which is prohibited by Congress from levying a commuter tax, is considering a recommendation from a recent Tax Revision Commission to impose a “local service fee” on non-governmental employers, including nonprofits, of $100 per employee. The Commission reportedly opted for the fee approach as a better alternative to seeking payments in lieu of taxes (PILOTs) from nonprofits.

Taxes, Fees, PILOTs

  • Fees: The Honolulu City Council voted to reject a proposed ordinance to extend a trash collection fee to charitable nonprofits. Lisa Maruyama, president of the Hawai`i Alliance of Nonprofit Organizations, voiced the concerns of the nonprofit community: "It's a slippery slope of fees that actually contribute to nonprofit overhead and increased business costs. This type of overhead expense is very hard to recoup in fundraising initiatives."
  • PILOTs: The Speaker of the Connecticut House is threatening to turn up the pressure on nonprofit hospitals and universities to provide more money to their local governments. He is describing a plan to alter the State’s revenue sharing plan to reduce payments that go to communities to cover revenues lost from property tax exemptions by those institutions. Although no legislation has yet been introduced, the Speaker claims to have bi-partisan support for a proposal that could require universities and hospitals to pay property taxes and then submit a request to the State for reimbursement for all or some of the amount.
  • PILOTs: Bryant University in Smithfield, Rhode Island, has effectively agreed to all of the town’s terms – payment of $200,000 annually to cover the costs of emergency police and fire services it receives – and the Town Council members apparently are having difficulty taking “yes” for an answer. Bryant and Smithfield have been locked in heated negotiations for years, culminating in a controversial law enacted last year by the General Assembly empowering the town to charge fees if Bryant doesn’t capitulate.

Government-Nonprofit Contracting Update
Maryland Nonprofits Excluded from Applying for Contracts

Smaller nonprofits that historically have performed services on behalf of governments may be excluded from competing for state contracts if small-business legislation is enacted. The measure would mandate that contracts valued between $15,000 and $100,000 must be set aside in a Small Business Reserve (SBR) by all state agencies and only awarded to those certified as small businesses. Nonprofits would not be eligible for the preferential treatment because they are not independently owned and operated. We would like to hear from any other states that have – or that have rejected – similar programs that prevent nonprofits from competing for state contracts to serve their local communities.

Legislatures Continue to Tweak Solicitation Regulation

State legislatures continue to tweak their solicitation laws in an effort to increase accountability, and occasionally, to reduce burdens on nonprofits. A bill pushed by the Maine Attorney General would eliminate registration and disclosure requirements for charitable nonprofits and professional fundraising counsel, leaving only professional third-party solicitors still required to register and report. Maryland appears likely to adopt a rewrite of the state’s solicitation registration law to increase the Attorney General/Secretary of State’s oversight of nonprofits and raise certain fees for charities. Maryland Nonprofits, the State Association in Maryland, supports the bill on the grounds that it would “provide resources and authority to address glaring shortcomings in the state’s ability to protect charitable donors from fraud, effectively monitor compliance with state rules on charitable solicitations, and when necessary intervene to prevent the misuse of charitable assets.” In Oregon, both the House and Senate have passed the bill authorizing the Attorney General to impose increased penalties, including fees, on nonprofits that fail to comply with reporting and other regulatory requirements. The measure, which was expressly amended to restrict the creation of additional and burdensome reporting requirements, now goes to the Governor for his signature. See the recent Nonprofit Advocacy Matters for more background on these and other proposals.

Additional State and Local Issues

Advocacy in Action 

Here’s Why

We’ve all heard the declaration: Your nonprofit can/should/must engage in advocacy! The typical reasons given are that you serve a population that doesn’t have a voice or the public needs your good sense. Rarely does the speaker of the opening declaration explain “why” in terms that matter to the mission and day-to-day responsibilities of the busy nonprofit professional. Until now.

Dennis McMillian, President of the Foraker Group, opened his March message to members of the state association of nonprofits in Alaska with a message worth sharing. In The Case to Engage in Public Policy, Dennis used facts to make his point clear for residents of his state: “Nationally 31% of charitable nonprofit revenue comes from government grants. Alaska gets twice that much! That fact alone should make it clear that public policy is not just a good thing to do, many organizations must engage in it to survive.”

He went on to explain: “Even nonprofits that depend on earned revenue or charitable giving are not immune to today's policy challenges. Never have stakes been so high. Individually and collectively we must act – we must do a better job of advocating for ourselves.”

And then there is this universal truth that all nonprofits should acknowledge: “Some elected officials don't understand why nonprofits are important, others lack respect for what we do. For example, recently some of our legislators were heard making statements that nonprofits are "not effective,” that "salaries are too high,” we "waste money,” we "don't know how to run our businesses,” and that we need to be "taught" to do more for less. Unfortunately, these officials don't know what they don't know. If we don't speak for ourselves, they may assume their perceptions are true.”

In other words – for Alaskans and nonprofits throughout the United States – advocating on behalf of your nonprofit is an essential tool for advancing mission.


 

Worth Reading

Foundations Can Rewrite History by Focusing on the States, Tim Delaney, Nonprofit Quarterly, March 5, 2014, demonstrating that while much attention is focused on federal proposals in Washington, DC that often are dead on arrival, “the real action is in the states” when it comes to legislating: last year Congress passed fewer than 80 laws, while state legislatures adopted 40,000.

Worth Quoting
Respect from Washington

“Representing 10 percent of the nation’s adult workforce and contributing more than $800 billion to US GDP, nonprofits also serve as an economic engine for job creation in communities across America.”

- Strengthening and Supporting the Social Sector to Grow the Middle Class, White House Budget Fact Sheet accompanying the President’s FY 2015 Budget, March 4, 2014.

Worth Quoting

"Nonprofit leaders are the best business people in the state. They are able to deliver world-class services, balance the books, and run a marketing campaign -- usually all on a shoe-string budget."

- Washington Governor Jay Inslee speaking to an audience of 200+ nonprofits at Washington Nonprofits' Legislative Reception, February 12, 2014.

Worth Studying

25 Maps and Charts That Explain America Today, Washington Post, February 24, 2015, offering a fascinating pictorial collection of demographic information ranging from the economic and digital divides to tax and social policies across the country.

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