Nonprofit Advocacy Matters | April 5, 2010

This edition of Nonprofit Advocacy Matters focuses primarily on state and local issues. Congress is in recess, but you can check on the status of federal issues we are following by going to the Federal Issues section of the National Council website.

UPDATE: Small Employer Health Care Credit

The small employer credit for providing health insurance is now in effect, so qualifying smaller nonprofit organizations will start seeing savings when they file their next payroll tax statements with the Internal Revenue Service. The IRS has provided tax tips, guides, and answers to frequently asked questions on its website, and both the IRS and the U.S. Department of Labor will be issuing additional guidance in the future. We at the National Council are extremely proud of the work our network accomplished in broadening what was originally just a tax break to help small for-profit businesses into a significant benefit for smaller nonprofits that extends health insurance to their employees. We have provided tips on our website to help small organizations understand, and take advantage of, the small employer credit. As always, this page will be updated as new guidance and information become available, so check back often.

State Tax Collections Show Some Improvement

For the first time in nearly two years, some states saw a modest increase in revenues in some tax collections, according to a report by the Census Bureau.  In the fourth quarter of 2009, the 15 most populous states saw a combined increase of 3.9% in revenue from corporate income and property taxes. The report also notes, however, that individual income and sales taxes still declined over the same period. A separate report from Bloomberg finds that states will continue to encounter financial difficulty over the next several years, but that the overall freefall in revenue receipts appears to be over. The stabilized revenue reports could help state and local lawmakers avoid previously planned cuts or restore funding for essential services during this election year, but quickly revisit them after the fall elections if that quarter’s numbers was abnormal. To learn more about what your organization can do, please visit the National Council’s State Budget Page and read our latest special report, State Budget Crises: Ripping the Safety Net Held by Nonprofits 

New York Comptroller Calls for Contracting Fixes to Aid Nonprofits

One of the more encouraging examples of how nonprofits can work with government officials to address late payments and other contracting problems comes from New York State, where Comptroller Thomas DiNapoli recently recommended several key changes to state contracting practices. Among other recommendations, Mr. DiNapoli called for expedited contract payments to nonprofits, faster reviews of requests for proposals (RFPs) and efforts to spur greater private lending to nonprofits. The proposals come after a series of meetings between the Comptroller’s office and nonprofit leaders, including the New York Council of Nonprofits. In his report, the Comptroller cited a NYCON survey earlier this year that revealed 69% of New York’s nonprofits have borrowed money in the last two years to cope with delayed government payments. “Not-for-profits are struggling to provide crucial services to New York families,” Mr. DiNapoli said. “When state agencies fail to approve contracts and make payments on deadline, they make the problem worse.”

Michigan Nonprofits Object to Sale of Nonprofit Hospital to For-profit Company

A cadre of Michigan nonprofits are objecting to the proposed sale of the Detroit Medical Center to a for-profit company based in Nashville, reports the Detroit Free Press. While the sale of the center would provide $850 million for facility improvements and close a pension-funding gap, the objecting groups are concerned at the potential loss of charity care and the long-term impact on the area’s poorest residents. It is important to keep in mind that charitable assets acquired in the sale must still be used to carry out the original mission of the sold institution. This historically has been done through the creation of a “conversion foundation.” Kyle Caldwell, President and CEO for Michigan Nonprofit Association, offers balanced commentary on the MNA website on the potential impact of the deal on the Detroit area and Michigan’s nonprofit sector. This potential deal is being watched across the country as other nonprofit hospitals continue to struggle through the recession.     

Rhode Island Eyes Nonprofits for Sales Tax Revenue

Lawmakers in the Rhode Island General Assembly recently considered a plan to subject nonprofits, including churches, YMCAs, and even parent-teacher associations, to the state’s 7% sales tax. The nation’s smallest state is currently mired in a $221 million budget deficit and legislators are searching desperately for new sources of revenue. Community groups were quick to respond. The RI Alliance of YMCAs stated, “By nature, nonprofit organizations are break-even entities. If this proposal were to move forward, it would force YMCAs across the state to take a very hard look at expenditures and to tighten budgets that are already under extreme pressure.” According to reports from nonprofits we contacted, the proposal to tax nonprofits has been put on the back burner, for now. This legislation further highlights the difficulties that both states and nonprofits are facing in this recession. Please read our latest special report and visit out website to find out what you and your nonprofit can do to improve nonprofits’ partnerships with lawmakers and local governments. 

Hart County has a Heart for Nonprofits

In South Carolina, the Hart County Recreation Department voted to repeal a policy that imposed fees on nonprofits for using county facilities. County officials noted, “If we do it for one, we’re going to have to do it for all. We need to make a fundamental change that all nonprofits are exempt.” This represents a small, yet positive shift away from the recent trend of imposing fees and taxes on local nonprofits.  

Don’t Just Complain, Fix the System

The year 2009 in Illinois was known for many crises – political and fiscal – but Donors Forum of Illinois resolved to advocate for solutions, rather than stand on the outside complaining. Donors Forum interviewed nearly 50 City and State officials, human services providers, and civic and philanthropic leaders, convened focus groups, conducted extensive research, and convened a Policy Forum of 41 experts representing a wide range of perspectives. The result is the report Fair and Accountable: Partnership Principles for a Sustainable Human Services System. The principles include guidance for establishing transparent and competency-based selection processes, contract terms that are based on the community’s best interests, fair payment practices, effective communication and ensuring that needed services are delivered effectively to those who need them the most.

To date, 70 organizations have endorsed the Partnership Principles, including the Chicago Department of Family and Support Services. Those groups that endorse the Partnership Principles share “a vision of a system that is responsive and efficient in meeting the needs of the community, and in which the interaction between government and nonprofit providers reflects fairness and mutual accountability.”

Other News

Send us your stories

The National Council of Nonprofits is working on a special project with the Center on Nonprofits and Philanthropy at the Urban Institute to document the growing problems with government payments. We invite nonprofits to share your experiences - not only negative stories about problems but also any stories that demonstrate success in solving them. Submit your story through our website or contact Chris Conkey.