Nonprofit Advocacy Matters | January 17, 2012 | National Council of Nonprofits

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January 17, 2012

Congressional Agenda Filling Up Quickly

Nonprofits should get some clarity in the coming weeks on a number of federal issues that impact their work in communities throughout the country. The House of Representatives returns this week for a series of hearings and the Senate convenes next week in time for President Obama’s State of the Union Address on January 24. In that speech to Congress and in his budget for the 2013 fiscal year, due to be released in early February, the President is expected to reveal how he thinks Congress should implement the spending cut targets enacted last year. Critical funding issues involving human services, education, arts, health care, and volunteerism are at stake. Also, Congress must take action by the end of February if it intends to extend beyond February the two-percent employee payroll tax cut and continuation of unemployment and food benefits that it passed as an emergency compromise at the end of December. Each of the issues impacts the work of nonprofits, whether as employers or service providers for affected populations.

Nonprofits Participate in White House Summer Jobs+ Program

Many nonprofit organizations are joining with businesses and governments in committing to create 180,000 to 250,000 jobs this summer for low-income and disconnected youth. The commitments are part of the White House Summer Jobs+ program designed to provide pathways to employment by giving young people needed work-related soft skills, such as communication, time management and teamwork, through coursework and/or experience, as well as “insight into the world of work to prepare for employment.” The nonprofits that have made a “Pathway Pledge” so far include Easter Seals, Goodwill Industries International, Syracuse University, and United Way Worldwide.

As the Governors See It

The State of the States

Governors from across the country are announcing their plans and priorities as their legislatures convene for the 2012 session. Here are a few trends:

State Spending Cuts: Many state governments anticipate additional cutbacks that could have negative implications for the work of local nonprofits. The governor of Massachusetts called cuts to state programs and services “unavoidable,” while the new governor of Mississippi plans to cut agency budgets by an average of 2.9 percent. Meanwhile, to make government more efficient, Colorado’s governor is working to trim costs by reforming or repealing certain administrative policies and personnel rules. The governors of Nebraska and Vermont are looking into similar changes.
Tax Reform: Governors in some states are proposing tax-reform plans that focus on income and sales taxes. As in Nebraska and Idaho, the governor of Kansas has proposed decreasing income taxes and eliminating exemptions and itemized deductions that stand to significantly impact Kansas nonprofits and the individuals they serve. A proposal to lower sales and estate taxes has also surfaced in Tennessee. Conversely, governors are seeking to increase sales taxes in California, Maryland, and Washington. Other governors have kicked off the new year with tax reform plans to benefit many businesses, although the impact on nonprofits is unclear. The governor of Iowa has proposed lowering commercial property taxes by five percent, and the governor of Arizona is pursuing reforms that would provide lower tax rates and simplify rules around income and sales taxes for small businesses.
Job Creation: Job creation plans are lead or major components of proposals from governors in several states, including West Virginia, New York and Minnesota. Minnesota’s jobs bill, which would provide $775 million in funding for job-creation projects and tax breaks to businesses that hire unemployed individuals, college graduates and veterans, could benefit local nonprofits.
Government Contractors: New York Governor Andrew Cuomo is calling for new controls on executive compensation and administrative costs of nonprofit and for-profit service providers in the state. If his proposals, announced January 17, are adopted, contractors would be barred from paying executives in excess of $199,000 and at least 85 percent of every public dollar would have to be spent on direct services rather than on administrative costs.

Taxing Tax-Exempts

When PILOTs Still Aren’t Enough

Brown and Princeton Universities make payments in lieu of taxes (PILOTs) to Providence, Rhode Island and Princeton, New Jersey to compensate the local governments for their large land holdings, but governments and some residents are currently demanding that they pay more. Brown University, which already pays about $2.4 million annually in PILOTs to the city, is exempt from local property taxes for its buildings and land used for educational and other exempt purposes. Officials now, however, are questioning the usage of each parcel of land, seeking to levy taxes on commercial and residential facilities and vacant buildings. Providence intends to get the nonprofit to pay “what we would like them to pay, given the city’s current financial difficulties,” said a local councilman. Some residents in Princeton are challenging the legality of Princeton University’s recently approved arts and transit project which took additional properties off the tax roll. Opponents complain that the city granted zoning approval based on the agreement by the school to increase its annual PILOTs by $500,000 and make an additional one-time payment of $500,000.

Maine Governor Vetoes Sales Tax Exemptions for Arts Groups

Governor LePage vetoed a bill that would have exempted nonprofit performing arts groups from paying sales taxes. “Performing-arts organizations are important to the cultural fabric of Maine. However, simply because something is good does not mean it should enjoy tax-free status. Exemptions from the sales tax should be saved for the necessities of life — food, shelter, medicine — as well as for important initiatives meant to foster growth and create good paying jobs in Maine industries, increasing our overall tax base,” wrote Governor LePage in his veto letter. Of the $45,000 in annual revenue that the tax is projected to provide to the state, as much as $16,000 comes from just one performing arts organization, the Maine State Music Theatre.

Taking Money from Missions Via Fees

Chicago Nonprofits to Pay Fees for Water

The city of Chicago is eliminating water fee waivers that have benefitted some local nonprofits for several generations. The nonprofit fee waivers – which were not automatic, but provided at the discretion of individual aldermen – will be phased out over the next three years, with smaller nonprofits (defined as organizations with assets worth $250 million or less) receiving a 60 percent discount in 2012, a 20 percent break in 2014 and no discount on water fees by 2015. Among the nonprofits most affected by the changes is the Roman Catholic Archdiocese of Chicago, which expects its schools and parishes in the city to see costs increase by an average of $10,000 or more each from the water fees.

Using Fees in Lieu of Taxes

Some call it an effort to evade a state constitutional protection, while others view it as a creative way to fill a local government's budget gap. But either way, the Greenwood, South Carolina city council is questioning whether it values the work of nonprofits in its community. On January 23, the council will hold a hearing on a new business license fee targeted at nonprofits in Greenwood that charge fees for services (such as church daycare and pre-school facilities, hospitals, and community health centers), and sell goods to the public (potentially including rummage sales and second-hand stores that fund program operations). In a recent op-ed in the local paper, Mayor Welborn Adams acknowledges the economic impact of the targeted nonprofits, but claims that the new charges are designed to broaden the tax base. He makes no mention of the South Carolina Constitution which expressly exempts charitable organizations and hospitals from taxes.

Policy Tool Advances Advocacy in Hawai’i

The Hawai’i Alliance of Nonprofit Organizations (HANO) is starting the new year with a much more aggressive focus on advocacy thanks to a new and innovative tool that will dramatically change the way local nonprofits participate in policy and advocacy work. Known as the Hawai’i Policy Portal, this new tool simplifies and streamlines nonprofits’ policy and advocacy work by creating a one-stop shop that offers everything from templates for action pages to petitions. Each component of the Policy Portal comes complete with ways to help provide transparency for and educate users on the issues and legislators involved.

Nonprofit Advocacy Matters | January 17, 2012

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