Nonprofit Advocacy Matters | June 1, 2010

Annual IRS Filing: Continue Encouraging Nonprofits to File the Form 990-N

Although the May 17 filing deadline has passed, the IRS has indicated it will continue to accept 990-Ns filed by smaller organizations that have not filed in the past three years and are at risk of losing their tax-exempt status through automatic revocation. Please spread the work and share this new resource from the National Council about state and federal annual filing obligations for all nonprofits, even those with under $25,000 in annual gross receipts.

Hot New Report: GAO Finds Governments Treat Nonprofits Unfairly and Inconsistently

Federal grants often fail to provide nonprofits with enough funds to cover the full costs they incur for delivering services on behalf of government, the Government Accountability Office (GAO) recently reported. "These issues place stress on the nonprofit sector," the GAO found, "diminishing its ability to continue to effectively partner with the federal government to provide services to vulnerable populations." Among the eye-opening findings:

• Unfair: For 88 percent of the nonprofits the GAO examined, the government failed to reimburse nonprofits the full costs of the indirect expenses they incurred to deliver services on behalf of government. Some nonprofits get nothing at all.

• Inconsistent: Amazingly, even with federal programs using federal dollars, the extent to which a nonprofit can recoup its indirect costs depends on how much state and local governments want to take off the top for themselves. For instance, the GAO documented that Wisconsin reimburses nonprofits up to 14 percent for indirect expenses, Louisiana withholds more so nonprofits get only 9.4 percent for indirect costs, and nonprofits in Maryland get zero - all working on the same grant program through the federal Department of Health and Human Services.

Read a summary of the report and the GAO's recommendations.

Final Action Delayed on Jobs Bill, Tax Incentives for Giving

The House Friday approved a scaled-down version of of a bill designed to strengthen the economy and assist nonprofits and other employers. The $113 billion American Jobs and Closing Tax Loopholes Act (HR 4213), which passed by a vote of 215-204, would extend the IRA Rollover and other charitable giving incentives, and provide temporary pension funding relief to nonprofit and for-profit sponsors of defined benefit plans. The House-approved bill does not include $31 billion in additional Medicaid assistance that many states have been planning to use to help balance their fiscal year 2011 budgets, but House leaders have pledged to take up the measure shortly after they return next week. The Senate is also expected to consider the jobs package and several of the related bills in the coming weeks.

Financial Regulatory Reform and Nonprofits

Last month, the Senate passed the Restoring American Financial Stability Act of 2010, a bill that, among many other things, would give the Federal Reserve expanded authority to set consumer protection rules for mortgage lending and credit cards. The action now moves to a conference committee that will iron out the differences with a version passed by the House in December. Of particular interest to nonprofits: an amendment sponsored by Sen. Richard Durbin (D-IL) that would let the Fed limit fees imposed on debit card transactions. This could cut costs for many nonprofits and make donations go further.

NH Advocacy Prevails Against Advocacy Challenges

The New Hampshire Legislature appears to be on the verge of enacting sweeping advocacy and political advertising restrictions in the wake of the Supreme Courts' Citizens United case, but 501(c)(3) organizations have largely been exempted due to effective lobbying by the New Hampshire Center for Nonprofits and its members. As initially proposed, the legislation would have imposed prior restraint of nonprofit speech on legislative advocacy and required the public disclosure of the names of donors if the organization launched advocacy (as opposed to political electioneering) advertisements during the campaign season. "Nonprofit leaders and advocates sprang into action to inform the legislators about the effects of the proposed legislation on their organizations," Claudia Damon of the NH Center reports. "Their descriptions of the practical impact of the bill disclosed significant unintended negative consequences that resulted in major revisions to the bill, affirming for us, once again, the value of nonprofit legislative advocacy."

NC Proposes to Withhold 2% from Nonprofits for "Oversight"

The N.C Center for Nonprofits is leading the opposition to a legislative proposal that would allow state government agencies to withhold two percent of grants to nonprofits to pay for state agency oversight. The legislative proposal targets only grants to nonprofits, not grants to others.  More than 200 nonprofits have joined in the effort to encourage lawmakers to treat nonprofits fairly by appropriating money expressly for oversight (as it does for other grant recipients) rather than taking it from nonprofits. Advocates have already succeeded in getting the bill watered down so state agencies have to actually show a need for the withheld funds, rather than automatically getting them. Read the Center's one-page explanation on what this means for nonprofits in North Carolina.

New Reports on Recession's Impact on Nonprofits

• San Diego, CA: 30-40 percent of San Diego nonprofits continue to have long running budget deficits, according to a report released by the University of San Diego. The report's author believes the reasons for the deficits could be slow or insufficient reimbursement from government contracts, a heavy demand for services, and an overstretched drive to fill the void left by for-profit companies.

• Palm Beach, FL: A report from the Community Foundation for Palm Beach and Martin Counties examines the impact that the economy has had on local nonprofits and the strategies organizations have developed to cope with the difficulties of the recession.

Nonprofit Voter Engagement Resources Launched Today

The Nonprofit Voter Engagement Network launched a new website for the 2010 midterm elections that provides new resources for nonprofits to help their constituents participate and vote. New features include online versions of the NVEN nonprofit guides, a 50 State Voter Information map, and updated toolkits, fact sheets, PowerPoint presentations, and more.

Other News

Listen to the NPR Story, "Amid Red Ink, Tax-Exempts Asked To Add To Coffers," by Pam Fessler.

New IRS Trainings

The Internal Revenue Service has scheduled its 2010 National Tax Forums focusing on tax law, compliance, and ethics. The sessions will be held in six locations around the country this summer: Atlanta, Chicago, Las Vegas, New York City, Orlando, and San Diego.

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 contracts hurting nonprofits (including delayed payments, partial payments, changed terms, requirements to waive certain rights, and more) as well as stories that demonstrate success in solving them. Please submit your story through our website or contact Chris Conkey.