Nonprofit Advocacy Matters | May 3, 2010

Spread the Word: Don't Throw Away Your Tax Exempt Status

May 15th is the deadline for nonprofits that have not filed an annual return in the past three years. 2010 is the first year the IRS will automatically revoke the tax-exempt status of organizations that have failed for three consecutive years to file the required Form 990 with the IRS. Read this fact sheet from the IRS for more information about filing annual returns. Please spread the word to your friends and neighbors who may be involved with small nonprofits that may assume they are exempt from filing. Please visit our website for more information.

Financial Reform Moves Forward

After months of negotiation, the Senate has voted to allow debate on Financial Regulatory Reform. The reform bill pending in the Senate is strongly supported by many organizations that favor greater consumer financial protections for low-income individuals who are frequently victims of predatory lending and other practices. The bill is still of concern to nonprofits due to the House version regulating financial literacy programs and the potential expansion of the Federal Trade Commission's jurisdiction. The Senate is scheduled to begin debate on amendments today.

Deficit Reduction Commission Meets

The National Commission on Fiscal Responsibility and Reform, otherwise known as the deficit reduction commission, held its first meeting on April 27. The meeting offered a glimpse of the key challenges facing the Commission, including: controlling Medicare costs, Social Security solvency, and stagnating revenues. While the meeting was largely an introductory event, members began to stake out their positions regarding spending cuts, programming shifts, and raising taxes. The Commission could put proposals forward that affect federal funding of nonprofits at both the state and national level. The National Council will provide analysis and updates on how the Commission deliberations could impact nonprofits and the people we serve. Information is also available on the Commission's new website.

New Campaign Finance Bill Introduced

In response to the Supreme Court's decision in the case Citizens United v FEC, Senator Chuck Schumer (D-NY) and Representative Chris Van Hollen (D-MD) introduced the DISCLOSE Act (summary and bill text). The bill would require organizations participating in electioneering activities to disclose election-related expenditures to shareholders, board members, and the public. The sponsors of the bill hope to have it passed so the new regulations are in effect for the mid-term elections this fall. Neither the bill nor the Court's decision have changed the ban on 501(c)(3) electioneering activity. The National Council  encourages all nonprofits to learn what they can do to educate and register voters. For more information regarding nonprofits and elections, please read our brief analysis regarding the Supreme Court's decision and learn about nonprofit voter engagement.

New Jersey Cap on Reimbursing Salaries, Benefits

Nonprofits that contract with state human services agencies are facing a proposed cap on how much they can pay for salary and benefits. The proposal would use a sliding scale, based on the gross revenues of the nonprofits, to limit how much the nonprofits can pay employees and get reimbursed by the state. Nonprofits with gross revenues over $20 million could pay no more than $141,000 in salary to an employee; nonprofits with revenue less than $5 million could pay no more than $105,750. The state would also limit the amounts it would pay nonprofits for employee benefits, such as tuition reimbursement and training, as well as restrict travel costs. Nonprofits would be required to raise funds from other sources to cover any of these costs. The New Jersey Center for Non-Profits explains exactly how this proposal will affect the nonprofit sector.

North Carolina Considers Two Percent Oversight Fee for Grants to Nonprofits

Last week, North Carolina state regulators urged the Legislature to give state agencies authority to take away two percent of grants to nonprofits that fund government programs for the purpose of regulating nonprofits. The issue is expected to be considered when the General Assembly convenes May 12. The North Carolina Center for Nonprofits is asking lawmakers not to take money out of the programs that serve communities in order to fund state agencies' oversight. They have created the following talking points on the issue.

Payment in Lieu of Taxes (PILOTs)

Martha's Vineyard, MA: The Town of Oak Bluffs is seeking to fill a budget gap created when voters rejected several measures to raise revenues. Because of the shortfall, members of the Town Council are exploring a payment-in-lieu-of-taxes (PILOT) program that would seek payments from larger nonprofit institutions such as Martha's Vineyard Hospital.

Philadelphia, PA: Initial PILOT negotiations between Philadelphia city officials and leaders from higher education and health care institutions, the so-called the "Eds & Meds" community, have led to no accommodation. The representatives from the various institutions, including Temple University, reportedly expressed no interest in increasing their existing payments or contributing to new PILOTs. Other groups, such as the Chamber of Commerce, have come forward looking to create some form of standardized payments.

Los Angeles Arts Groups Caught in City Budget Crunch

A new budget proposal from the Los Angeles Mayor's office would redirect funding that had been guaranteed to nonprofit arts groups to plug an increasingly large gap in the city's budget. The tax in question is a hotel lodging tax that is allocated directly to community arts groups located throughout Los Angeles. The Mayor has also proposed eliminating free rent provisions for nonprofit theaters and arts education groups, potentially costing nonprofits hundreds of thousands of dollars. Adding to the controversy, the Mayor has also proposed taking away grants already awarded by the city through a competitive application process and allocating them directly to groups of his choosing.

Using the Media to Open the Dialogue

The Louisiana Association of Nonprofit Organizations (LANO) successfully utilized an online media tool last month to get their point across and open the dialogue. Using the "Ask Your Lawmaker" service offered by the nonprofit Capitol News Connection, LANO posted a question for Representative Steve Scalise (R-LA) about ways the federal government can support and better partner with the nonprofit sector to help the overall economy. A reporter for the news service then asked LANO's question during an interview. The Representative responded with genuine respect for our community, saying, "…we've heard from a lot of non-profits that are doing good work in the community, that are doing things that government might end up doing if these non-profits weren't doing them." The "Ask Your Lawmaker" project gives nonprofits the opportunity to take their advocacy efforts to the next level by crafting pointed questions for accredited journalists to ask. Once the questions are posted online, individuals are encouraged to vote for the question, thus raising the likelihood it will be asked, and answered.

Other News

Connecticut's Nonprofit Sector

A new report by the Connecticut Association of Nonprofits offers a look at the impact nonprofits have on the state's economy and citizens. The report also demonstrates how, in spite of the economy, nonprofits continue to provide essential services and programs to the state's most vulnerable residents.

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). 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.