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:
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.”
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.
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.
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 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.
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.
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.
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.
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.
“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.
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.
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