Spending Bill for Remainder of 2013 Retains, Modifies Sequestration Cuts
Congress is planning action in the coming days to avert a government shutdown while retaining the $85 billion in arbitrary, across-the-board spending cuts known as “sequestration” that went into effect at the beginning of this month. The current funding authority for the entire federal government expires on March 27. The House passed a bill March 6 to continue funding the federal government through the end of the fiscal year (September 30) at the current levels minus the $85 billion in sequestration cuts but with some adjustments for defense, FBI, and immigration accounts. The Senate is scheduled to take up the House-passed bill this week and is expected to retain the same spending levels but provide greater flexibility to federal agencies to move money between programs.
Although federal policymakers are taking these minor steps to avert a handful of the multitude of problems caused by the across-the-board cuts, the true impact of sequestration is being revealed very slowly. For example, the Internal Revenue Service announced that nonprofits will see an 8.7 percent reduction in the savings they are otherwise entitled to under the Small Employer Health Credit.
The sequestration cuts will have an impact in every community in America, and therefore likely hit virtually every nonprofit, including those that do not receive government funding. The National Council of Nonprofits launched a special website, www.GiveVoice.org, to alert nonprofits about the need to capture information about the effects of sequestration and help nonprofits collect data and tell their stories. This new tool enables charitable nonprofits to report the negative effects of the sequester on real people in local communities across America. The GiveVoice.org website will be updated as stories come in from people across the country and the effects of sequestration continue to make themselves known.
Dueling Federal Budget Proposals to be Unveiled, Giving Incentive on the Table
Even before spending levels for the remainder of the current fiscal year are settled (see above article), Congress is working on budget blueprints for fiscal year 2014 and beyond. Numerous contentious issues are in play. The House Republican budget that will be released this week is expected to balance the federal budget at the end of 10 years in part by cutting spending by an additional $5 trillion, turning Medicare into a premium support, or voucher, program, and repealing some of the 2010 Affordable Care Act. The Senate Democratic budget, also scheduled for release in the coming days, reportedly will include a combination of fewer spending cuts and increases in tax revenues. Senate Budget Committee Chairwoman Patty Murray (D-WA) conducted a hearing last week focusing on the impact of various tax provisions, such as itemized deductions, on the deficit. One witness expressly called the charitable giving, state and local taxes, home mortgage and other personal itemized deductions unfair, inefficient and “extraordinarily costly,” and recommended replacing them with a 15 percent credit. Senator Ron Wyden (D-OR) took an opposite position, stating that he views the charitable deduction as a “lifeline,” not a “loophole,” that encourages individuals “to give more than they would otherwise give.” The House and Senate are seeking to complete action on a Budget Resolution for FY 2014 by April 15.
Opportunity to Tell Your Story
Reforming Government Contracting Relies on Nonprofit Survey Responses
Charitable nonprofits in every state have the opportunity to accelerate the progress in improving the wellbeing of those they serve, as well as the nonprofit community in general and government-nonprofit contracting in specific, by completing a survey recently sent out by Social Science Research Solutions (SSRS) to randomly selected organizations. The survey follows up on the seminal 2010 research conducted by the Urban Institute identifying critical contracting challenges, such as late payments, failure to receive full costs for contracted services provided, cumbersome and redundant application and reporting requirements for nonprofits, and governments changing contracts mid-stream. In companion research, the National Council of Nonprofits uncovered specific abusive contracting practices and promoted solutions, such as government-nonprofit task forces, auditing reforms, and document vaults, that improve services while ensuring that taxpayers get full value for the programs they are funding. The new SSRS/Urban Institute survey updates the research from 2010 to show areas of progress and lost ground, and is expected to clarify the challenges that nonprofits are currently facing in performing services on behalf of governments.
All organizations that receive the survey are strongly urged to complete and return it as soon as possible. The data collected will be a major source of information used to guide the work of the Government-Nonprofit Contracting Reform Project of the Council of Nonprofits and state associations of nonprofits. Even if your organization does not receive the survey to complete, you can still play a major role in reforming the broken contracting system by sharing your stories with the National Council of Nonprofits.
Pennsylvania Local Governments Demand Proof of Tax-Exempt Usage
Pennsylvania’s Allegheny County is sending letters to 2,800 nonprofits directing them to provide verification to the Office of Property Assessments that they deserve exemption from property taxes. The demand for information is part of a triennial review mandated by County law which requires each organization to submit a review application within 60 days under penalty of losing its tax-exempt status. Separately, a measure before the Philadelphia City Council would create new certification requirements for local nonprofits, forcing them to prove every year that they are still eligible for their tax-exempt status. In explaining his rationale for the efforts in Philadelphia, the proposal’s sponsor reportedly cited a few examples of nonprofits engaged in commercial activities and acknowledged his desire to induce more nonprofits to make payments in lieu of taxes (PILOTs) to the City’s treasury.
Curbing Fees in Lieu of Taxes
Minnesota’s Legislature is considering a bill to stop a trend that has harassed charitable nonprofits in the state in recent years – charging property owners for street lights, pothole repairs, and other services that traditionally have been funded through property tax payments. The legislation, if enacted, would exempt nonprofits from paying new fees if local governments were simply creating such fees as a way to avoid the state constitution's ban on taxing charitable nonprofits.
Challenges to Nonprofit Independence
Legislators are once again considering measures to expand application of open government laws beyond governments to nonprofit contractors. In Maine, a bill would subject the bylaws and minutes of board meetings of hospitals with government contracts to the Freedom of Access Act. Legislation in Oregon would subject nonprofits with local, state, and federal grants that make up at least 25 percent of their annual operating budgets to disclosure requirements under public record laws. State associations of nonprofits and the National Council of Nonprofits have actively opposed such legislation as discriminatory treatment of nonprofit contractors (by failing to apply the burdens to for-profit government contractors) and as a violation of nonprofit independence. (See the Council of Nonprofits' 2013 Public Policy Agenda.)
Additional Articles on National Council of Nonprofits Website
Voter Engagement Pays Off in 2012
Nonprofits that worked to lift the voices of the communities they serve had a significant impact on voter engagement in the 2012 elections, according to a recently release report from Nonprofit VOTE. The report, America Goes to the Polls 2012, found that an estimated 58.7 percent of those eligible turned out to vote last November 6th – exceeding, with the exception of 2008’s record-breaking year, voter turnout in presidential elections for the past 40 years. This unexpected increase happened despite various obstacles that voters faced across the U.S., including a hurricane and last-minute policy changes that contributed to uncertainty and complications at the polls.
Minnesota, Wisconsin, and Colorado ranked in the top slots for voter turnout last year, with Hawai’i trailing in last place. Among the ten states that preformed the best, seven offered Election Day Registration. The report also discovered that as many as 33 to 40 percent of Americans voted early, an increase from 31 percent in 2008.
“A Sensible Deal Can Avert a ‘Sequester’ Disaster,” by Albert R. Hunt, Bloomberg News, February 17, in which the veteran journalist calls on Congress and the President to, among other things, exempt charitable giving from any limitation on itemized deductions.