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Nonprofit Advocacy Matters | December 15, 2014

Posted: 
December 15, 2014

Federal Issues

Charities-Only Tax Bill Nearly Passes in the House

The work of charitable nonprofits in communities throughout the United States fell just a few votes short of receiving a boost by Congress last week when the Supporting America’s Charities Act, H.R.5806, was introduced, debated, and voted on by the House of Representatives. H.R. 5806 sought to make permanent three charitable giving tax incentives: allowing older Americans to make IRA rollovers for charitable purposes without suffering tax consequences; promoting an incentive for donations of conservation easements to protect the environment; and making it easier for farmers and small businesses to donate food to community food banks. The bill was deemed necessary because separate H ouse-passed legislation (H.R.5771) to provide a so-called “one-year” extension of 50+ expired tax provisions would have the effect of promoting charitable giving for less than three weeks – from the date President Obama signs the bill until December 31, 2014 when the tax provisions expire again. Although a majority of the House voted in favor of H.R.5806, the bill needed support from two-thirds because of the procedural rule that allowed expedited consideration. The final vote was 275 to 149, with 47 Democrats joining 228 Republicans in support of the bill – 65 percent of the vote, eight votes short of the two-thirds needed to pass. Ultimately, the bill failed because the House Democratic leadership and the White House worked hard against the bill, which they reportedly opposed because the tax cuts were not directly offset with revenue increases and they saw it as a precedent-setting test of the power of the President’s veto threat. For more information, see the Nonprofit Community Joint Statement to House leaders, a December 11 ad in Politico, and the statement of the National Council of Nonprofits.

Congress Averts a Government Shutdown, Approves Funding Through September

The Senate followed the House in passing a $1.1 trillion appropriations bill that folded a year’s worth of legislating into one 1,600 page document. The legislation provides year-long funding for every federal agency except the Department of Homeland Security, which was singled out for short-term appropriations by Republicans objecting to President Obama’s executive actions removing the threat of deportation for five million individuals in the country illegally. The so-called “Omnibus” bill provides level funding and some increases for some programs, but funding for the Internal Revenue Service, which enforces the tax laws and provides educational assistance to nonprofits, was reduced out of continuing concern over allegations that IRS employees discriminated against conservative groups seeking tax-exempt status. The bill includes numerous controversial provisions, such as language weakening the Dodd-Frank law regulation of banks and a hike in the level that individuals can contribute to political parties for certain purposes. In passing the legislation, which President Obama has said he will sign, Congress averted shutting down the federal government.

Incoming Senate Tax Chairman Issues Backgrounder on Tax Reform

The incoming chairman of the Senate Finance Committee, Sen. Orrin Hatch (R-UT), released a study by Republican committee staff that he believes explains the many reasons why tax reform must happen swiftly, including promoting efficiency and economic growth, achieving a more equitable tax code, simplification, and bringing the outdated tax code into the 21st century. Comprehensive Tax Reform for 2015 and Beyond, which will likely be used as a guide by federal and state legislators alike, provides useful background on the rationale, and potential previously proposed reforms, for such nonprofit issues as the charitable deduction (pages 76, 96-98) and unrelated business income taxes (page 145). In releasing the report, Sen. Hatch issued an open invitation, stating, “I am willing to work with anyone – Republican or Democrat – to fix our country’s tax code and I hope this report will be viewed as an invitation to work together on these critical issues.”

 State and Local Issues

Difficult Financial Times Continue for States, Nonprofits

Consensus at the November meeting of the National Academy of Public Administration about government funding for services provided by nonprofits was rather bleak. State budget improvements in some states do not mean that state governments have recovered. In 2014, total spending for all 50 states fell below its peak in 2008. This is partially due to the ongoing cuts in federal discretionary spending, a trajectory that is likely to continue unless the Budget Control Act is amended. One speaker opined that if the Budget Control Act and its arbitrary, across-the-board cuts policy known as “sequestration” remain in effect, non-defense domestic discretionary spending will drop below the lowest level in the modern era. Much of the funding for the services that nonprofits provide in communities comes from discretionary grants from the federal government to state and local governments, which in turn contract or grant with nonprofits. 

Taxes, Fees, PILOTs

  • Taxes: A Kirkwood, Missouri Presbyterian retirement home has agreed to pay a $1 million annual property tax bill, 80 percent of what it would owe if it were a for-profit business. Of particular note, the St. Louis County Assessor challenged the tax-exempt status of the nonprofit facility after an investigation by the local newspaper into religious-affiliated retirement communities. The Assessor grabbed attention by stating, “You can have ‘Presbyterian’ in your name all you want, but if you walk like a for-profit and quack like a for-profit, it means that you are a for-profit.”
  • PILOTs: Radnor Township, Pennsylvania has asked three universities to make voluntary payments reportedly to help cover their use of police, fire, and other essential services. The schools – Villanova, Eastern University, and Cabrini College – have so far declined the request from the local government, stressing that their legal tax-exemption is based on the real social and economic good they bring to the community.
  • PILOTs: Waterville Township, Maine has agreed to allow Centerpoint Community Church to buy property in a commercial zone after initial resistance. The town council was concerned at the prospect of allowing more non-taxable property, but approved the transaction after a group of churches in the community offered to chip in to defray some costs of the town, such as by purchasing cameras for the police department. 

Arizona De-Regulated For-Profit Fundraising Firms

Recent media coverage suggests that a 2013 Arizona law repealing nonprofit fundraising registrations may have accidentally eliminated disclosure requirements for for-profit fundraising activities as well, but that result was predicted before that law was passed. The issue came to light as a Scottsdale, Arizona, telemarketing firm and a Texas sheriff’s union came under investigation for not disclosing their fundraising activities to the state as required by Texas law, as well as not disclosing to donors that more than two-thirds of contributions go to the telemarketer. The law to de-regulate fundraising activities of charities in Arizona was proposed and passed on the presumption that regulation activities were a “waste of resources” and a “hassle” for the Secretary of State as well as the charity. However, the legislator who sponsored the bill recently said that eliminating the registration requirements for contracted fundraising firms could have been an oversight. Patrick McWhortor at the Alliance of Arizona Nonprofits pointed out at the time of passage that the bill was poorly drafted and warned that removing all regulations for solicitations may lead to Arizona becoming a haven for fundraising scams. 

Florida to Consider Sales Tax Exemption for Original Art

Legislation prefiled this week in Florida could exempt original works of art from the state sales tax. The exemption would apply to original works of art, priced at less than $1000, signed and sold by the artist. The proposal may be considered when the Florida legislature convenes in early March.

Advocacy in Action 

The Twittersphere as Megaphone, Focus Group

The decision by lawmakers to push a charities-only tax bill in the waning days of the 113th Congress was not made until the weekend of December 6; the bill (H.R.5806) was introduced on Monday the 8th, and House floor vote occurred on Thursday the 11th. The nonprofit community had to coalesce and mobilize very, very quickly in that compressed time period. “Tweets” turned out to be an effective tool for action advocacy as well as message development.

While not suited for providing detailed analyses of policy proposals, tweets were ideal for getting the word out and for connecting interested people to actions they could take to make a difference. For example, most state associations of nonprofits sent out ACTION ALERT emails to their members on the Monday morning, and expanded their reach by tweeting the news as well. Multiple national groups also used this medium and shared common messages to frame and drive home consistent messages to lawmakers. Many nonprofit staffers who didn’t receive (or received but didn’t read) the email messages caught wind of the campaign either directly from the state association or other national groups' tweets, or from a friend retweeting the message. Mobilization was near instantaneous.

And as a peer-to-peer mobilizer, the use of pictures proved powerful, as this image demonstrates:

 

Perhaps the most tweeted and retweeted messages were those that combined compassion and outrage over congressional inattention: “Hungry families will still be hungry in January if #HR5806 is voted down in the House today. Demand @HouseDemocrats @HouseGOP vote YES!,” and “It is time for warmer hearts. Tell your Rep to vote YES on #HR5806 #IdahoPol.” 

And then there is the follow up after the votes have been cast and counted. Despite the outcome of the vote on H.R.5806, the Supporting America’s Charities Act, effective nonprofit advocates took to Twitter to swiftly register their appreciation to the Representatives who stood up to support the work of charitable nonprofits (e.g. from Kentucky, “Thanks @RepHalRogers @RepAndyBarr @RepEdWhitfield @RepThomasMassie @RepGuthrie for supporting #HR5806. Pls keep working to #protectgiving!”)

Social media has been used as an advocacy tool for several years, but it is still evolving. Tweets during the campaign to pass the Supporting America’s Charities Act showed the effectiveness of this tool and demonstrated that in the hands of creative and passionate advocates, tweets can cut to the essence of the issues at hand. 


 

Worth Quoting

“What I do, rather than complain or criticize, is just keep coming back. Not give up and complain and throw rotten fruit at each other. Just keep coming back.”

- Sen. Ron Wyden (D-OR), Chairman of the Senate Finance Committee, quoted in Washington Post, December 11, 2014.

“Buncombe County saves huge amounts of taxpayer money by (1) identifying a specific need, (2) partnering by contract with an organization that is set up to provide the need in a cost-effective way, and (3) carefully monitoring the progress and success/failure of the nonprofit to deliver agreed upon benchmarks or results by ongoing and periodic reports …. In short, I believe that partnering with existing nonprofits gives our citizens the best possible delivery of desired services at the lowest possible cost.”

David Gantt, Chair of Buncombe County (NC) Board of Commissions Commission, responding to questions in Asheville’s Mountain Xpress, November 19, 2014.

On the Omnibus Spending Bill

“We’re doing more in eight days than we did all year.” 

- Retiring Rep. Jim Moran (D-VA), who voted for the Omnibus spending bill, quoted in “A productive week for an unproductive Congress,” Washington Post, December 11, 2014.

“Putting these two things in the same bill illustrates everything that’s wrong with the political process right now: a giveaway to the special interests and then providing them the ability to more easily finance the process.”

- Rep. Chris Van Hollen (D-Md.), who opposed the Omnibus bill in part because of a provision that loosened campaign finance limits, quoted in the same Washington Post article.

“The rush Tuesday to post the legislation underscored the 113th Congress’s dubious record as one of the least productive in modern history — governing by deadlines and cliffs of its own making, and struggling to pass even some of the most pro forma pieces of legislation.”

- “Congressional Leaders Reach Deal on Spending,” New York Times, December 9, 2014.

Worth Studying

New Jersey Assembly Resolution No. 193, a measure urging Congress and the President to take actions to “enhance the charitable food donation deduction” in federal tax law as proposed in H.R.4719, the America Gives More Act. The resolution serves as a model for presenting data and the rationale for taking action.

Worth Reading

Using Data to Build Nonprofit Advocacy Capacity, Rick Anderson (Senior Policy Coordinator for the state association Washington Nonprofits), Market for Good website, December 12, 2014, explaining the work of Washington Nonprofits in presenting data in innovative ways to give local networks tools to demonstrate and communicate measurable impact on complex social problems and improve the state policy and budget environment for the work of nonprofits and their local networks.

Worth Recognizing
CT’s ‘nonprofit guru’ steps down after 35 years,” Hartford Business Journal, December 15, 2014, chronicling the career and nonprofit advocacy successes of Ron Cretaro, Executive Director of the Connecticut Association of Nonprofits, who is retiring December 31 after 35 years. Cretaro was one of the founders of the National Council of Nonprofits.

Nonprofit Advocacy Matters | December 1, 2014

Posted: 
December 1, 2014

Federal Issues

Obama Immigration Actions Alter Spending, Tax Agendas in Congress

President Obama’s executive actions to end the threat of deportation for millions of individuals in the country illegally has added a major complication to plans by Congress to fund the government, pass extensions of expired tax provisions, and adjourn for the year. A short-term “continuing resolution” that funds federal agencies expires December 11 and lawmakers have been working on enacting comprehensive appropriations legislation, known as an “omnibus” bill, to provide resources through September 30, 2015, the end of the fiscal year. House Republicans reportedly are seeking to change that plan by approving year-long spending for all federal departments except those that would administer the President’s immigration changes; those would be funded only on a temporary basis if the new strategy were to be implemented. 

On the tax front, a deal to extend expired tax provisions appeared to have been reached last week, only to be sent back to the bargaining table due to a presidential veto threat and opposition by congressional Democrats. It was widely reported early last week that an end-of-year tax bill had been crafted that would make permanent ten expired tax provisions, including key charitable giving incentives – the IRA rollover, the food inventory provision, and the land conservation incentive – and extend through 2015 almost all of the rest of the collection of expired tax breaks known collectively as the “extenders package.” The deal did not include Democratic priorities of making permanent several tax incentives for the working poor, such as the earned income tax credit, reportedly due to concern that the tax benefits could be claimed by persons who entered the country illegally, but whose immigration status was affected by the President’s actions. The White House has issued a veto threat and the path to passage of a tax bill is unclear.

Advocacy Opportunity: The uncertainty over whether a tax bill can be enacted and, if so, what provisions will be included, make it most urgent for charitable nonprofits to convey their support for enactment of charitable incentives in the remaining days of the session. More than 1000 nonprofits signed onto a letter to Senators and Representatives circulated by Independent Sector calling for passage of the components of the America Gives More Act. See also the November 19 letter from national nonprofits to congressional leaders that makes the case for each of the charitable provisions. Go to the National Council of Nonprofits website for resources on the issue and information for contacting Members of Congress while there is still time to make a difference.

OMB Uniform Guidance
Counting Down to Federal Grants Reform

In less than one month, new rules go into effect that benefit nonprofits in their relationships with local, state, and federal governments. The Office of Management and Budget’s Uniform Guidance, published at the end of last year, mandates that governments at all levels must reimburse nonprofits for some or all of their indirect costs (sometimes called administrative or overhead costs) for work performed under a wide variety of contracts and grants when federal grant money is involved. For the past year, federal agencies have been revising their regulations in order to ensure consistency with the new federal reforms. OMB is expected to release Interim Final regulations from most federal agencies that will take effect by December 26, and all governments at all levels will be obligated to follow the new rules. Leading up to the formal implementation date of December 26, federal officials are continuing to make technical corrections and provide clarification for remaining questions. Last month, OMB released an updated version of Frequently Asked Questions (FAQs) published in late August clarifying some effective dates. Also, the National Science Foundation (NSF) has already published its proposed revised policies, complete with a helpful guide identifying what is new because of the Uniform Guidance and other important changes. Learn more about the OMB Uniform Guidance on the National Council of Nonprofits website and help nonprofit advocacy efforts by completing the short survey.

State and Local Issues 

Voters Approve Arts Funding in Rhode Island and Utah

On November 4, voters in Salt Lake County, Utah and Rhode Island approved ballot measures designed to provide tax revenues to support arts and cultural programs. In Utah, voters reauthorized for ten years the Zoo, Arts, and Park tax. In place since 1997, the ZAP adds a penny sales tax to every $10 purchase in the County to provide funding for “zoological, cultural, botanical, recreational, and artistic programs.” Rhode Island voters approved Question 5, which authorizes $35 million in matching funds for renovation projects in arts facilities.

Government-Nonprofit Contracting Update
North Carolina County Takes Nonprofit Accountability to the People

Commissioners in Buncombe County, North Carolina have included an interesting twist to government-nonprofit contracting process when it comes to public accountability. Once nonprofits have been selected by the local government to provide cost-effective services in the community, Commissioners award one-year performance-based contracts. Commissioners then rely on a citizen-led group to monitor and evaluate each nonprofit to determine whether it has delivered the outcomes and/or benchmarks included in the contract, and report findings back to the County Commission. These reports are the basis for determining whether the nonprofit’s contract will be terminated or renewed.

Nome, Alaska Preserves Nonprofit Sales Tax Exemptions

Nome, Alaska City Council rejected a proposal to revoke the sales tax exemptions for local churches and other nonprofits after a debate that highlighted ignorance by policymakers about why the exemption is in the community’s best interest. Expressing the view that the City was just being “nice” by granting sales tax exemptions to nonprofits, one Council Member considered it appropriate to deny all nonprofits the sales tax exemption and then "donate" the money back to specific nonprofits when government resources are less scarce. Prior to the City Council vote, Danielle Sligsby from the Nome Community Center set the record straight about taxing charitable nonprofits, stating “I think if you take [the sales tax exemption] away from nonprofits, you’re basically just taking away services from the people of Nome.” 

Demand Up, Supply Down for Rhode Island Food Pantries

The number of people receiving food assistance from food pantries in Rhode Island has nearly doubled, from 33,000 to 63,000, since before the recession, according to a new report released by the Rhode Island Community Food Bank. The report also found that food donations decreased at the same time that demand went up, making it increasingly difficult for food pantries and soup kitchens to serve their communities. The report built on the latest Hunger in America study released by Feeding America to show the pervasiveness of food insecurity in the state and to put a face on the recipients of charitable food donations. 

Advocacy in Action 

In Focus
Using Confusion Over Business Tax Breaks to Make a Nonprofit Point

All states and many localities provide tax breaks to lure for-profit businesses that promise to create jobs in their area instead of elsewhere. Critics of these programs charge that today’s politicians are giving away tomorrow’s needed resources in exchange for political support for themselves and empty promises for the community. Most of the 1,200 local governments and agencies surveyed in a recent report assert that they measure the effectiveness of business incentives or conduct cost-benefit analyses. These assertions run counter to findings from a 2012 Pew study which found that half the states lack basic measures to inform policymakers on whether they provided an adequate return on public investments. The new assertions of strict oversight may also be characterized by unrealistic assumptions or questionable methodologies, according to an in-depth analysis by Governing.

These shortcomings may soon be called into question if new draft rules from the Governmental Accounting Standards Board go into effect after a public comment period. The proposed rules would require state and local governments for the first time to disclose information about property and other tax abatement agreements.

The issue of minimal scrutiny of tax incentives for for-profit businesses is confounding to charitable nonprofits that are seeing increased scrutiny and misunderstandings from policymakers about nonprofit autonomy and the reasons for tax exemptions. Recently, Chris Bray of the Utah Nonprofits Association asked a simple question in an op-ed article in the Salt Lake Tribune: “Is There a Double Standard on Tracking Taxpayer Money?” Bray wrote: “Charitable nonprofits earn their tax exempt status every day by giving back to the community, dedicating themselves to the public good, and working in collaboration with business and government to solve our communities' most intractable problems. Why don’t we expect equal transparency and accountability from all who contract with our state government? Why don’t we apply equal standards when taxpayer money is involved?”


 

Worth Reading

Maine’s Nonprofits are Givers, Jessica Skwire Routhier and Erin I. Bishop, Maine Archives and Museums, November 18, 2014, expressing distress at recent disparaging comments by Gov. LePage about nonprofits, providing compelling data demonstrating the economic and cultural impact of Maine collecting institutions, and taking the high road by calling on the Governor to join them in committing to “mutual respect and support, rather than divisive generalities.” Also see the excellent analysis by the Maine Association of Nonprofits, discussed in the November 17 edition of Nonprofit Advocacy Matters.

It’s time for nonprofits to advocate for their missions,” Sonya Campion, Seattle Times, November 21, 2014, providing a strong endorsement for Stand for Your Mission, a campaign and guide designed to help transform board members into ambassadors and advocates for their nonprofit missions in the larger public arena.

Nonprofits in Rural America Face Deepening Challenges, Rick Cohen, Nonprofit Quarterly, November 26, 2014, compiling data from across the country to explain the challenges that rural nonprofits face in seeking to address homelessness, health care, and poverty.

Worth Quoting

“[B]efore the organization’s leadership sign the contract and accept the funds, … the organization needs to protect its autonomy or independence and must be very careful about how it subjects itself to the authority of the government office providing the funding.”

- Stephen G. Donshik, in “Choosing your funding sources carefully,” The Jerusalem Post of Israel, November 25, 2014, providing excellent advice to nonprofits contracting with governments and proving that nonprofits must remain vigilant because governments worldwide fail to recognize the inherent independence of charitable organizations.

Worth Quoting (again)

 “Overhead in the for-profit world—sales, general and administrative costs as a percentage of total sales—is 25% across all industries and 34% for service industries. The cruel irony of holding nonprofits to a much tougher standard is that donors often say that they do this because nonprofits ought to ‘run more efficiently, like a business.’ Most people don’t know the overhead of businesses because profitability matters more.”

- Ann Goggins Gregory, chief operating officer at Habitat for Humanity Greater San Francisco, interviewed in Social Velocity Blog. Ann, co-author of The Nonprofit Starvation Cycle, formerly was a Senior Director at the Bridgespan Group. 

Numbers in the News

25%

Percentage of grant dollars going to general operating support, up from 20% in 2013.

SOURCE: “Is Grantmaking Getting Smarter?,” the annual survey of Grantmakers for Effective Organizations, which found that funders “increased the types of support most commonly associated with boosting nonprofit success, including general operating, multiyear and capacity-building support.” 

Worth Watching

On Nonprofit Advocacy

Check out this 1969 video clip of Senate Testimony by Fred Rogers, longtime host of Mister Rogers Neighborhood children’s program, who presents “one of the most famous pieces of marketing and advocacy because Mr. Rogers is so effective and genuine,” according to Max King, President and CEO of the Pittsburgh Foundation, as quoted in the Pittsburgh Post-Gazette. Be sure to watch all the way to the punchline at the end.

Nonprofit Advocacy Matters | November 17, 2014

Posted: 
November 17, 2014

Federal Issues

Drama Likely in Lame Duck Session

Pre-election predictions of a drama-free conclusion to the 113th Congress are proving hopelessly optimistic as Senators and Representatives return to take up spending to keep the government open past December 11, multiple expired tax matters that must be renewed before year’s end, presidential appointments, and other issues prior to adjournment in December. Complicating the political calculations are President Obama’s recent announcement of his plan to bypass Congress and take executive action on immigration issues. Leaders and less-senior policymakers in both political parties are scrambling to quickly devise winning strategies to achieve their priorities before leaving for the holidays.

Spending: The current spending plan covering the federal government expires December 11. Instead of a stopgap spending measure that temporarily funds the government for a few weeks or months, leaders had been talking about passing a single appropriations bill, known as an “Omnibus” law, that would fund all parts of the federal government through the current fiscal year that ends September 30, 2015. Incoming Senate Majority Leader Mitch McConnell (R-KY) has proclaimed that “there will be no government shutdowns,” but he and other Republicans in the House and Senate are now signaling their intent to “go after” the President’s executive and regulatory actions that they oppose by seeking to block them through provisions written into spending bills. The push is on to fight those battles now, before Executive Orders go into effect, rather than next year as part of the normal appropriations process. Further complicating the strategizing are the President’s request for emergency funding of $6.2 billion to fight the Ebola outbreak and $5.6 billion for operations against the Islamic State terrorist group. It is hard to predict whether intransigence (which could lead to a government shutdown) or pragmatism will prevail.

Restoring and Extending Tax Incentives: Also on the “must pass” list for Congress is enactment of an end-of-year tax bill that restores numerous expired tax incentives. House and Senate leaders and tax writers appear to be committed to passing tax legislation in December, but the scope and content are in dispute. A Senate Finance Committee bill, known as the EXPIRE Act, would restore and extend through 2015 a package of 55 expired tax provisions, including three supported by the nonprofit community – the IRA rollover and the enhanced deductions for donations of food inventories and land conservation easements. House negotiators reportedly are pushing to make several provisions permanent, such as the three charitable incentives approved by a wide, bi-partisan margin in the House in the America Gives More Act. That bill also expands the food inventory incentive, streamlines the foundation excise tax, and extends the deadline to April 15 for making charitable donations in the previous tax year. Some conservatives in the House, however, reportedly are calling for a one-year extension of all of the expired provisions to give themselves more leverage for changes when the new Congress convenes in January.

Nonprofits Take Action: The uncertainty over competing strategies by legislative leaders, departing and incoming committee chairs, and political parties make it more urgent for charitable nonprofits to convey their support for enactment of charitable incentives during the lame duck session. More than 1000 nonprofits signed onto a letter to Senators and Representatives circulated by Independent Sector calling for passage of the components of the America Gives More Act. Go to the National Council of Nonprofits website for resources on the issue and information for contacting Members of Congress while there is still time to make a difference.

State and Local Issues

States and Localities Still Battling the Great Recession

The Great Recession continues to challenge the finances, policies, and programs of state and local governments. Connecticut recently ordered emergency spending cuts and put state contracting on hold in the face of a $60 million revenue shortfall and $80 million in cost over-runs by state agencies. Likewise, Louisiana officials have given notice of a $171 million shortfall that will require mid-year cuts. The revenue shortfall is even more severe in Arizona, which forecasts a shortage of half a billion dollars by the end of this fiscal year and up to $1 billion the following year. The Kansas City Star is warning readers that “Kansans must brace themselves for cuts to public services,” in light of the fact that “State officials face the daunting task of having to slash the current budget and next year’s by more than $700 million.” Similarly, a report from the National League of Cities finds that revenues for metropolitan areas are still about 10 percent below pre-recession levels.

Mid-Term Election Results and Opportunities for Nonprofits

The voters shifted partisan control of eleven state house chambers as a result of the mid-term elections, leaving 42 states solidly run by one party (31 by Republicans and 11 by Democrats). For full reporting on the partisan breakdown of the state legislatures, review these articles from the National Conference of State Legislatures, the Christian Science Monitor, and the Washington Post. Perhaps more significant for future nonpartisan advocacy efforts by charitable nonprofits, there will be 1,334 freshman legislators next year, more than a fifth (22%) of the seats contested on November 4. Among those newcomers are Ted Kennedy Jr., elected to the Connecticut Senate and teenager Saira Blair, who will become the nation’s youngest legislator at the age of 18 when she takes her seat in the West Virginia House. Nonprofit leaders are likely to find, as did Anne Hindery, CEO of the Nonprofit Association of the Midlands in numerous meetings across Nebraska, “how many candidates were not aware of the economic benefits that nonprofits contribute to our tax base.” Anne’s advice to all charitable nonprofits is worth heeding: “If you have not done so already, we encourage you to engage ... newly elected officials in support of your specific missions.”

Voters Consider Ballot Measures Affecting Nonprofit Community

On November 4, voters considered 136 statewide ballot measures and constitutional amendments, several of which were being closely followed by charitable nonprofits. Voters in three states, Kansas, South Carolina, and Tennessee, authorized charitable organizations to utilize raffles and certain other forms of gambling in fundraising efforts. West Virginia voters approved the “Boy Scout amendment” that allows the Boy Scouts to rent out its Summit Bechtel Family National Scout Reserve for private events. On tax policy, voters took mostly “anti” positions. Georgians voted to become the first state to cap income tax rates for individuals at 6 percent. Voters in Tennessee went farther by approving Amendment 3, which prohibits the Legislature from levying, authorizing, or permitting a state or local payroll or personal income tax. Nevada voters rejected a two-percent tax on business profits that would have provided additional funding for schools. However, in Illinois voters answered “yes” on an advisory question asking whether a three-percent income surtax should be levied on millionaires to fund education. 

Taxes, Fees, PILOTs

  • Taxes: The Oregon Department of Revenue is considering a proposed rule that would restrict property tax abatement for educational nonprofits that are not providing K-12 or post-secondary education by disqualifying schools that tailor their educational programs to a single discipline, art, or technical skill. According to the Nonprofit Association of Oregon, the draft rule may disqualify any nonprofit teaching dancing, drama, music, religious, or athletic instruction.
  • Taxes: The Honolulu Real Property Tax Advisory Commission, appointed by the city council, held a final meeting last week to discuss recommendations regarding Honolulu’s real property tax, including the minimum tax imposed on nonprofits. The Hawai`i Alliance of Nonprofit Organizations provided testimony at the meeting to advocate against any increase in the current $300 minimum tax on charitable nonprofits.
  • Fees: The Portland, Oregon, City Council will hold a public hearing this week on the “Portland Street Fund,” a new tax and fee proposal designed to raise $46 million annually. The current draft would impose fees on for-profit business owners of up to $1,728 per year; nonprofits would be required to pay half of the business fee. The proposal is scheduled for a Council vote on December 3.

Government-Nonprofit Contracting Update
A Tale of Two New York Counties

Two neighboring counties outside New York City could not be more different when it comes to how they view the importance of contracting with nonprofits to provide services for community residents and support the local economy. The Rockland County Executive’s 2015 budget proposes to reduce a small part of the County’s deficit by eliminating all funding used to contract with nonprofit organizations for services. Opponents note that beyond the impact on families who need the services provided by nonprofits, this means a significant impact to the overall economy. They cite a recent study by Cornell University reporting that the approximately $3 million the county spends for community services through contracts with nonprofits leverages another $566 million in grants and contracts from sources outside of the county, supporting at least another 7,800 jobs, and generating an additional $433 million in private sector revenues within the county. In neighboring Westchester County, charitable nonprofits provide 10 percent of the jobs in the county and reportedly contribute $15.8 billion to the local economy. Recognizing these contributions, Westchester County officials recently adopted efforts to support nonprofits by streamlining contracting practices and procedures to ease the paperwork burden of doing business with the government. They also initiated a program to help nonprofits cut employee training costs, and established a small bond issuance program to help smaller nonprofits finance capital projects between $1 million to $5 million.

November is Nonprofit Awareness Month in Several States

November is Nonprofit Awareness Month and several state associations of nonprofits are using this time to celebrate and advocate for all the work charitable nonprofits do in their states. November marks the first ever Nonprofit Awareness Month in Delaware, and the Delaware Alliance for Nonprofit Advancement has created a useful toolkit to promote and celebrate nonprofits. In addition, they have been tweeting out interesting facts about and support of the Delaware nonprofit community. The Nonprofit Association of Oregon is celebrating its Nonprofit Awareness Month by sharing the stories of some of its members, including Candlelighters, an organization for children with cancer, and Adelante Mujeres, an organization that empowers Latinas. NYCON is celebrating nonprofits in New York by creating a calendar to suggest easy ideas for promoting nonprofits every day of the month (today they ask you to share nonprofit employment data). The Idaho Nonprofit Center has also created a calendar, fact sheet, and tool kit for use in recognizing nonprofits in Idaho. The North Carolina Center for Nonprofits has been tweeting facts and figures about the nonprofit community in its state, as well celebrating the great work that its members do every day.

Advocacy in Action 

Setting the Record Straight

What’s a nonprofit leader to do when his Governor, ebullient from winning a close re-election contest, uses his first opportunity to take an unsolicited shot at the commitment and sincerity of charitable nonprofits? Set the record straight, of course.

Scott Schnapp, Executive Director of the Maine Association of Nonprofits, read the Governor’s remarks with concern. In a post-election interview, Governor LePage made the statement that Maine nonprofits "don't pay their fair share," and that "they are takers, not givers." The Governor’s priority, it appears, is to impose new taxes on tax-exempt nonprofits.

In a message to nonprofits of the Pine Tree State, Schnapp elevated what every nonprofit board member and staff member should be thinking: “This kind of statement is misleading, and feeds a public perception that is just not based on the facts.” Schnapp goes on to point out that the Governor’s remark “unfairly maligns a sector comprised of highly valued organizations such as veterans groups, domestic violence prevention programs, churches, museums and theaters, hospitals, economic development organizations, educational institutions, land trusts, social service agencies, environmental organizations, and many others that not only play a significant economic role in Maine, but also enhance our quality of life.”

Then using data, Schnapp shows that nonprofits give far more to their communities than the Governor perhaps ever imagined. The Maine nonprofit sector contributes 18.9% of the state’s gross product, employs more than 84,000 of its citizens, pays more than $3.6 billion in wages that support families and businesses throughout Maine, and contributes over $10 billion to the Maine economy.

Schnapp concludes with admirable restraint:

"So, as a representative of the nonprofit sector in Maine, we would like to respectfully request that the Governor consider the damage that sweeping statements like this can have on the public perception of Maine’s nonprofit sector, one that he also professes to value and admire. This kind of statement unfairly categorizes a sector that plays a huge role economically, while also enhancing quality of life of all Maine citizens. It also denigrates the 150,000 employees and volunteer board members who commit their time and talents to work that supports the values and ideals that Maine citizens hold dear."

And to help local nonprofits tell the story of their impact, MANP has made it easy for them to share their stories on Facebook and Twitter using #NonprofitsGoodForME.

 


 

 

Worth Quoting

On “Overhead”

“Overhead in the for-profit world—sales, general and administrative costs as a percentage of total sales—is 25% across all industries and 34% for service industries. The cruel irony of holding nonprofits to a much tougher standard is that donors often say that they do this because nonprofits ought to ‘run more efficiently, like a business.’ Most people don’t know the overhead of businesses because profitability matters more.”

- Ann Goggins Gregory, chief operating officer at Habitat for Humanity Greater San Francisco, interviewed in Social Velocity Blog. Ann, co-author of The Nonprofit Starvation Cycle, formerly was a Senior Director at the Bridgespan Group. 

On Advocacy

“The true cornerstone of successful democratic politics — its nuts and bolts — is not elections. It is volunteer-based civic organizations that advocate public policies.”

- Neal Milner in After Election Comes the Real Work of Being an Activist, Honolulu Civil Beat, November 6, 2014.

Worth Studying

Stand For Your Mission is a new campaign designed to unleash the full potential of nonprofit organizations to advance their missions in their local communities by engaging board members more directly as advocates on behalf of their organizations.

Worth Reading

How a national service year can repair America,” Stan McChrystal, Washington Post, November 16, 2014, former commander of forces in Afghanistan making the case for a voluntary (but socially expected) year of national service as a common expectation and opportunity for all 18- to 28-year-old Americans. Read the proposal and let us know what you think.

Numbers in the News

22%

Nonprofit boards with formal, written public policy/advocacy agendas, according to the annual survey by BoardSource, Leading with Intent 2014. Clearly there is room for improvement.

Nonprofit Advocacy Matters | November 3, 2014

Posted: 
November 3, 2014

On November 4

Vote

The charitable nonprofit community has a long and principled tradition of defending democracy, promoting the right to vote, and advancing community engagement at all levels. Whether it is on the 6,049 state legislative seats, 36 Governorships and 31 Attorneys General races, the 136 statewide ballot measures, the 435 seats in the U.S. House of Representatives, or the 36 U.S. Senate seats up for grabs, your vote is important to you, your family, your nonprofit, and those your nonprofit serves in your community.

And in case you think one vote doesn’t matter, check out this resource which highlights federal, state, and local races throughout American history that came down to one vote. Some were even tied, requiring a coin toss or a cut of the cards to settle the election.

So get to the polling place and exercise the Great American Franchise. You (and all of us in the nonprofit community) will be glad you did.

Here are resources to make voting easy:

  • GetToThePolls.com, from Pew’s Voter Information Project
  • Voting in Your State: a 50 State voter information tool, from Nonprofit VOTE
  • National Hotlines: These nonpartisan national hotlines are live again this year on Monday and Tuesday to help people vote. Voters can also report problems and get legal assistance voting.
    • 1-866-OUR-VOTE (687-8683)
    • 1-888-VE-Y-VOTA (839-8682
    • 1-888-API-VOTE (274-8683) 

Federal Issues 

Congress, Nonprofits, and the End-of-Year Tax Bill

When Congress returns to Washington, D.C., after the elections, a tax bill will be one of the few “must pass” bills it will consider. The legislation is expected to include provisions to renew and extend several dozen expired tax measures, collectively known as the “extenders package,” including three charitable giving incentives. Thanks to significant lobbying efforts by the nonprofit and foundation community at the end of the summer, it appears that some or all of the components of the House-passed America Gives More Act (H.R.4719) are well-positioned to be included in the end-of-year tax bill. The America Gives More Act would make permanent the three charitable provisions: the IRA charitable rollover, the enhanced deduction for donations of food inventories, and the conservation easement deduction. The bill would also add three new provisions: expand the food donation incentive to make it more accessible for farmers and ranchers and increase the business deduction, streamline the foundation excise tax, and extend the deadline for making charitable donations (to April 15).

During the course of the election campaigns, nonprofits have continued to promote passage of all or some of the components of the America Gives More Act. When responding to a question from a nonprofit employee, a Senate candidate in New England expressed strong support for charitable giving incentives at a town hall meeting. A Missouri community foundation leader points to passage of the America Gives More Act as a way to de-politicize Congress in support of communities. The Donor's Forum in Illinois is promoting two sign-on letters – one for charitable nonprofits and another for private foundations – that will be sent to the Illinois congressional delegation asking for their support for the legislation. These are just a few ways that nonprofits and foundations can raise awareness and promote passage of these key incentives for the work of nonprofits in communities. Go to the National Council of Nonprofits’ website for more ideas and templates.

New Nonprofit Employment Data Released, Improvements Requested

The charitable nonprofit sector employed at least 11.4 million people in 2012, representing 10.3 percent of total non-military employment, according to new data from the Bureau of Labor Statistics (BLS) covering years from 2007 to 2012. Nonprofits generated $532 billion in wages in 2012, comprising around 10% of total private wages. The largest subsector is "healthcare and social assistance," making up 68 percent of nonprofit employment. BLS created this data in response to requests from the nonprofit community, and is now seeking input from nonprofits  on the methodology of the research, the usefulness of the data, and any suggestions for future data products. Any questions about the data or the process of obtaining datasets should be directed to BLS officials

State and Local Issues

States Rated on Property Tax Fairness

Forty states earn mediocre to poor grades on their real and personal property tax laws and administration, according to a new report by the Council on State Taxation. The results are based on a scorecard rating each state’s transparency, simplicity, as well as procedural fairness The six states with the lowest rankings were Connecticut, Delaware, Hawai`i, Nevada, Pennsylvania, and Rhode Island. Oregon ranked highest among the states with a B+, because it has standardized forms, an annual appraisal cycle and appeals information included in the notice of assessments. The report’s authors hope that the “Scorecard will drive changes to ensure property taxes … are administered more effectively, fairly and without perceptions of bias or undue administrative burdens.” Public perceptions about the fairness of property tax laws and administration can be at the center of efforts at the local and state level to impose new taxes, fees, and payments in lieu of taxes (PILOTs) on charitable nonprofits that are typically exempt from paying real property taxes.

Taxes, Fees, PILOTs

  • Taxes: Georgia voters will decide this week on whether to grant tax-exempt status to private vendors that operate housing and parking facilities at public universities. The ballot referendum would allow the university system to contract with private service providers more cost-effectively.
  • PILOTS: Most Boston colleges did not pay the full amount sought in voluntarily PILOTS by the city. The voluntarily payments were requested of nonprofits with more than $15 million of tax-exempt property and were reportedly designed to offset police and fire protection costs, among other services. All hospitals donated the requested amount. See related Advocacy in Action article, below.

New York Conservancy Shares Know-How to Improve Low-Income Neighborhoods

The Central Park Conservancy, the nonprofit that supports and operates New York City’s Central Park, has created a new program aimed at helping revitalize and maintain parks and green spaces in low-income neighborhoods across the city. The program comes as an alternative to a proposal endorsed in the past by Mayor de Blasio and others to require financially sustainable park conservancies to make payments to improve other parks in low-income neighborhoods. The Five Borough Crew, as the program is called, has been lauded by the parks department and hopes to bring the Conservancy’s gardening and upkeep know-how to other green space maintenance i n the city. 

Boy Scouts’ Tax Exemption on the West Virginia Ballot

The Boy Scouts are looking to rent out their West Virginia reserve to non-members, a move that would cause them to lose tax exemption in the state. Voters on Tuesday will decide whether this tax rule is appropriate, or whether to approve the Nonprofit Youth Organization Tax Exemption, which would allow the Boy Scouts' Summit-Bechtel Reserve to lease its facilities to outside organizations without jeopardizing its exemption from property taxes. The Boy Scouts built the large recreational area to serve its membership, yet seeks to rent to others to afford the high cost of the upkeep. Proponents of the amendment claim that opening the reserve to non-Boy Scouts would bring in more visitors to the area, which would boost the economy. Opponents claim the tax-exempt status would result in unfair competition between the reserve and other venues in the area.

Advocacy in Action

Students Tutor Politicians on PILOTs

Many powerful interests in Boston – from the Mayor’s office to public sector unions and large newspapers – backed the demand that some nonprofits “voluntarily” make payments to the city’s coffers by way of payments in lieu of taxes (PILOTs), and in particular through the infamous “Boston PILOT Scheme.” In response to news that several nonprofit universities in Boston are not voluntarily paying as much in arbitrary assessments as politicians have demanded, one City Councilor expressed outrage that the schools “insist on being a bad neighbor;” while another asked “Is your word any good?” 

In this atmosphere of sanctimony and hyperbole fanned by city “leaders,” it is refreshing to read Voluntary PILOT Payments to City Of Boston Are Nonprofits’ Prerogative, an editorial in The Heights, the student-run newspaper at the nonprofit Boston College. The editorial board challenges the cookie-cutter approach of Boston officials and makes the case that each nonprofit in Boston contributes uniquely to the city and utilizes services from the city differently, making the current PILOT program an ill-fitting and unjust method for taking from nonprofit missions. Several of the points in the editorial are applicable to similar challenges nonprofits face all over the country:

“These organizations are exempt from taxes because, in the view of the government, they provide a valuable service to society and are not trying to make a profit for a group of shareholders. The positive cultural, educational, and social impact that these institutions have on the community justifies their tax-exempt status.”

“Any stigmatization [for failure to make voluntary payments] is unwarranted because it is impossible to quantify the exact benefit that these organizations bring to the city, whether it is through student volunteers, outreach programs, or community centers, and so it is impossible to know whether BC receives more in services from the city than it gives back.”

“If it fits within their budgets and long-term plans, they should contribute to the city for the services they receive, but not under the cookie-cutter approach currently used. They should not be shamed if they do not." 

Local politicians (and nonprofit advocates) should take notes and heed the wisdom of these Boston students.

 


 

 

Worth Quoting

“Social impact financing does not fit for the vast majority of nonprofits…. They have to have a high level of evidence and credible rigor and metrics and money to invest in that over a long period of time. They have to be able to take risks. It’s only appropriate for certain kinds of service provisions.”

- Victoria Vrana, Senior Program Officer, Bill & Melinda Gates Foundation, responding to a question at an Urban Institute event, October 29, 2014.

 “If you truly want to find innovative ways and efficient ways of getting to an outcome, you can’t arbitrarily cap something. It will prevent exactly that: creativity and innovation.… An arbitrary cap seeks to really hurt the ultimate goal of getting to that outcome, whatever it may be, because it puts this false parameter and false restriction on the ability [of the nonprofit] to administer.”

- Matthew Z. Hammoudeh, Assistant Secretary, Illinois Department of Human Services, explaining during an OMB Webcast, October 2, 2014, why artificial caps on indirect costs are harmful to taxpayers and people being served in local communities.

“What it provides is a needed dollop of glue that helps hold the community together.”

- “Arts center provides social glue,” Crain’s New York Business, October 27, 2014, detailing the community benefit of Bronx, NY, Mind-Builders Creative Arts Center, a nonprofit that serves more than 500 students from every zip code in the borough and never turns anyone away because of inability to pay. 

Worth Watching

Indirect Cost Rates for Subrecipients (26:55), the nonprofit-focused segment of OMB webcast Uniform Guidance Implementation: A Conversation Presented by the COFAR, October 2, 2014, during which nonprofits and governments get answers to questions about the OMB mandate on payment to nonprofits of their indirect costs and hear of positive practices arising from government-nonprofit collaborations in Illinois.

Worth Studying

2014 Ballot Measures That Matter Most for States and Localities, Governing, November 3, 2014, tracking more than 50 of the most significant statewide ballot measures this year.

The Nonprofit Sector in Brief: Public Charities, Giving, and Volunteering, Brice S. McKeever and Sarah L. Pettijohn, Urban Institute, October 27, 2014, the latest update of annual collection of key data on the nonprofit sector.

Nonprofit Advocacy Matters | October 20, 2014

Posted: 
October 20, 2014

Federal Issues

Pressure Builds for Quick Action on End-of-Year Tax Bill

Nonprofit champions of improved tax incentives for charitable giving are receiving indirect, but powerful, support from an unusual source: the Commissioner of the Internal Revenue Service. John A. Koskinen, IRS Commissioner, is warning Congress that passing tax legislation reviving expired tax provisions, including three charitable giving incentives, in December or later could delay refunds for millions of taxpayers. The comments are seen by lawmakers as a challenge to act swiftly after the elections to pass a tax bill. Senate Finance Committee Chairman Ron Wyden (D-OR) is urging action on a two-year extension of the expired tax breaks, known as the EXPIRE Act, that passed out of his committee. Nonprofit advocates are pushing for inclusion of the components of the America Gives More Act as part of any end-of-year tax bill.

Sequestration Back in the News

Nonprofits that utilize the small-employer health credit to help pay for employee health insurance coverage will see a 7.3 percent reduction next year as the result of the automatic, across-the-board spending cuts known as “sequestration” that were enacted in 2011. The shrinking health credit is only one of thousands of arbitrary cuts that can adversely affect the work of charitable nonprofits. According to the IRS, these and other cuts will occur “unless and until a law is enacted that cancels or otherwise impacts the sequester.” Last December, House and Senate budget negotiators reached an agreement to avert another round of sequestration cuts, but that deal expires next year. White House officials revealed last week that President Barack Obama will propose sequester relief in his fiscal 2016 budget due to be released in February. 

Pastors Defy Ban on Politicking by Charitable Nonprofits, Again

More than 1,800 pastors from all 50 states have preached partisan politics from the pulpit this month, intentionally defying the ban on charitable nonprofits engaging in partisan political activities, according to CNS News, a conservative news source. The religious leaders are participating in the fourth bi-annual Pulpit Freedom Sunday, a project of the Alliance Defending Freedom, an Arizona-based Christian activist group. The participants are encouraged to preach messages “representing biblical perspectives on the positions of electoral candidates.” The protest is aimed at the law governing all charitable nonprofits, including churches, that permits 501(c)(3) tax-exempt status only if an organization “does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.” The Internal Revenue Service, which enforces the tax law, has not taken action against any of the preachers since Pulpit Freedom Sunday began in 2008.

State and Local Issues 

Recent Cuts to Child Welfare and New Initiatives

The resources that child welfare agencies and nonprofit organizations receive from federal, state, and local sources decreased by 8 percent between 2010 and 2012, according to the latest Child Trends analysis. Although federal spending was higher in 2013 compared to 2012, it has declined overall since 2010, the Urban Institute reports. The Urban Institute report further projects that outlays on children will drop as much as 10 percent through the next decade. All states experienced decreases in funding, with Connecticut, Louisiana, Nevada, New Hampshire, and Wyoming feeling the largest declines. In response to the cuts, states have turned to flexible federal funding sources, such as the Performance Partnership Pilots for Disconnected Youth, and a $650 million federal grant benefitting children and families programs in Maryland. 

Candidates Respond to Nonprofit Questionnaires

Nonprofits across the country are utilizing the election-year tool of nonpartisan candidate questionnaires to record the office hopefuls’ views on the issues of the day and to remind the candidates and the public of the important societal and economic impact that nonprofits have in their communities. The approach tends to be tailored to the individual states, but the response has been impressive. The North Carolina Center for Nonprofits invited all 263 candidates for the General Assembly to participate in its questionnaire, and sent along a fact sheet on the nonprofit sector to the candidates. The Maine Association of Nonprofits invited all candidates running for national or state office from the state to address questions about their own experiences with nonprofits and their views on some important policy issues. Likewise, the Massachusetts Nonprofit Network asked the gubernatorial candidates from all parties to respond to a survey and express their views on the importance of nonprofits in their policy agendas. The unedited responses returned to the nonprofits from the candidates in North CarolinaMaine, and Massachusetts can be found here.

How did the candidates respond and what do they think of the work of charitable nonprofits in their communities? Here are some notable responses from across these three states from would-be politicians of all political stripes:

  • “My experience with [nonprofit] organizations has made me realize that nonprofits partner with government to provide essential services to our communities.”
  • “Charities serve a very important role in my life and the life of our community and world. My policy positions will always be to benefit charitable organizations and keep the government out of their way.”
  • “I will continue to work to protect the tax exemptions for contributions to nonprofit organizations…. Donations to nonprofits are important solutions to help those who need help, to preserve important ideas and assets, and to improve quality of life for all.”
  • “I believe that nonprofits provide needed services and programs which enhance our lives while offering opportunities to network, build friendships, and volunteer in areas of our choice which also builds character and communities.”
  • “The work that nonprofits do is critical. These nonprofit organizations are comprised of amazing volunteers, supporters, and staff that provide exceptional services and programs.”
  • “As Governor, I am committed to being a partner with nonprofits and working diligently to increase their impact here.”

Taxes, Fees, PILOTs

  • Taxes: Residents in Urbana, Illinois are posting signs in opposition to Carle and Provena Covenant Medical Center’s new property tax exemption, claiming that other property owners are now forced to bear the tax burden. The medical center was granted tax-exempt status in recent years based on the amount of charity care it provides to the community, as permitted under a 2012 statute. A spokesperson for the hospital explained that its tax exemption resulted in a $6 million decrease in revenues for the city, while the hospital provided $7 million in free or discounted care to the residents of the community.
  • Fees: North Strand Housing Shelter in North Myrtle Beach, South Carolina, is facing a $40K bill for infrastructure improvements and impact fees from the local water utility. The shelter was not expecting an impact fee; the water company says it does not distinguish between for-profits and nonprofits in cost for service. The shelter has offered a payment plan to the nonprofit to not gut its annual $70K budget.

BP Challenges Settlements Made to Nonprofits after Oil Spill

BP is attempting to claw back payments made to nonprofits hurt by the 2010 oil spill in the Gulf of Mexico. Nonprofits received payments for damages after experiencing decreases in grants and donations following the spill. Damages were awarded to nonprofits in the affected area based on a court-ordered formula with no cap on funds. London-based BP is now claiming a misinterpretation by the claims administrator resulted in BP covering claims it never agreed to. Lawyers for the nonprofit claimants worry that this case, if it is picked up by the Supreme Court, will be a test case that could open the door to challenges of hundreds of thousands of damage-claim awards. 

Advocacy in Action 

Advancing Nonprofits' Boards Toward Every Day Advocacy

Tim Delaney, President and CEO of the National Council of Nonprofits, will tell you – actually, he’ll tell anyone who will listen – that one of the most persistent and pernicious barriers to effective advocacy by nonprofits is the misperception by nonprofit board members that they cannot or should not advocate for the organization. As he tells it, and as most of us know, many board members see their job as to focus just on internal governance issues, such as reviewing financial reports and setting the general direction of the organization. Getting board members to connect their passion for the nonprofit’s external mission and engaging actively in advocating on behalf of that mission has been a difficult and frustrating task. Until now.

Stand For Your Mission is a new campaign launched to raise awareness – specifically among nonprofit board members – that being an external advocate for the nonprofit’s mission is an important and expected role for every board member. The campaign is designed to unleash the full potential of nonprofit organizations to advance their missions in their local communities by engaging board members more directly as advocates on behalf of their organizations.

The specific goals of the Stand for Your Mission campaign are to:

  • Bring about a sustainable shift in the understanding and expectations around board engagement in advocacy;
  • Move advocacy from an ancillary to a key board leadership role; and
  • Strengthen the nonprofit sector’s ability to advance the public good.

The National Council of Nonprofits has been collaborating with BoardSource, the Alliance for Justice (with its Bolder Advocacy initiative), the Forum of Regional Associations of Grantmakers, the Campion Foundation and the John S. and James L. Knight Foundation, to curate a set of core resources for board members, CEOs, and grantmakers. Please share the Stand for Your Mission discussion guide as a useful resource with your board.

The Stand For Your Mission campaign advances the Council of Nonprofits’ mission of changing the culture around nonprofit advocacy so it is embraced as an effective, everyday tool for advancing nonprofit missions. Advocacy is not an add-on activity; it is core mission work. Advocacy is not just legislative lobbying, but also standing up and promoting your nonprofit’s mission with business leaders, government officials, news reporters, and even your neighbors. It moves the nonprofit community toward the simple concept of advancing mission through every day advocacy.

Nonprofit Advocacy Matters | October 6, 2014

Posted: 
October 6, 2014

Federal Issues

OMB Webcast Provides Clarity, Highlights Need for Collaboration with Nonprofits

The Uniform Guidance from the White House Office of Management and Budget will be binding on most of the contracts and grants between state and local governments and nonprofits when federal discretionary funding is utilized, according to government officials during an OMB webcast conducted on October 2. Presented as a “conversation” among stakeholders, the webcast provided opportunities for various interests affected by the Uniform Guidance to raise questions and seek clarity on key topics that have caused confusion. OMB officials kicked off the event by discussing how the new Uniform Guidance, among other things, is intended to lower barriers to entry for smaller nonprofit organizations to perform services in communities on behalf of governments.

Matt Hammoudeh, Assistant Secretary at the Illinois Department of Human Services, discussed the steps taken in Illinois to implement numerous requirements of the OMB Uniform Guidance and to change state policies to ensure consistency across government programs. In responses to questions from David L. Thompson of the National Council of Nonprofits, Hammoudeh confirmed that the requirement in the Uniform Guidance for governments to pay nonprofits their indirect costs is binding on governments at all levels of contracting and grantmaking, and that nonprofits cannot be asked to waive their reimbursement rights. The Illinois official also made a strong statement against arbitrary caps to indirect costs, pointing out that caps undermine nonprofit innovation and hurt service delivery. Hammoudeh stressed the importance of the lesson learned by the state of collaborating with nonprofits at the beginning of the process to develop the changes needed to implement the OMB Uniform Guidance. He note that nonprofits are the experts who can identify in advance the positive and negative impacts that new policies will have on delivering services in communities. Other panels during the webcast addressed questions related to audits and internal controls, procurement, and innovative funding. OMB will post a recording of the webcast within a week. 

Public Supports Clear Rules on What Counts as Politicking 

A large majority of American voters (60 percent) believe that having clear rules defining political activity for social welfare organizations is important, according to a recent public opinion poll. Eight in 10 voters believe that political operatives and donors take advantage of vague rules and blurry lines defining what is and is not permitted. Among voters who had an opinion, a majority favored changing the way that activities of social welfare nonprofits organized under Section 501(c)(4) of the tax code are regulated to establish clearer and fairer rules for what counts as partisan political activity. The poll, which was conducted for Public Citizen and released in conjunction with the Hudson Institute, comes at a time when the Internal Revenue Services is seeking to clarify the rules for 501(c)(4) social welfare nonprofits (as opposed to charitable nonprofits) and recover from a scandal involving alleged targeting of various groups based on presumed political leanings.

Communications Challenge: When Technology Meets Regulation

Calls and texts to old cellphone numbers could result in significant liability, according to legal pleadings in numerous federal class-action lawsuits. Briefly stated, nonprofits and other callers could potentially be liable if they make calls or send texts to cellphone numbers that they previously received authorization to call but, unbeknownst to the caller, had been reassigned to a new person who has not given “prior express consent” to receive communications. According to one report, more than 37 million cellphone numbers have been reassigned in the past 10 years, so the likelihood of organizations having old numbers on their records is great. The National Council of Nonprofits filed comments with the Federal Communications Commission (FCC) asking for an expedited declaratory judgment confirming that “callers who obtain prior express consent from a called party are not liable for phone calls and text messages to telephone numbers for which the caller has obtained prior express consent, but that have been reassigned without the caller’s knowledge, or for other types of ‘wrong number’ calls.” The FCC may rule on the issue this fall.

State and Local Issues

Candidate Forums Connecting Office Seekers with Nonprofit Missions

This election season several state associations of nonprofits are using candidate forums in non-partisan ways to educate the voting public about the candidates and their positions. Providers’ Council in Massachusetts recently hosted the Human Services Gubernatorial Forum where four candidates addressed 700 attendees on human services topics. Significantly, all four candidates expressed their support for a 2008 statute that was designed to bring human services reimbursement rates up to market value, but whose full implementation has been delayed. The video of the event can be found here. Connecticut Association of Nonprofits co-sponsored the state’s second 2014 Gubernatorial Debate last week. Big topics of the debate included economic growth in the state and education reform. Go here for a recording of the Connecticut debate.

The “No Vote No Grumble” campaign, of which the Hawai`i Alliance of Nonprofit Organization is a partner, will hold a gubernatorial candidate forum on Wednesday, October 8th. The mission of No Vote No Grumble is to “increase civic engagement, including registering and educating voters, especially with the underrepresented/underserved communities.” HANO stresses that this is an important opportunity for nonprofits to share their community’s concerns with candidates. The Colorado Nonprofit Association will be holding a forum during its 2014 conference that will focus on the races for Secretary of State and Attorney General. Colorado’s PBS station will record and air the forum, giving the public the opportunity to learn more about the candidates in these “down ticket” races that often get overlooked. Each forum gives nonprofits the opportunity to educate policymakers on the work and impact of the nonprofit community to their respective states and the ways in which lawmakers can work with nonprofits to identify and promote solutions in communities.

Taxing Student Housing on the Rise

The tax-exempt status of student housing facilities is under attack in the courts, at city hall, and in the ballot box. The Texas Supreme Court agreed last week to decide whether the Texas Student Housing Authority must pay property taxes on a dorm facility on the campus of Texas A&M University. County tax assessors had determined that the use of the facilities during summer months by high school students disqualified the dorms under Texas law. In Waleska, Georgia, the City Council is considering a tax on student residence halls at Reinhardt University, a local nonprofit. The Mayor said that the idea for the tax on the small Methodist university was proposed by the state Department of Community Affairs. The city would base the tax on the state’s hotel-motel tax, but is awaiting comment from the Attorney General on the legality of the proposal. Georgia voters in November will also be voting on whether to tax student housing across all public institutions in the University System of Georgia.

Taxes, Fees, PILOTs

  • Taxes: A bill in Pennsylvania would impose real estate taxes on nonprofits owning property valued at more than $200,000. The bill’s sponsor has repeatedly introduced measures to tax tax-exempt nonprofits in the Commonwealth based on the common misconception that taxpayers end up paying more, but without recognizing the numerous community benefits of nonprofits, including the lower cost to governments.
  • PILOTS: Pittsburgh’s Mayor has proposed his budget for 2015 that assumes $24 million annual contributions, or payments in lieu of taxes (PILOTs), from the city’s largest nonprofits. Large landholding nonprofits, such as University of Pittsburgh Medical Center, have expressed a willingness to negotiate on contribution size, as long as they are allowed some say in how the funds will be allocated.

California Adopts Paid Sick Leave Employment Policy

Governor Brown has signed the law requiring nonprofits and other employers, starting in July 2015, to pay employees one hour of sick leave for every 30 hours worked. In an alert to nonprofits, CalNonprofits reports that the amount of sick time used can be capped by employers at 3 days per year (24 hours) and any unused sick time at the end of the rolling-12-month period must be rolled to the next 12-month period. 

Southern Voters Consider Income Tax Restrictions

Voters in Georgia and Tennessee will have the opportunity on November 4 to alter their states’ constitutions to significantly restrict the power of their legislatures to levy personal income taxes. Voters in Georgia will decide on Amendment A, which would permanently cap the top income tax rate at six percent. Polls show that the ballot measure has broad popular support. If approved by voters in Tennessee, Amendment 3 would prohibit the legislature from levying, authorizing, or permitting any state or local tax upon payroll or earned personal income. Critics of both measures argue against removing taxation from the tools the legislatures have to address economic downturns and unforeseen challenges.

Tax Approved to Fund Philadelphia Schools

Pennsylvania passed a cigarette tax intended to provide additional funding for Philadelphia city schools. The new tax comes in time to avoid layoffs of more than 1,000 employees. Public schools in the area had been looking into alternative funding streams, such as fundraising through social media, as the vote on the tax loomed. However, a bill is still advancing in the state Senate that would lock in education cuts and result in future funding challenges that could result in appeals to nonprofits and the public to fill resource gaps.

North Carolina Budget Cuts Demanded

The North Carolina Office of State Budget and Management has instructed state agencies that their FY2015-17 budgets must be at least 2% lower than their current budgets. According to the North Carolina Center for Nonprofits, state agencies in the past imposed disproportionate cuts on programs affecting populations and communities served by nonprofits through state contracts and grants. 

Advocacy in Action

Because Now is When Candidates are Paying Attention

The people and communities served by charitable nonprofits “win” elections when all the candidates learn about the significant impact of nonprofits, look to nonprofits as community problem solvers, and agree with the policy priorities of nonprofit organizations. It’s not a partisan matter of who gets elected, but about using the elections to inform candidates and the public about the value of the contributions of nonprofit organizations. The non-partisan election-related activities performed by state associations of nonprofits and many other organizations across the country this election season are helping to educate voters and promoting good policy results.

The lead state article, above, highlights effective non-partisan advocacy actions in Colorado, Hawai’i, and Massachusetts in using candidate forums to focus on the work of nonprofits in communities. Other organizations, like the North Carolina Center for Nonprofits, are engaging candidates through questionnaires that address a broad array of issues that will help voters gauge the priorities of each public office hopeful. Still other nonprofit advocates are sharing their public policy and legislative agendas with all of the candidates with the expectation that some will recognize the value, adopt the priorities, and give public voice to the needs of the communities that nonprofits serve. In all of these cases the same strategy is at play: communicate with the candidates about policy priorities while they are most interested in what constituents think – from now until election evening.


Worth Quoting

“The cost principles are designed to provide that the Federal awards pay their fair share of the costs recognized under these principals.”

- Frequently Asked Questions, U.S. Office of Management and Budget, August 29, 2014, explaining the underlying reason for the mandate in the OMB Uniform Guidance that pass-through entities (typically state and local governments) reimburse nonprofits for their indirect costs. 

Worth Reading

Federal Grant and Contract News for Nonprofits, Venable LLP, September 2014, highlighting new procurement standards that federal grantees and subrecipients will be required to follow under the OMB Uniform Guidance.

Worth Studying

Income Growth Varies Widely Across States, Governing, September 19, 2014, providing state- and county-specific data on personal income growth since 2000 through 2011, utilizing three interactive maps. 

Numbers in the News

On November 4, voters will decide the following:
435 seats in the U.S. House of Representatives
36 U.S.Senate seats
36 Governorships
31 Attorneys General races
6,049 state legislative seats in 46 states
136 statewide ballot measures in 41 states

Nonprofit Advocacy Matters | September 22, 2014

Posted: 
September 22, 2014

Celebrate National Voter Registration Day

Join Nonprofit VOTE, the National Council of Nonprofits, the National Association of Secretaries of State, and more than 1,500 organizations (and counting) in celebrating the nonpartisan National Voter Registration Day on September 23rd. National Voter Registration Day is a time to promote voter registration and register voters ahead of registration deadlines. National Voter Registration Day falls 6 weeks before Election Day and is the time to ensure our communities are registered and ready to participate. Why nonprofits? Because we reach audiences no one else does and because our community has always been about promoting democracy, engagement, and community building.

Taking action is easy. Pick and choose what information you would like to share with your staff, board members, clients, family, and friends from the free Voter Information Toolkit such as the online voter registration tool, and find a National Voter Registration Day event near you. Learn more at www.NationalVoterRegistrationDay.org and use #CelebrateNVRD on social media to spread the word!

Federal Issues 

Congress Heads Home for the Elections, Much Left Undone

The House and Senate adjourned last week and are not scheduled to return until the week after the November 4 elections to finish the business of the 113th Congress. Despite the calls for action from many Senators, nonprofits, and foundations, Senate leaders did not take up the America Gives More Act, a bill that would make permanent and expand several charitable giving incentives, streamline the foundation excise tax, and extend the time that individuals have to make tax-deductible donations to their favorite charities. Before leaving town, Congress approved the Iraq/Syria military plan and temporarily funded the government into December. The “lame duck” session is expected to address a short “must-do list” that includes a spending bill that runs through the fiscal year (until September 30, 2015), a tax bill containing several policy provisions including extension of expired tax provisions collectively known as “extenders,” and, depending on effective advocacy efforts by the nonprofit community, the components of the America Gives More Act. Learn more about what nonprofits can be doing now.

Consensus on Social Impact Bonds Remains Elusive

Social Impact Bonds remain a hot topic of debate on both sides of the Atlantic with no clear consensus on whether the new funding mechanisms will actually increase the level of resources going to promising social interventions or result in increased costs to governments/taxpayers due to the added layers of activities. On September 9, a House subcommittee held a hearing to discuss the merits of Social Impact Bonds in relation to federal SIB legislation. The bill’s sponsor and several witnesses hailed SIBs as a new, innovative tool to improve social and public health outcomes, s tating that SIBs are a preferable model for funding social programs since they fund results rather than intentions and success is measured by outcomes not inputs. A witness opposed to SIBs, Dr. David Juppe, who conducted an in-depth review for the Maryland Legislature, expressed concern that the funding mechanisms often overstate the cost savings and likelihood of success. He pointed to his research indicating that SIB-financed projects actually increase the costs to government even if the projects succeed. The hearing took place before disparaging words were expressed by British MP Nick Hurd, who previously had expressed support for SIBs when he served as Charities Minister for the conservative government. Hurd stated that social impact bonds are “clunky, take too long and are too expensive to set up,” and that they needed to be improved before pursued in the future.

State and Local Issues 

New York Establishes Nonprofit Coordinating Unit

The State of New York is taking a significant step toward strengthening relationships with nonprofit organizations by creating a new unit within the Division of Budget dedicated to nonprofit issues. The Nonprofit Coordinating Unit will focus initially on addressing late payments and late contracting matters, as well as promoting compliance, presumably including implementation of the federal OMB Uniform Guidance that goes into effect at the end of 2014. The new unit is overseen by Fran Barrett, the Governor’s Interagency Coordinator for Not for Profit Services, who also co-chairs the National Council of Nonprofits' National Task Force on Government-Nonprofit Contracting Reform. “We are excited that this will become a hub for dealing with nonprofit issues,” Barrett said. “As issues surface, they can be resolved more quickly. It strengthens the lines of communication and gives us dedicated resources. We can test new ideas and put new systems into place. This unit will have the clout and capacity to bring some of these ideas to fruition. This shows that the nonprofit sector is a priority for the governor and his administration.”

More States Reinstate Work and Volunteer Requirements for Food Stamp Recipients

Seventeen states will soon see the end to temporary waivers that allowed able-bodied adults without dependents to access SNAP benefits (food stamps) without proof of work or volunteerism, Stateline reports. According to federal law, these individuals may receive SNAP benefits for only three months in a three-year period unless they are actively working or participating in a job-training or volunteer program. The 2009 economic stimulus package allowed states with high unemployment rates to seek waivers for this requirement; almost every state chose to do so. The waiver has been phased out in other states over the past two years due to either improving economic conditions or state preferences. The change to requirements can affect up to 4.6 million SNAP recipients. Nonprofits could see an increase in requests for volunteer opportunities from these individuals. Generally, the National Council of Nonprofits opposes the conditioning of statutory benefits on performance of volunteer or community service, terming the policy “mandatory volunteerism,” because forcing people to "volunteer" imposes increased costs, burdens, and liabilities on nonprofits by creating an influx of coerced individuals.

Government-Nonprofit Contracting Update
New York Salary and Administrative Caps Still Uncertain

Governor Cuomo’s 2012 Executive Order directing state agencies to adopt rules to limit the use of state funds in executive compensation and organizational administrative costs continues to be challenged in the courts. The Executive Order has resulted in two conflicting rulings from trial level courts so far. Last month, a court declined to dismiss a suit filed by several healthcare associations. It is likely that all of this will eventually be decided by the Court of Appeals. The Executive Order caps at $199,000 the amount the state will reimburse for executive salaries at for-profit and nonprofits performing work under contracts/grants with the state. The E xecutive Order also seeks to limit reimbursement for administrative costs (initially capped at 25 percent, declining to 15 percent over the next three years). Nonprofit contractors are recognizing that this arbitrary limit on administrative or indirect costs appears to conflict with the new OMB Uniform Guidance, which expressly requires state and local governments to reimburse nonprofits for their true costs when performing work for the state that is funded using federal grant dollars.

Puerto Rico Increases Charitable Giving Through Tax-Law Change

Puerto Rico’s tax treatment of charitable donations was changed in 2010, resulting in almost 20,000 more residents making a charitable deduction the next year and generating $5 million more in giving to the work of nonprofits across the commonwealth, the NonProfit Times reports. In 2010, Puerto Rico changed its deduction policy to match federal law in the U.S., allowing individuals to deduct 100 percent of donations up to 50 percent of adjusted gross income. Previously, Puerto Rico imposed a 15 percent cap on deductions and a 3 percent income floor. 

Philadelphia Schools Look to New Funding Schemes, Wait for Legislative Action

Continuing a trend of schools seeking new funding streams, Philadelphia public schools are hoping to spark a viral giving trend seeking school supplies, such as paper, for the year. Philadelphia schools opened this year with an $81 million deficit, which some policymakers intend to fill through a $2-a-pack cigarette tax. The Philadelphia school superintendent has said that if the tax isn’t passed by the beginning of October, he will be forced to lay off more than 1,000 employees, including teachers. For the time being, schools are turning to a start-up called Leadnomics to provide everyday necessities, such as paper. 

Additional State and Local Issues

Advocacy in Action 

Advancing Mission through Voter Engagement

So, if a nonprofit works to remain scrupulously nonpartisan as the law and good sense require, why should it get involved in voter registration efforts, such as National Voter Registration Day, and other election-related activities? Good question. Let’s ask some experts:

Nonprofit VOTE will tell you that “Voter engagement is a critical part of nonprofit work because it not only empowers the people and the communities we serve, but it also helps us further our missions. Voter engagement makes our nonprofits relevant both during and after elections, helping to make us part of critical public policy discussions and allowing us to weigh in on our issues.”

The National Council of Nonprofits’ president and CEO Tim Delaney observes: “Nonprofits helping people register to vote so they can have a say in the future of their communities are honoring the noble quest that President Lincoln challenged us all to do – ensure ‘that government of the people, by the people, for the people, shall not perish from the earth.’”

The Colorado Nonprofit Association views voter engagement in terms of what nonprofits give and get back from the community: “Nonprofits play various roles in building healthy communities. Nonprofits rely on our communities to provide support for our causes, volunteer for our events, and keep us informed on how we can best help. Community involvement is also vital for ensuring elected leaders govern wisely on behalf of the people they represent.”

CT Nonprofits, the state association of nonprofits in Connecticut, goes for the two-pronged approach, explaining that the two most important roles of nonprofits while engaging in nonpartisan election-related work are: “educating candidates about the critical work your organization does in the communities the candidates represent; and encouraging all of your organization's constituents to vote - your staff, volunteers, customers, clients, and all other stakeholders.”

The Vote with Your Mission campaign of CalNonprofits is firmly committed to these principles, stressing, “When nonprofits use our voting power, we advance our causes, make our voices heard and change the world for the better.” Equally strong statements of purpose have been registered by state associations of nonprofits across the country, including Arizona, Minnesota, North Carolina, and Pennsylvania.


Worth Reading

A Board Member's Guide to Nonprofit Overhead, by Jan Masaoka and Steve Zimmerman, Blue Avocado, September 1, 2014, explaining what “overhead” costs are and what nonprofit board members need to know. Here’s a significant quote worth repeating: “overhead costs are crucial costs: liability insurance, staff training, computers and fundraising staff are all necessary costs. Overhead is necessary for credible financial statements, quality services, safe facilities, and the costs of fundraising.”

Nonprofits: Bill would free more funds, Sherri Welch, Crain’s Detroit Business, September 21, 2014, quoting Rob Collier, president of the Council of Michigan Foundations as saying that the America Gives More Act, H.R.4719, is "the biggest thing for the charitable sector since the introduction of the IRA charitable rollover in 2006."

Take Away Harvard’s Nonprofit Status, Annie Lowrey, Slate, 9/10/2014, arguing that “mega-rich schools hoard funds and real estate, tax-free, to the detriment of local communities or federal coffers,” and proposes treating some nonprofit higher-education institutions differently by imposing “a wealth tax on endowments over $1 billion, property taxes, or a tuition sales tax.”

Numbers in the News

Focus: Charitable Giving

$17 and $34 billion less, annually

The estimated reduction in charitable giving by individuals if Congress were to adopt the tax reform proposals of Ways and Means Committee Chairman Camp (R-MI).

Source: Preliminary Estimates of the Impact of the Camp Tax Reform Plan on Charitable Giving, Urban Institute Center on Nonprofits and Philanthropy and the Urban-Brookings Tax Policy Center, August 2014, which determined that the total impact of the tax reform discussion draft would reduce individual giving in the range of 7 to 14 percent.

Worth Studying

Tax Revenue Recovery Varies Widely; 26 States Still Behind, Pew Charitable Trusts, August 19, 2014. See whether your state’s tax revenues have recovered from the Great Recession, when adjusted for inflation. Hint: Some states are doing very well, but most have not yet fully recovered.

Worth Quoting

“The Denver Office of Strategic Partnerships (DOSP) was created in January 2004 to serve as a liaison between the City of Denver and the nonprofit sector. DOSP serves as a catalyst to leverage the best of Denver's public and nonprofit sectors to engage in innovative and collaborative work. DOSP believes that by working collectively, the public and nonprofit sectors can be even more efficient and effective in strengthening Denver's communities.”

- Denver Office of Strategic Partnerships website, quoted here to show that partnerships between governments and nonprofits is a way of life in Denver, and can be elsewhere by embracing the truth that both sectors can better serve the public through collaboration.

Nonprofit Advocacy Matters | September 8, 2014

Posted: 
September 8, 2014

Federal Government Clarifies New Grant Reforms

The federal government has taken steps to deliver on its recent promise that nonprofits will be paid the true costs for performing work on behalf of governments. In recently published Frequently Asked Questions (FAQs), the federal Office of Management and Budget (OMB) removes much of the gray area in the mandate that pass-through entities (typically state and local governments) using federal funds must pay federally negotiated rates for indirect cost or, if such a rate doesn't exist, pay at least a 10 percent rate to eligible nonprofits. The FAQs also provide preemptive instructions on what governments may not do to avoid complying with federal grantmaking reforms that take effect in December. See the September 2 special edition of Nonprofit Advocacy Matters for a brief analysis of the FAQs and related information.

Nonprofits with government contracts and grants should review the new FAQs in detail and adjust their practices accordingly. Nonprofit leaders can help in the development of tools to turn the new reforms into reality for their organization and others by completing this short survey and by encouraging colleagues at other nonprofits to fill it out as well. 

Federal Issues 

America Gives More Act Update
A Short Shrift Senate Session, Unless …

Congress is scheduled to return to Washington today with a goal of passing spending legislation to fund the federal government through the elections, address a few other pressing matters, and leave town as quickly as possible. Earlier calendars showing that the House and Senate will be in session for 15 days this month may get tossed, as congressional leaders are now predicting a shorter, rather than longer, work period in order to enable politicians to return to their campaign trails. A Washington Post editorial today expresses the dissatisfaction of many: “Instead of passing bills into law and allowing voters to judge their work, the legislators appear to be pushing hopes of any serious lawmaking off into the safety of a post-election, lame-duck session." Unless Senators can be convinced to immediately take up and pass the House-passed America Gives More Act (H.R.4719) in September, many of the incentives for giving to the work of nonprofits in communities will be lost.

State associations of nonprofits and their members have been making calls, writing letters, and meeting with policymakers, all with the goal of motivating Senators to take up the legislation. The foundation community is mobilizing in support of the bill as well, by, among other things, joining forces with their state associations of nonprofits in sending letters to their Senators and encouraging colleague organizations to contact their Senators. Many foundation leaders across the country are taking public positions both in support of the legislation and urging immediate action. See last week’s op-ed by Vikki Spruill of the Council on Foundations, and articles by foundation leaders in Utah, New Mexico, and West Virginia. The National Council of Nonprofits takes the position that conventional wisdom – the view that the Senate doesn’t have time to take up the America Gives More Act – can be overturned if everyone committed to the mission of nonprofits, be they board members, volunteers, donors, clients, or employees, calls their Senators to deliver a clear message: “Don’t leave Washington in September until the Senate passes the America Gives More Act; our communities are counting on you.Learn more about what individuals can do to support the America Gives More Act.

Partisanship Splits Investigation on IRS Political Bias

The Internal Revenue Service inspector general improperly omitted a finding that there was "no evidence of political bias” when he issued a May 2013 audit alleging that the IRS engaged in political targeting of applicants for 501(c)(4) nonprofit status, according to a new report from the Democratic members of the Senate Permanent Subcommittee on Investigations. In a detailed dissent, Republicans on the subcommittee assert that the IRS was indeed biased against conservative-leaning applicants for social-welfare status. Both sides reviewed over 800,000 pages of documents and reached polar-opposite interpretations of the facts. Read the full subcommittee report, majority statement, and minority statement.

State and Local Issues 

States Consider Performance-Based Budgeting

More states are turning to “performance-based budgeting,” an approach for allocating budget funds based on measurable program successes or outcomes. As Stateline reports, the idea is to use specific measures of past performance to assess whether a particular budget item, such as a child nutrition program or a new road, is worth the expense. Eleven states have shifted to a “Results First Initiative,” which planners believe will bring accountability and cost-outcome analysis to all levels of state government. However, the results of this and similar performance-based approaches have been mixed so far. Since the process relies heavily on accountability, its success depends as much in how compliant state leaders and agencies are in implementing the approach as it does in how well successes can be measured and economic conditions can be anticipated. A 2014 analysis by the National Association of State Budget Officers concluded that “despite widespread interest and growing use of performance budgeting practices, the process of actually tying performance information to funding decisions in an effective, meaningful and practical manner continues to be a major challenge for all levels of government.”

Billions Pour Into State Campaigns

Money flowing into state political campaigns and ballot initiatives may exceed $3 billion this year, reflecting the growing recognition that the real policy action is happening in the states, not at the federal level, according to Stateline. The projections for this year are 50 percent higher than six years ago when state candidates, legislative caucuses, and state political parties raised $2 billion in the 2007-2008 election cycle, according to figures compiled by the National Institute on Money in State Politics. Observes Professor Paul Brace of Rice University, there is “more power and influence on policy at the state level than 30 years ago,” which is one reason for the rapidly increasing amount of money being spent on state races. Another reason is “the fact that a wide array of hot-button issues, such as educational standards, the Affordable Care Act, immigration, gay rights and gun control, are being shaped and implemented in the states because of political gridlock in Washington.” Further, the Citizens United decision of the U.S. Supreme Court removed limits on independent expenditures levels by corporations and unions at not only the federal, but also the state level. 

Taxes, Fees, PILOTs

  • Taxes: The city council in Nome, Alaska is considering eliminating sales tax exemptions for the city’s nonprofit charities and churches in an attempt to increase city revenues. While other options for filling city coffers were evaluated at an August meeting, stripping nonprofits of their tax exempts was touted as the “easiest to implement” by city administrators.
  • Fees: Nearly 80 churches, schools, and other nonprofits in Oahu, Hawai’i will now have to start paying for trash collection after the city decided to discontinue its free refuse collection service for nonprofits that had been in place for decades. 

New Jersey City to Pull Grants from Nonprofits

City administrators in Paterson, New Jersey recently announced plans to rescind over $800,000 in grants to a dozen nonprofits providing food and assisting the elderly and instead use the funds to pay for street repairs. The grant money, which the City had previously awarded to the nonprofits for various community programs through the federal Community Development Block Grant program, comes after a change in administrations and may result in staff layoffs and shuttering of certain community centers, such as the Grandparents Relatives Care Resource Center. The grants had been awarded and approved by the City Council, and in reliance of those official actions nonprofits may already have incurred costs. But the city’s new administrators claimed that the money did not yet belong to the nonprofits since the formal contracts had not been signed.

Nonprofit Commercial Activities Undermine Property Tax Exemption in North Carolina

A conservation nonprofit in Western North Carolina has been denied property tax exemption because the state Court of Appeals ruled that some limited commercial activities on the property were not operating "wholly and exclusively" for charitable or educational purposes. The court decided the case based on a strict construction of the term "wholly and exclusively" and noted that commercial activities such as the operation of a gift shop and a restaurant and the presence of administrative offices were not appropriate for a nonprofit receiving property tax exemption. North Carolina nonprofits have expressed concerns that broad application of the court’s decision to all types of nonprofit property tax exemption could affect many organizations that engage in some commercial activities to offset mission-related operational costs. The North Carolina Center for Nonprofits is exploring whether nonprofits should challenge the court's decision.

Advocacy in Action 

Never Say Never

Supporters of the America Gives More Act can take inspiration from environmental and conservation groups in New Jersey which have proved the nonprofit advocacy adage: “never say never.” The groups are now promoting public support for a state constitutional amendment on the November ballot, a proposal that was declared by many to be dead when the General Assembly adjourned for the year in June.

The proposed constitutional amendment would create a permanent funding stream for preservation of open spaces, farmland, and historic structures by tapping at least $70 million in revenues generated by the state’s corporate business tax. The proposal was widely supported by state Senators, but some Assembly members had expressed concern over the cost of the measure and the need to get New Jersey’s fiscal house in order.

Although the constitutional amendment seemed dead in June, the coalition of environmental and conservation groups did not give up. They continued to promote the measure despite the apparent lack of an opportunity for the Legislature to place the proposal on the ballot. Yet, in a rare August session, and on the last possible day for a vote, the Assembly passed the amendment with enough votes to ensure that the question would be on the ballot this November.

Those expressing conventional wisdom talked about “next year.” Dedicated advocates continued to advocate for immediate action, however, and prevailed. 


 

Worth Reading

Push the Senate to Pass the America Gives More Act, Vikki Spruill, president & CEO, Council on Foundations, Chronicle of Philanthropy, August 29, 2014.

W.Va. needs U.S. Senate to act on charitable giving, Paul Daugherty, Philanthropy West Virginia, and Becky Ceperley, Greater Kanawha Valley Foundation, Charleston Gazette, August 24, 2014, expressing their view that, "West Virginia's itemized charitable giving has not returned to the pre-2008-09 Great Recession levels,” and that the “America Gives More Act makes it possible for more people to give for local needs.”

OMB, Nonprofits and Social Impact, Elaine Carpenter, ZeroDivide blog, August 22, 2014, explaining the impact of the requirement in the new OMB Uniform Guidance that governments pay nonprofits for their indirect costs, stating, “governments using federal funds will no longer be able to say ‘we don’t pay for administrative or overhead costs; your nonprofit will have to eat those costs or raise the money on your own.’ … No longer will nonprofits need to postpone investments they require to do their work, nor will they have to continue subsidizing their work with government agencies.”

Business as usual for business tax breaks?, Korey Clark, StateNet, September 8, 2014, analyzing developments in making businesses more accountable for the $80 billion in tax breaks that states and local governments grant annually.

Worth Quoting

"We also realize that if somebody's not there to speak out, that [legislators] take the silence as agreement and so we need to speak out as well as any others that might be impacted,”

- Eddy Aliff, executive director of the Virginia Assembly of Independent Baptists, in a WVIR-TV interview referring to the need to speak up for all nonprofits at a public hearing in Virginia on nonprofit tax exemptions.

“Members of Congress tend to act like harried undergraduates, leaving their hardest assignments till the end of the term and then finishing with a blizzard of activity.”

- Drew DeSilver, writing in Congress continues its streak of passing few significant laws, Pew Research Center, July 31, 2014, pointing out that among “the past seven Congresses, between 39% and 59% of all the substantive laws they passed came in the last five months of their respective two-year terms; the average was 49%.”

Worth Studying

The Distribution of Select Federal Tax Deductions and Credits Across the States, Pew Charitable Trusts, September 4, 2014, providing an interactive map and tables with state-specific data for 2012 on taxpayer deductions for charitable giving, state and local taxes, mortgage interest, and tax credits.

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