Statement from National Council of Nonprofits on New Hampshire SB17

Statement from National Council of Nonprofits on New Hampshire SB17

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Statement Regarding Opposition to SB 17

Mandatory Nonprofit Board Training Legislation

Written Statement Provided by Tim Delaney, President and CEO, National Council of Nonprofits

Madam Chair and Committee Members:

I write on behalf of the National Council of Nonprofits to express strong opposition to SB 17, “An act relative to training of certain board officers of nonprofit corporations,” because it singles out and imposes special burdens on nonprofits with government contracts and grants for special trainings without treating in the same way for-profit contractors that also receive public funding as a result of written agreements with government.

The bill fosters a false and misleading perception through its use of the term “publicly supported funds.” Contracts with nonprofits are not a form of public welfare; rather, these contracts results in payments that nonprofits earn for performing services on behalf of the governments for the benefit of the people of the state – just as for-profit entities do.

Nonprofits are not Government Subsidiaries

To the National Council of Nonprofits and the many charitable organizations throughout the country watching the deliberations on SB 17, the bill improperly presumes that nonprofits contracting with government are transformed into subsidiaries of government instead of remaining independent, private corporations.

The bill does not, for example, impose a similar board-training mandate on road builders in the state, on for-profit hospitals, on professional firms such as attorneys or accountants, or on newspapers that receive state and local funds to run advertisements and publish public notices on behalf of governments – all of which also receive public funding as a result of their written agreements with governments.

We are confident that the New Hampshire Senate honors the reality that the receipt of public funding as the result of arms-length transactions involving written agreements to perform work on behalf of governments does not convert private independent corporations – whether for-profit or nonprofit – into governmental instrumentalities. Fair treatment is in order.

Please know that the National Council of Nonprofits does not oppose reasonable regulations. However, our network representing 25,000 nonprofits across America opposes proposals that fail to acknowledge nonprofit accountability, independence, and effectiveness. SB 17 violates these strongly held principles.

An Unfunded Mandate

The National Council of Nonprofits has for many years been dedicated to improving government-nonprofit contracting systems and strengthening the public-private partnership at all levels through collaboration and direct engagement. In communities across America, charitable nonprofit organizations are working to address local needs: educating children, training the workforce, healing the sick, supporting our elders, caring for returning soldiers, rebuilding cities, fostering faith, elevating the arts, protecting natural resources, and more. Governments at all levels – local, state, and federal – contract with charitable nonprofit organizations to provide efficient and effective services to residents that would be more costly if performed by others. The irony of SB 17 is that it focuses on nonprofit contractors rather than on the arbitrary and wasteful costs and burdens mandated by our government partners.

Recent data from the Urban Institute confirm that governments – including those in New Hampshire – routinely fail to pay the full costs of the contracted services and impose unnecessary and wasteful burdens and reporting requirements on nonprofits.

Survey data from New Hampshire nonprofits indicate that more than half (55%) report that they experience problems by governments imposing arbitrary caps on reimbursement of necessary administrative or “overhead” expenses. Nearly seven out of eight nonprofits (85%) that experience caps reported being reimbursed at just ten percent of general administrative costs or less; twelve percent were paid zero for these necessary costs. Now consider the discrepancy between the meager rates that governments pay New Hampshire nonprofits versus the normal overhead rates range of 25-35 percent for organizations (whether for-profit or nonprofit) that deliver services.

SB 17 would add another indirect cost on nonprofits that perform services on behalf of governments. It indeed is another unfunded mandate. Considering the compelling data about the chronic underfunding of indirect costs of nonprofit contractors in the state, SB 17 will exacerbate, not lessen, the compliance and performance challenges of nonprofits in New Hampshire.

An Overreach of Authority

SB 17 would impose the board-training mandate on New Hampshire nonprofits receiving at least $250,000 in “publicly supported funds” from governments at any and all levels. The legislation does not require a clear nexus between New Hampshire governments and nonprofits in the state. Indeed, the Senate Bill would impose added costs on a nonprofit performing work under an agreement solely and directly with the federal government or working under contract with the State of Maine or Vermont.

The National Council of Nonprofits questions the authority of the Senate, and certainly the purpose of the legislation, to impose mandates on “publicly supported funds” originating outside the state and over which the state of New Hampshire has no control. SB 17 therefore not only infringes on the rights of independent nonprofit organizations, but also appears to reach beyond the borders of the state to impose contracting terms on agreements that are outside its constitutional power.

Conclusion

The National Council of Nonprofits opposes SB 17 and urges the Senate Public and Municipal Affairs Committee to reject this unwarranted intrusion into the operations of independent nonprofit organizations.

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