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National Council of Nonprofits


Federal Issues


Efforts to Politicize Nonprofits Expand

Barely two months after Congress rejected efforts to weaken the longstanding provision of tax law that keeps partisan electioneering out of charitable nonprofits, houses of worship, and foundations, politicians seeking to politicize these organizations are at it again. An extraneous rider attached to the House Financial Services and General Government (FSGG) appropriations bill for fiscal year 2019 would impose insurmountable barriers to enforcement of the Johnson Amendment against “churches” that commit even the most egregious violations of law by, among other things, diverting charitable donations to candidate coffers and endorsing candidates for public office. The bill was approved by a subcommittee and now moves to the full Appropriations Committee for consideration next month.


Vice President Pence is making clear, however, that legislative action is not the totality of the assault on nonprofit nonpartisanship. At a conference in Washington, DC, last week, he stated, “We are going to fight until we fully repeal the Johnson Amendment from the Internal Revenue Code but it will no longer be enforced under this administration.” The statement, perhaps, confirms the reason that some appear emboldened to violate the law. Franklin Graham, son of the late evangelical pastor Billy Graham, is leading an election-style bus caravan across California encouraging evangelicals to vote for candidates supporting socially conservative values.


TAKE ACTION: Call your Members of Congress and tell them, “The vast nonprofit community strongly supports the Johnson Amendment, the longstanding law that protects charitable organizations, houses of worship, and foundations from caustic, partisan politics. I expect you to oppose the FSGG Fiscal Year 2019 appropriations bill rider at Section 112 that would repeal or weaken the Johnson Amendment. Nonprofits are counting on the [Representative/Senator] to preserve nonprofit nonpartisanship.How to Make the Call: Simply call the Capitol switchboard (202-225-3121) and follow the automated instructions to reach the offices of your Representative and Senators. NOTE: Studies show that phone calls to congressional offices are the most effective means of constituent advocacy – so make the calls first and then encourage others to call, too. Learn more on our Take Action page.

IRS Issues Notice of SALT Workaround Regulations

IRS logoLast week, the IRS announced it will be writing regulations on SALT workaround efforts. New Jersey and New York have enacted laws to circumvent the newly imposed $10,000 cap on state and local tax (SALT) deductions under the new federal law by providing state tax credits to their taxpayers who make payments to government-run entities that the states say can be treated as uncapped charitable donations on federal tax returns. Some have questioned the lawfulness of the workaround approaches while others note that states have been providing tax credits in exchange for charitable donations for many years. The recent Notice from the IRS starkly reminds taxpayers that “federal law controls the proper characterization of payments for federal income purposes,” perhaps foreshadowing the likely outcome of future regulations. The New Jersey Attorney General wrote that the state's tax credit is similar to those in more than 30 other states and follows previous guidance from the agency. “The IRS should not play politics,” the Attorney General wrote, and asserted, “Should the IRS and Treasury Department continue down this path, New Jersey will have no choice but to challenge the new rule in court."

Federal FastView

  • SNAP Work Requirements: A bill that would have imposed new work requirements for recipients of the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as food stamps, failed in the U.S. House of Representatives due to internal fighting among Republicans. The Farm Bill, typically reauthorized every five years, would have mandated 80 hours per month of work or job training for adults between 18 and 59 years old, among other things, to be eligible for SNAP benefits. Exemptions for persons with disabilities, pregnant mothers, and parents with young children would have applied. The bill was released the same week that President Trump signed an executive order encouraging inclusion of work requirements for welfare programs.
  • New TANF Restrictions: A House committee approved a bill (HR 5861) to reauthorize the Temporary Assistance for Needy Families (TANF) and rename it the Jobs Opportunity with Benefits and Services (JOBS) program. The program provides cash assistance and employment support to families. The committee voted along party lines to increase funding from $2.9 billion to $3.5 billion per year for child care assistance and extend the program for five years. The measure would permit states to transfer up to 50 percent (up from 30 percent) of allocated moneys to Child Care and Development Block Grants. However, the bill eliminates states’ abilities to set aside funds for other block grants and establishes eligibility limits to families with incomes below 200 percent of the federal poverty level.

In Focus

Litigation Over the 2020 Census

Last week, Alabama and a U.S. Representative from Alabama sued federal officials regarding the 2020 Census. Their lawsuit was the fifth (so far) alleging that the issue of citizenship will produce a flawed count. But while the first four lawsuits contend that the addition of a divisive and untested citizenship question will undercount people, the Alabama lawsuit claims that the 2020 Census will overcount people by including undocumented immigrants, alleging it will cause the state to lose a congressional seat.


Also last week, the Phoenix City Council voted to file a lawsuit challenging the U.S. Census Bureau's plan to include a question about citizenship status in the 2020 Census. It is unknown at this time whether Phoenix will file its own lawsuit, or join existing litigation, as happened this month when five California cities and the state’s largest county joined the State of California’s lawsuit challenging the citizenship question.


Take Action

Delay Taxes on Tax-Exempt Nonprofits

Your nonprofit organization likely is already liable for new unrelated business income taxes (UBIT) as the result of the major federal tax law enacted in December. But relief is a possibility with collective action. Join the National Council of Nonprofits, the American Institute of Certified Public Accountants, the American Society of Association Executives, and many others in calling on the Treasury Department and the IRS to delay new UBIT liabilities unless and until the government provides clear guidance. Learn more at Taxing Tax Exempts and Other Oxymorons in the New Tax Law.


Go to the IRS public comment form and insist that Treasury and the IRS delay implementing the two new UBIT subsections until one year after Final Rules are promulgated. (Fill in "Form 990-T" in the line: Form/Instruction/Publication Number.)


And we have two more quick asks: 1) Please share with us the comment you submit so we can remind Treasury and the IRS of the many people they are hearing from. 2) Forward your requests to your U.S. Senators and Representative so they are aware of the challenges you face.



State and Local Issues


States Seeking to Decouple from New Federal Taxes

State tax laws traditionally follow the federal tax code on numerous issues, including  federal taxes on tax-exempt organizations. Yet at the behest of nonprofits, legislators are considering bills in several states to avoid automatic increases in state unrelated business income taxes (UBIT) resulting from the new federal taxes on transportation benefits and individual “trades or businesses.” A bill introduced last week in New York would decouple state law from the new federal tax on nonprofit and employee expenses for transportation benefits. The Nonprofit Coordinating Committee of New York issued an Action Alert this morning urging nonprofits to call members of the Senate and Assembly in support of the legislation. If no action is taken, nonprofits would be required to pay a nine-percent tax on top of the federal UBIT of 21 percent. The North Carolina Center for Nonprofits is asking lawmakers to not automatically follow the new federal UBIT provisions and instead relieve nonprofits of a state three-percent UBI tax on transportation expenses. Last week, a key committee approved a bill that, among other provisions, would fix this problem; the Senate could consider the legislation in the coming days. Similar efforts in Minnesota were not successful this year, but demonstrate support for protecting charitable nonprofits from the consequences of the federal tax law. Minnesota’s Governor twice vetoed a state tax reform bill that included language that would have decoupled state law from the federal Section 512(a)(6) (taxing individual trades or businesses), but not the new UBIT on transportation benefits (Section 512(a)(7)). At the time of the first veto, the Commissioner for the Department of Revenue stated that the Governor did agree with nonprofits that these new federal provisions were an “unfair result … that Minnesota should not make part of their tax code.”

Mandatory Volunteerism – Update on State Expansion

New Hampshire became the fourth state (after Kentucky, Indiana, and Arkansas) to receive federal approval to include a work and volunteering requirement for eligibility for Medicaid benefits. The New Hampshire approach is the most stringent, requiring able-bodied adults to participate in 100 hours per month of “community engagement activities, such as employment, education, job skills training or community service.” “Community service” typically means volunteering at charitable nonprofits and foundations and receiving certification from the organization of the number of hours worked. Ohio is also taking steps to require recipients to work at least 20 hours per week, look for work, or attend school or job training.


State legislatures are also looking to impose community service requirements on Medicaid recipients, with Oklahoma earlier this month enacting a mandate for recipients to engage in work, job training, or volunteering with charitable nonprofits. North Carolina is reportedly discussing including work requirements for Medicaid recipients in budget negotiations for FY2018-19. Rather than using the traditional process of committee hearings and lengthy debates, back door dealings may simply use a bill already in conference committee (S.99) from a previous session to push through the language within the $24 billion budget. The Colorado, Connecticut, Minnesota and Wyoming legislatures adjourned without approving bills that would have imposed the community service requirement. More detail on mandatory volunteerism and its effects on nonprofits can be found in the blog, "Don’t Take Away the Commitment to Giving Back," and watch our brief (2:29) video on Mandatory Volunteerism.

Vermont Legislature Repeals Charitable Deduction, Approves Smaller Credit

Lawmakers in Vermont sent to the Governor a bill to repeal the state’s charitable giving incentive and replace it with a five-percent tax credit. The final version caps the tax credit at donations of $20,000, meaning that the maximum incentive for charitable giving can reduce state taxes by no more than $1,000 per year. The Governor had proposed the change to a credit, the House added a $10,000 cap, and the Senate partially responded to nonprofit concerns by raising the House cap. An open letter from the nonprofit community to elected officials warned that the measure “if enacted will fundamentally change the nature of charitable giving in Vermont. Its negative effects will hurt Vermont nonprofits, and more importantly, diminish our ability to serve Vermonters in our communities.”

North Carolina Bills Take Sides in Net Neutrality

Legislation in the North Carolina House and Senate (H.R.1016/S.736) would require internet service providers (ISPs) in the state to treat all online traffic equally and prevent ISPs from blocking access to some websites and offering special “fast lanes” to other websites. In December 2017, the Federal Communications Commission (FCC) repealed its net neutrality rules, effective on June 11, 2018. Many people view net neutrality as a nonprofit issue because it empowers 21st Century advocacy, upholds civil rights, and impacts the lives of the people nonprofits serve. Nonprofits have also expressed concerns that the FCC’s repeal of its net neutrality rules could ultimately make it harder for their donors and clients to access their websites and could increase the cost of effective internet access for many nonprofit organizations and the people they serve. This month, the U.S. Senate passed a measure (S.J.Res.52) that would preserve net neutrality rules, but it is unlikely that the House of Representatives will act on it.

Taxes, Fees, and PILOTs

  • Taxes and Fees: Students at the City College of New York are stepping in to protect nonprofits from improper tax liens assessed against their tax-exempt properties. The Department of Finance plans to sell delinquent property tax liens to private entities that can foreclose on the properties. Yet the list of properties includes nonprofits that have not filed a certification that the property is being used for a charitable purpose with the City and are thus considered delinquent despite being legally exempt from property taxes and water and sewer fees. The students are calling hundreds of nonprofits alerting them to update their paperwork to avoid foreclosure. The students state they “have been sweeping up wreckage left behind by the city’s tax collectors, who are not only walloping nonprofit organizations and houses of worship with property taxes and water bills they should not be charged, but then putting these organization on the brink of losing their real estate.” A councilmember has introduced a bill to correct the City's actions by re-exempting such property and protecting it from the lien law process.
  • PILOTs: A Boston councilmember is seeking to force tax-exempt organizations throughout the city to make more payments in lieu of taxes (PILOTs) under the city’s PILOT program, reportedly in response to declining payments by organizations under the city’s so-called “voluntary” PILOT program. The Mayor’s office asserts that educational, medical, and cultural institutions paid approximately $32 million last year compared to the city’s demand for payments of $49.5 million under the program.

Government-Nonprofit Contracting Reform

Maryland Enacts Bill to Require Indirect Cost Reimbursement

Maryland Governor Hogan signed a bill into law this month that aligns state law with the OMB Uniform Guidance in requiring state agencies to reimburse nonprofits for the indirect costs they incur when performing state grants and contracts paid with non-federal funds. Maryland is the second state, following Illinois, to apply the federal grantmaking rules to state funds, thus streamlining the process and reducing administrative burdens for governments and nonprofits alike. Maryland Nonprofits was a prime advocate for this significant reform, which may serve as a model for legislation for other states.

The State of Government-Nonprofit Contracting

The results of the annual Nonprofit Finance Fund (NFF) 2018 State of the Sector Survey continue to tell a disturbing story about government-nonprofit contracting relationships. A full two-thirds of those responding to the survey reported their nonprofit earns revenues from government grants and contracts. Slightly fewer nonprofits (26 percent) indicated reductions in government funds than in 2015 (30 percent), but these cuts are cumulative. There is no improvement in late payments and only a slight increase in indirect cost reimbursement – from the 4 to 9 percent range to the 10 to 15 percent range at the federal level. A full 94 percent said they feel government underpays them for the services they provide. Perhaps even more concerning is that 67 percent of responding nonprofits said that the policies and positions of the federal government in 2017 have made life harder for those they serve.


Advocacy in Action


Lights, Camera, Advocacy in Action!

Nonprofits are shining the spotlight on advocacy by incorporating quick, easy-to-make videos on smart phones to inform and engage their audiences and lawmakers. Here are recent examples in which state associations of nonprofits give staff and members the lead roles in explaining policy issues and how they affect their organizations in clips and videos they share with their networks.


Delaware Alliance for Nonprofit AdvancementDelaware Alliance for Nonprofit Advancement (DANA) recently shared how they increase engagement through short videos. “We wanted to create a fun way to engage with our audience, advance advocacy across the state, and highlight topics relevant to the sector, so we began filming short videos called ‘DANA’s Mission Minute,” said Jessica Bell, Director of Communications at DANA. Bell further explains, “Our videos have featured the entire DANA team, or individual team members, and we sometimes film while on location when out and about. The videos have added value to our communications and they’ve been a great way to share our message in our newsletters, social media, and website.”


Washington Nonprofits Census VideoNonprofit staff across Washington State starred in a Washington Nonprofits video on the upcoming census, a video that has many people talking. By asking nonprofits to explain why the 2020 Census matters to their missions, the state association is able to showcase the need for adequate funding to ensure a fair, accurate, and complete count, getting out the count, and how the Census impacts the works of nonprofits. To further spread the message (i.e., advocate), Washington Nonprofits TwitterWashington Nonprofits launched a postcard campaign in conjunction with the video. It invited viewers and members to write postcards to Congress about why the Census is important to them and ask that any citizenship question not be included. The template was free to download and all postcards will be hand-delivered when their policy team comes to Capitol Hill in June. Participants then spread the campaign even further by sharing on social media.


Minnesota Council of Nonprofits Advocacy VideoFinally, Minnesota Council of Nonprofits has mastered the art of “on location” shoots to make quick snippets of what is happening at the legislature, such as measures to strengthen the charitable deduction and to protect nonprofits from additional state unrelated business income tax imposed because of the new federal tax law. Filming in front of the state capitol and at a rapid transit station, MCN’s duo has been able to show how various tax policies would affect nonprofits. They end each video with a call to action and provide additional information in the comments. The short videos simplify complex issues, thank legislators, and invite viewers to engage.


With just a smart phone, you too can make movie magic (and advocacy action).


Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Matters.