Nonprofit Action Alerts
Ten Minutes to Make a Difference
This week – today even – take ten minutes to protect nonprofit wellbeing on three important issues that affect how nonprofits operate. Federal officials are deciding the outcome of the issues identified in the following three articles. If you want to keep divisive partisan politicking out of the 501(c)(3) community, block implementation of vague new taxes on tax-exempt organizations, and ensure fair, accurate, and complete census data, then now is the time for nonprofits to speak up for their missions and the people they serve. We ask you to join with organizations throughout the country by devoting ten minutes to help save our sector, and then encourage others to do so as well. Thank you!
House Appropriations Bill Seeks to Politicize Nonprofits
The U.S. House of Representatives is expected to take up legislation the week of July 16 that, among other things, would effectively undermine the longstanding Johnson Amendment, the provision of federal tax law that protects charitable nonprofits, houses of worship, and foundations from demands from politicians and others for endorsements and other support.
U.S. Representatives need to hear from every concerned nonprofit, house of worship, and foundation in their districts, as well as all who believe organizations have greater impact when they remain nonpartisan. Read the letter in opposition to Section 112 and go to the Take Action page to learn what you can do right now to protect nonprofit nonpartisanship.
At issue is controversial language that would effectively block the IRS from enforcing the Johnson Amendment when “churches” violate the law in even the most egregious ways, such as diverting charitable assets to influence partisan political campaigns. That language was added at Section 112 to the Financial Services and General Government appropriations bill for fiscal year 2019, that begins on October 1 – just five weeks before the general election. Republican leaders reportedly plan to combine that measure with a funding bill for Interior-Environment in a “mini-bus” package. In recent speeches, Vice President Pence and outside groups have ratcheted up their rhetoric and advocacy efforts in support of repealing the Johnson Amendment. It is unclear whether an amendment to strip out the anti-Johnson Amendment rider will be permitted, but the need for nonprofit engagement is critical right now.
Congress Feeling the Heat for Taxing Tax Exempts
The news broke on a national scale in late June that the federal tax law enacted at the end of December imposes a 21-percent tax on all kinds of nonprofits, including churches, for providing employee transportation benefits such as transit passes and free parking. Politico’s Brian Faler first reported that the Republican tax law hits churches, and the issue was picked up by multiple publications and news broadcasts. In most cases, the headlines have condemned the President and party that enacted the law: Donald Trump’s Tax Plan Could Have Churches Paying Thousands of Dollars More (Newsweek); Trump tax provision on churches, other nonprofits catches locals off guard (KVPI-TV, Anniston, Alabama); and The GOP Raised Taxes on Churches to Fund Its Giveaway to the Rich (New York Magazine).
In response to constituent concerns (see sidebar quote), Representative John Conaway (R-TX) introduced legislation to repeal the taxes on nonprofit transportation benefits and on another change that significantly expands taxes on charitable nonprofits for unrelated business income. Also, in a live interview, House Ways and Means Committee Chairman Brady stated, “We ought to be open to making improvements and fine tuning it as we go along because these are major changes so, yeah, we will be listening very authentically with
Join in the effort to secure immediate relief from the new taxes on tax-exempt organizations. 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.)
any organization that has improvements that they think we can make." While legislative action is possible late in the year, perhaps after the November elections, many nonprofits are already required to make estimated tax payments based on new tax provisions that are largely indecipherable. Hundreds of organizations, including those representing hundreds of thousands of nonprofits, foundations, lawyers, accountants, associations, are calling on Treasury and the IRS to delay new tax liabilities until a reasonable time period after the government provides clear guidance. Learn more at Taxing Tax Exempts and Other Oxymorons in the New Tax Law.
2020 Census Citizenship Question Open to Public Comment
Nonprofits and others now have an opportunity to weigh in on a controversial decision by federal officials that could undermine a fair, accurate, and complete count mandated by the U.S. Constitution. Since March, when Commerce Secretary Ross announced his intention to add a citizenship question to the 2020 census, several lawsuits have been filed challenging this late and untested addition to the decennial questionnaire. In the views of many, including the National Council of Nonprofits, the addition of a citizenship question would suppress response rates in immigrant communities, increase costs to taxpayers in administering the census, and lead to misallocation of government resources in ways that hurt businesses, governments, and nonprofits. A question on citizenship, in short, would lead to an unfair, inaccurate, and incomplete count of every person in America.
The U.S. Census Bureau is now taking comments from the public on the process it plans to follow to count every person in the country, specifically looking for “ways to enhance the quality, utility, and clarity of the information to be collected” and “ways to minimize the burden of the collection of information on respondents….” This comment period presents an ideal opportunity for nonprofits and all concerned persons to express opposition to the citizenship question. The public comment period closes August 7.
- Reversing Direction on Affirmative Action: The Trump Administration last week rescinded 24 guidance documents from the Obama Administration, including one on the use of affirmative action to promote more diversity in education. That particular Obama Administration guidance had noted that institutions could, but “are not required to implement race-neutral approaches if, in their judgment, the approaches would be unworkable” in achieving “the diversity the institution seeks.” The new directive, announced by Attorney General Sessions, means that schools and colleges will not be encouraged to consider race in the admissions process. The American Council on Education vowed to ignore the decision, saying that the administration is sending “precisely the wrong message” to institutions of higher education.
- Documenting Failures of the Flawed Form 1023-EZ: Citing a study showing that the IRS erroneously granted tax-exempt status to 42 percent of the organizations using the IRS’s flawed Form 1023-EZ, the National Taxpayer Advocate – for the third consecutive year – took the IRS to task for using such a demonstrably flawed form. The National Taxpayer Advocate's Objectives Report to Congress, Volume 2 underscored that the Form 1023-EZ used by smaller organizations seeking charitable tax-exempt status “does not solicit enough information to allow the IRS to determine, with sufficient accuracy, whether an organization qualifies for IRC § 501(c)(3) status and is therefore exempt from tax on its receipts.” The Taxpayer Advocate continued: “It is baffling that the IRS response does not acknowledge or address a 42 percent rate of noncompliance,” observing, “If taxpayers made such serious misrepresentations on their Form 1040 returns at a similar rate, we are certain the IRS would immediately take corrective measures.” Most damning is her conclusion: “The IRS’s ongoing refusal to address these concerns is nothing short of an abdication of its oversight responsibilities.”
- Expanding Student Loan Forgiveness: Legislation introduced last month would expand the federal Public Service Loan Forgiveness (PSLF) program and “encourage more students to enter public service professions,” according to bill sponsor Senator Heidi Heitkamp (D-ND). The Help Encourage a Lifetime of Public Service Act (HELPS Act), S. 3124, would waive interest accrual under PSLF and direct the U.S. Department of Education to streamline the employment certification process. “With nonprofits making up 15 percent of the private sector workforce in our state, programs like PSLF and enhancements such as interest relief are essential for nonprofits to secure staff and to provide programs and services critical for North Dakotans,” said Dana Schaar Jahner, Executive Director of the North Dakota Association of Nonprofit Organizations. If enacted, the expansion would provide relief for all qualified applicants across the country.
2020 Census and Counting Children
The annual 2018 KIDS COUNT Data Book from the Annie E. Casey Foundation is a treasure trove of data that uses 16 key indicators to rank states’ performance in the areas of overall child wellbeing, economic wellbeing, education, health, and family and community. The 2018 report warns that the last census, conducted in 2010, failed to count one million children. Foundation President and CEO Patrick McCarthy warns, “we face another potential undercount of young children in 2020,” noting that “if the 2020 numbers are wrong, we will live with the consequences for 10 years.” The results matter for multiple reasons, including that 2020 census data will be used to determine how much federal funding goes to states and localities for hundreds of programs. The KIDS COUNT report estimates that federal spending on children in 10 large programs in 2015 amounted to nearly $160 billion in spending. It states, “When kids aren’t counted, communities don’t get their fair share of federal dollars for Head Start, school lunches, public health insurance, housing, child care and myriad other programs and services that help young children in low-income families get a healthy start in life.” Of particular concern is the last-minute addition of a citizenship question, one that will undoubtedly exacerbate the problem of reaching hard-to-count families and children. The report’s authors make clear the consequences of a flawed census count: “An undercount of young children in the upcoming decennial census would shortchange child well-being over the next decade by putting at risk hundreds of millions of dollars of federal funding for programs that are critical to family stability and opportunity.”
The KIDS COUNT report closes on a positive note, recommending five actions that will lead to a better count of children in the 2020 census: 1) maximizing the capacity of the Census Bureau to count them; 2) fully funding state and local outreach campaigns focused on their parents; 3) expanding the pool of trusted messengers who can reach hard-to-count families; 4) making internet access available to families least likely to have it at home; and 5) addressing privacy and confidentiality concerns.
State Medicaid Work Requirements Struck Down
A federal judge blocked Medicaid expansion in Kentucky because the U.S. Department of Health and Human Services, when granting a waiver to the federal program by allowing Kentucky to impose a work requirement on recipients, failed to “adequately analyze” the impact on coverage. Kentucky’s Governor had previously signed an executive order directing termination of the expansion if the courts struck down the requirement that to be eligible for coverage a person must work 80 hours per month, whether through actual employment, attending school, or performing community service by volunteering through nonprofits. The day after the court ruling, the Governor eliminated vision and dental coverage for 460,000 Medicaid recipients in the Commonwealth. Since approving Kentucky’s work requirement in January, HHS has approved work requirement waivers for three more states (Arkansas, Indiana and New Hampshire); seven other states have pending applications. Additionally, Michigan, New Hampshire, Oklahoma, and Virginia have all passed legislation imposing similar mandatory volunteerism for Medicaid recipients under state law.
States Consider Expanding Overtime
While efforts by the federal government to expand overtime were blocked in court in 2016 and 2017, some states have taken up the challenge. The Pennsylvania Department of Labor and Industry recently published proposed regulations to update the Commonwealth’s overtime pay rules, calling for increasing the minimum salary threshold (salary level test) for employees to qualify for the executive, administrative, and professional exemptions to overtime requirements. Under the proposed regulations, the current minimum salary level for these exemptions, $455 per week or $23,660 annually, would be increased over three years to $921 per week, or $47,892 annually, and then be adjusted for inflation thereafter. The proposed regulations also call for changes to the duties tests under the wage and hour law. See the Pennsylvania Bulletin Proposed Rulemaking and Regulatory Analysis Form for more information.
The Washington State Department of Labor & Industries is currently engaged in rulemaking to update the state’s overtime pay exemption threshold, likely raising the overtime exemption for all employers, including nonprofits. Washington Nonprofits asks for “a simple and clear plain language duties test” that accounts for nonprofit employees who “wear many hats” and is reflective of a modern office, as well as “the ability to plan and forecast their staff costs” through “a predictable, non-political updating mechanism.” The state association of nonprofits is encouraging nonprofits in the state to also respond to a series of “scoping questions” from the Department designed to identify issues it should consider in revising the wage and hour regulations.
States Preparing for the 2020 Census
The decennial census mandated by the U.S. Constitution is a federal responsibility, but states are taking action to ensure their interests are protected and their citizens counted. Last month California Governor Brown signed the Budget Act of 2018 that provides unprecedented state funding of $90.3 million for 2020 Census planning and outreach in the state. The amount appropriated is $50 million more than the Governor initially proposed and reflects the advocacy work of more than 100 organizations, including CalNonprofits, the state association of nonprofits. According to a news release from the Census Policy Advocacy Network of California, “This historic state investment is in direct response to the federal administration’s negative rhetoric against California’s diversity and the effort to depress participation in the 2020 Census by adding an untested citizenship question to the questionnaire form.” Eight other states have appropriated funding ranging from $115,000 to $5 million for general census support, additional state personnel, community engagement, and matching funds. Forefront, the state association of nonprofits and foundations in Illinois, helped secure $1.5 million for “community providers statewide to encourage census participation” under the Illinois budget. Michigan Nonprofit Association is expected to receive $500,000 directly under the state budget to aid in securing a fair, accurate, and complete count.
Delaware leaders are sponsoring a resolution to raise concerns about the importance of the 2020 Census and to establish a complete count commission. Delaware joins other state legislators in seven states looking to establish state-level complete count commissions and an additional four state governors who issued executive orders to support the census. Nonprofits are encouraged to join complete count commissions/committees and engage with census work in their communities.
New Jersey Grants Online Portal Reprieve
The New Jersey Division of Consumer Affairs announced that charities will be given an additional 30 days to submit online extension requests for reports that would have been due by June 30, 2018. Since May 1, all annual charity registration renewals and extension requests were required to be filed through a state-run online portal. The Center for Non-Profits had formally requested that the Division revert to accepting paper filings because of many problems with the online portal, including failure to meet the statutory requirement to incorporate Form 990 information by reference, as well as vague instructions, lack of available context-sensitive assistance, difficulty in locating and uploading information, and an unresolved backlog. During the delay, the state association of nonprofits and others will be working with the Division to identify and resolve these and other challenges so that the online portal will live up to expectations as a more efficient and transparent process.
OMB Uniform Guidance Update
More Reasonable Procurement Thresholds Implemented
Complying with federal procurement rules just got considerably easier for nonprofits with government grants and contracts paid using federal money. Pursuant to the OMB Uniform Guidance, government grantees and contractors are required to follow detailed policies and procedures when purchasing goods and services from others. The level of complexity and burden increases with the cost of purchases. Thanks to several years of advocacy, the federal Office of Management and Budget on June 20 raised the dollar thresholds for the micro-purchase threshold from $3,500 to $10,000, which is in line with recommendations from nonprofits pursuant to a national survey. The simplified acquisition threshold under the Uniform Guidance is also increased from $150,000 to $250,000. The purpose of imposing the procurement standards has not changed; they are designed to provide for fair, open, and appropriate levels of competition among providers depending on the type and amount of a purchase.
Getting in the Game and Playing by the Rules
Elections are not a time to sit on the sidelines but to get in the game. To remind players of the rules, the Maine Association of Nonprofits (MANP) has published a Nonprofit Election Law Basics playbook.
First up, who are the players? The clearest distinction is that nonprofit staff may play so long as they do so in their individual, private capacity. But they may not act on behalf of the nonprofit, and they may not use any of the nonprofit’s resources. These limitations exist because the final part of section 501(c)(3) of the federal tax code (the so-called “Johnson Amendment”) directs that nonprofits must remain nonpartisan. Specifically, charitable nonprofits may “not participate in, or intervene in (including the publishing or distributing of statement), any political campaign on behalf of (or in opposition to) any candidate for public office.” MANP breaks the protection down to its basics:
- No support or opposition for candidates running for office;
- No coordination or alignment with parties or candidates; and
- No campaign contributions.
Next, MANP describes the field of play: Individuals must remain in the proper arena and “keep it outside” the workplace. There must be clear distinctions between personal and professional activities. Any and all electoral activity for or against candidates must be done off work hours. No employer resources may be used. Nonprofits, along with their staff, board, and volunteers, should take it upon themselves to be clear on what is and is not permissible. MANP recommends having an organizational policy that is distributed at the start of campaign season to clarify where the lines are drawn between what is permissible and what is not. Helpfully, MANP provides a link to sample language for an organizational policy.
The playbook then goes through the rules on endorsements, appearances, “more no no’s,” nonprofit staff running for office, board members and volunteers running for office, criticizing candidate statements, annual legislative scorecards, and additional resources. These are quick tips to ensure everyone is playing by the rules and keeping each other in check.
This is not to say that nonprofits must shun the game all together! On the contrary, nonprofits are key players in civic engagement on a strictly nonpartisan basis. Nonprofit VOTE provides guidance on how nonprofits can help make sure that every citizen’s voice is heard in each election by getting voters to register and out to the polls. Nonprofits are encouraged to sign up as an official partner of National Voter Registration Day on September 25 and plan a voter registration drive. Nonprofits are invited to join a webinar, Planning for National Voter Registration Day, on August 16 to learn more.
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