Census Citizenship Question: As Hot as It Gets
Whether there should be a citizenship question on the 2020 census continues to be a hotly contested issue in all branches of the federal government. The controversy arose in the executive branch when the Trump Administration indicated its desire to add a citizenship question to the decennial census. Professionals throughout the Census Bureau objected because the information could be obtained other ways and adding the unnecessary question would decrease the census count, cost taxpayers more, and corrupt the data. Commerce Secretary Ross added the question anyway and was immediately challenged in the judicial branch. Following trials in three separate courts, federal judges in all the cases, most recently in Maryland on Friday, blocked the question, holding that Secretary Ross violated administrative and/or constitutional law. The question is now before the U.S. Supreme Court, which agreed to consider the ruling in the first case on an expedited basis, with oral argument set for April 23.
The National Council of Nonprofits filed in the Supreme Court an amici curiae (Latin for “friends of the court”) brief, joined by the National Human Services Assembly and YWCA USA, urging rejection of the citizenship question. Among other things, the amici brief explains how the “undercount resulting from the citizenship question will hurt … charitable nonprofits throughout the country in significant ways. Chief among those are a loss of funding for their work, a loss of data and effectiveness, and a loss of faith in democracy and government.” Many other groups filed amici briefs as well, from those opposing the addition of the citizenship question (including the business community, foundations, federal, state and local officials, and various advocacy groups) and those supporting its inclusion (including a separate group of states, other advocacy groups, and the Republican National Committee).
The legislative branch is also weighing in on the controversy. The House Committee on Oversight and Reform held a hearing in March to learn from the Commerce Secretary why he added the citizenship question, partly because evidence uncovered during the trials contradicted what Secretary Ross had testified to Congress in 2018. Unsatisfied, the Oversight Committee voted April 2 to subpoena Secretary Ross for more fulsome answers and documents. Explaining the decision to issue the subpoena, Oversight Committee Chairman Elijah Cummings (D-MD) stated: “The Committee is trying to determine the real reason Secretary Ross added the citizenship question, and the documents and testimony covered by these subpoenas are critical to answering that question. ”
Labor Department Proposes More Guidance on Overtime Pay
The U.S. Department of Labor has published proposed rules for determining “regular rate” of pay, which is the base hourly rate nonprofits, foundations, and other employers use for calculating time-and-a-half overtime pay for eligible employees. The proposed rules (and DOL’s two-page summary) clarify that employers are not required to include certain payments as part of the “regular rate” of pay, such as payments for unused paid leave, the cost of providing wellness programs and other similar employee benefits, and most reimbursed expenses. This set of draft regulations is a follow-up to DOL’s recently published proposed regulations that would increase the salary threshold for exemptions from the Fair Labor Standards Act (FLSA) overtime pay requirements from the current level of $455 per week ($23,660 per year) to $679 per week ($35,308 per year). Learn more about the overtime proposed regulations by reviewing the initial analysis by the National Council of Nonprofits. Nonprofits and all interested persons are encouraged to review both sets of proposed rules and offer public comments. The deadline for commenting on the overtime rule is May 21, 2019 and on the “regular rate” rule is May 28, 2019.
- Supplemental Nutrition Assistance Program (SNAP): A bipartisan letter to U.S. Department of Agriculture (DOA) Secretary Perdue urges the Administration to discard a proposal to impose a mandated work requirement in connection with the SNAP program that provides food assistance formerly known as food stamps. The letter expresses concern that “the Administration’s recent proposed rule” would “take food assistance away from Americans struggling to find stable employment while doing nothing to help them to actually become permanently employed.” Senators Stabenow (D-MI) and Murkowski (R-AK) penned the letter to criticize the three-month restriction proposed by the DOA because “many individuals face substantial barriers to employment that an arbitrary time limit or unemployment floor do nothing to address.” In total, 47 Senators signed the letter. Nonprofits and other interested persons still have time to submit comments about the proposed rule; due to technical difficulties with the comment site, USDA announced it is reopening the comment period until April 10, 2019.
- Violence Against Women Act Reauthorization: The House passed bipartisan legislation last week that would renew and expand the protections for women in the Violence Against Women Act, a landmark law first enacted in 1994. The bill seeks to address what some perceive as “gaping holes,” such as what is known as the "boyfriend loophole," left unfilled in current law around the issues of domestic violence, dating violence, sexual assault/harassment, and stalking. The New York Times reports that the National Rifle Association sought to block the act’s renewal because of a new provision that expanded law enforcement’s ability to strip domestic abusers of their guns.
- Remote Sales Tax Restrictions: Retroactive sales tax on remote sellers would be prohibited under a recently introduced bill (H.R. 1933) in the U.S. House of Representatives. The 2018 U.S. Supreme Court decision in South Dakota v. Wayfair made clear that states have the power to impose taxes on entities beyond their borders, but did not expressly prohibit retroactivity. Nearly half of the states (23) are considering or have considered measures this year to impose remote sales tax or clarify the law since Wayfair was decided.
- Conservation Easement Investigation and Legislation: Senate Finance Chair Grassley (R-IA) and Ranking Member Wyden (D-OR) have launched investigations into conservation easement transactions being used as inappropriate tax shelters. The tax leaders are seeking documents and additional information about syndicated partnership deals where land and development rights are donated by a partnership to a land trust for an inflated tax deduction. The Charitable Conservation Easement Program Integrity Act of 2019 (H.R. 1992 / S.170) would restrict these agreements by prohibiting a partnership to be formed, as well as limiting benefits to no more than 2.5 times the initial investment within three years. The Land Trust Alliance has come out strongly against this type of transaction and in favor or the legislation, stating, “Our concern is stopping the few people who are taking advantage of — and profiting from — a tax law that was designed to encourage philanthropic land conservation for the public good.”
The 2017 Tax Law’s Impact on Nonprofits
Did the 2017 tax law help or hurt charitable organizations, and if it hurt, how badly? The Democratic staff of the Joint Economic Committee of Congress attempted to answer those questions in the new report: “The Economic Impact on Charities of the 2017 Tax Act.” The report highlights what the writers consider the unintended consequences of several provisions: the near doubling of the standard deduction; increased administrative costs from the newly imposed unrelated business income taxes (UBIT) on expenses for nonprofit transportation benefits and the “siloing” provision that requires charitable nonprofits to pay UBIT on each separate trade or business; and the exclusion of nonprofits from the new family and medical leave tax credit. The report found, “If Congress does not undo these harms, many nonprofits will be forced to cut back staff and services, and some may have to cease operating.”
Joint Economic Committee Vice Chair Maloney (D-NY) issued the report out of concern for the vital role nonprofits play in the economy and basic human services. “While the stated intent of some recent legislation has been to level the playing field between nonprofits and for-profit entities, the outcome of the [Tax Cuts and Jobs Act] is that new burdens are placed on resource-strapped service providers.” In releasing the report, Vice Chair Maloney announced legislation to address these challenges to nonprofit sustainability, as well as a longstanding problem related to reimbursements for volunteer mileage.
States Stepping Up to Ensure Everyone Counts
The constitutionally mandated decennial census is less than one year away, and state lawmakers are taking action to prepare even while the litigation continues in the courts and debate rages in Congress over what will and will not be asked as part of the census (see related article, above). The stakes are high in communities across the country: for every person who is not counted, states stand to lose between $533 to $2,309 annually in federal funds. Six state legislatures have created Complete Count Committees (CCC) via legislation to help with planning for the census and five states have similar bills pending. Additionally, 15 governors have signed executive orders creating state-level Complete Count Committees or ordering CCC campaigns. The Lieutenant Governor of Connecticut joined those governors to establish a CCC this year for the Constitution State.
California lawmakers have put a high priority on the census by allocating more than $90 million in state funds for outreach, education, grants for cities and counties, administrative costs, and the State Census program. Appropriators in five other states have added $6 million for state census activities since 2017, and seven more state legislatures are considering measures to provide up to $102.2 million in revenues to assist efforts this year. Pending legislation in Colorado would create an outreach grant program in the Department of Local Affairs to provide grants to local governments, intergovernmental agencies, councils, housing authorities, school districts, and nonprofit organizations. An Illinois measure would issue matching grants to local governments and nonprofit organizations to support a fair, accurate, and complete count.
Correcting, Expanding Nonprofit Sales Tax Exemptions
Nonprofits in Kentucky are celebrating a major victory as Governor Bevin signed the bill to undo sales taxes on nonprofits, after a year of headaches in the Commonwealth caused by inadvertent taxing of tax exempt organizations under previous legislation. This new law immediately exempts from sales tax admissions and items sold for fundraising purposes by charitable nonprofits. The Kentucky Nonprofit Network fought hard for the legislation and remains vigilant, stating that “it is clear that there is much education and advocacy work that remains – addressing dangerous myths and misunderstanding about the essential work and vital role of nonprofits. Advocacy is absolutely no longer optional.”
Elsewhere, bills filed in North Carolina would clarify that nonprofits do not need to charge sales tax for tuition or registration fees for educational events, even if there is some entertainment provided at these events. Separate legislation would exempt most North Carolina nonprofits from paying sales and use tax when they purchase goods and services. Currently, nonprofits pay sales tax on their purchases and can apply to the NC Department of Revenue for semi-annual refunds of the taxes they pay. “A system of sales tax exemption would save nonprofits time and reduce administrative burdens,” according to the North Carolina Center for Nonprofits.
Status of Government Grant Reforms
Lawmakers across the country in 2019 have considered numerous proposals to impose new reporting requirements on nonprofits providing services on behalf of governments. They have rejected some abusive mandates, but many bills are still under review. A measure in Utah, ostensibly limited to governmental entities, sought to empower the State Auditor to establish a training program for managing and accounting for governmental funds. The original version of the legislation included a catchall phrase that could have allowed the Auditor to force nonprofits providing services on behalf of the state under grants and contracts to take (and perhaps pay for) the training. The Utah Nonprofits Association ferociously fought and won to have the provisions affecting nonprofits removed. A separate bill pending in North Carolina would require all nonprofits with state grants or sub-grants to post conspicuously in their offices the State Auditor's hotline telephone number for anonymously reporting improper governmental activities.
Lawmakers in Colorado agreed to delete mandates in a bill that would have required certain government contractors of professional or technical services to utilize tracking software, at their own cost, that counts the contractor’s employees keystrokes and screen shots to verify that hours billed for work under the contract that are performed on a computer are legitimate. Maryland and Washington have similar measures pending. Legislation in Hawai`i would require nonprofits seeking grants from the State to submit formal tax-exempt certifications, Form 990s, and compliance documents. Finally, a bill on Maryland Governor Hogan’s desk would makes technical corrections to last year's law mandating that the state pay indirect costs on state and other non-federal government grants and contracts.
The Modern Fight Over Donor Disclosure
The need and reasons for donor privacy versus confidential disclosure to the government continue to be debated across the country. Recently, the Ninth Circuit Court of Appeals refused to reopen a case that had approved a requirement that nonprofits submit their list of donors to the California Attorney General. In California and a few other states, nonprofits are required to submit to the state government the same list of donors that the organizations include in their Form 990s filings with the IRS. Similar confidentiality protections apply to ensure that the disclosures are not made public. At the state level, a new law in Mississippi turns the other way by barring state or local government from requiring any list or record that would identify an organization’s members, supporters, volunteers, or donors. The legislation, reportedly drafted by interest groups outside the state, prohibits public agencies from releasing any information without written permission from all affected individuals and the organization. There is an exception for certain enforcement and litigation purposes. Lawmakers in Michigan and West Virginia previously rejected this type of donor secrecy legislation.
Declaring a North Star, and Advocating to Get There
The Nonprofit Coordinating Committee of New York (NPCC) did something interesting at its annual gathering of members. Rather than looking backward at accomplishments of the past year or forward to future projects, they looked up. Up to what they are calling their North Star; as in a set of guiding principles that form the basis of the organization’s worldview of the sector’s needs and potentials. And the association of nonprofits in and around New York City announced that they will look to the principles to guide their day-to-day public policy work to meet those needs and potential.
That’s pretty heavy stuff. So, what’s the substance of NPCC’s Declaration of Nonprofit Rights? It’s the articulation of four principles with commensurate responsibilities that apply to every nonprofit of every mission:
- We have a right to sustainable resources and a responsibility to serve our communities well.
Meaning, “with sustainable resources we are more effective.”
- We have a right to engage in advocacy and a responsibility to share our expertise.
As in “with the understanding that advocacy is a key tool in achieving our mission, we are more useful in helping solve the world’s biggest problems.”
- We have a right to be fairly treated as a workforce and a responsibility to champion equity.
Recognizing that it follows that “with a thriving, equitable workforce, and equitable strategies to achieve our goals, we will achieve success throughout the sector.”
- We have a right to be powerful forces of change and a responsibility to advance the future of all communities.
“And with realized power, when we know our worth, and we understand power as a force for change, we will see social advancement.”
As Sharon Stapel, NPCC’s Executive Director, explains: “Each principle is defined by the Declaration to begin shaping the framework of the discussion about the principle, and to set the most critical priorities.” The organization is declaring its priorities and purpose, and is inviting nonprofits of all types to help shape what each principle means in the real world. NPCC, in essence, is inviting all nonprofits to aim high – to a North Star – and to work together to get there.
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