Bipartisan Budget, Debt Ceiling Bill Advances
Congress and the Administration have agreed to pass and sign the two-year Bipartisan Budget Act of 2019, H.R. 3877. The legislation would suspend the debt ceiling law until July 2021, enabling the government to continue borrowing and paying its bills, and raise the spending caps that would have automatically cut federal spending by $125 billion in the fiscal year beginning October 1. While not in the bill's text, the deal also includes an agreement that the 12 annual spending bills will not include new policy riders or changes to authority, such as curbing the administration's
ability to shift money to pay for border wall construction, unless there is bipartisan agreement on those issues. Once enacted, the package paves the way for passage of the dozen spending bills that actually fund federal government operations. The House passed the bill on Thursday by a vote of 284 to 149, and the Senate is expected to pass it this week. The President has tweeted that he will sign the legislation.
- Good News: The package would suspend the debt ceiling, thereby preventing a default on the full faith and credit of the United States. It would also effectively repeal sequestration, the automatic, across-the-board spending cuts process enacted in the Bipartisan Budget Act of 2011. And to the benefit of the charitable, religious, and philanthropic community, the deal means that there will be no attempts to insert anti-Johnson Amendment language into appropriations bills for fiscal year 2020 and perhaps 2021, although political rhetoric and administrative inaction
are expected to continue.
- Bad News: The legislation adds significantly to the federal deficit and only postpones making very tough revenue and spending decisions.
- Disappointing News: The package does not include tax provisions that nonprofits were hoping would be in the bill, such as repeal of the tax on nonprofit transportation benefits. Nonprofits are already mobilizing to pass the repeal when Congress returns from its summer recess – see Advocacy in Action, below.
Citizenship Question Fight Over, Concerns Continue for 2020 Census
Earlier this month, President Trump acknowledged that the 2020 Census questionnaire would not include the citizenship question and instructed the Census Bureau instead to compile citizenship information from other government records. Following the announcement, the President signed an executive order to require agencies that collect and have access to citizenship data to provide such data to the Department of Commerce within the confines of the law. The federal
judge overseeing the New York lawsuit formally blocked the citizenship question from being on the census form, and stated he would retain jurisdiction to ensure the question is not inserted later.
With the citizenship question fight over, attention turns to cybersecurity threats because, for the first time, the census will be conducted mostly online. Insufficient testing and other challenges provide opportunities for hackers and bad actors to infiltrate the new technology. “These innovations show promise to controlling costs, but they also introduce new risks in part because they have not been tested extensively, if at all, in earlier enumerations,” warned Robert Goldenkoff at the U.S. Government Accountability Office (GAO). He continued, “Without sufficient testing …
operational problems can go undiscovered and the opportunities to refine procedures and systems could be lost.” The census remains on the GAO’s list of high-risk programs; the Census Bureau still has not implemented 32 of 107 recommendations.
- Narrowing SNAP Eligibility: Last week, the U.S. Department of Agriculture proposed a rule that, if implemented, reportedly would remove approximately 3.1 million people from the Supplemental Nutrition Assistance Program (SNAP) (commonly known as food stamps). Beneficiaries would have to meet certain income and asset levels to qualify for SNAP, rather than being enrolled automatically if they received benefits from the Temporary Assistance for Needy Families (TANF)
program. The Department explained that the current rule does not rely on “a robust eligibility determination” and does “not meaningfully move families toward self-sufficiency.” Feeding America was quick to criticize the proposed change in eligibility: “In short, the proposed rule would increase the risk of food insecurity for millions of children, seniors and working families while putting additional strains on household budgets – and pressure on hunger-relief organizations.” The nonprofit explained further: “Currently, for each meal provided by Feeding America food
banks, SNAP provides nine meals. Private charity simply cannot compensate for the breadth of the impact of cuts to the SNAP program.”
- Increasing Domain Names Costs: The body overseeing .org domain names has entered into a renewal Registry Agreement that may result in increased operational costs for nonprofits' website registration and renewal. The new agreement removes the price caps of .org domain names, allowing Internet Corporation for Assigned Names and Numbers (ICANN) to increase the costs for all nonprofits and other organizations that utilize the .org domain. The Internet Commerce
Association stated it was “profoundly disturbed by ICANN’s decision to remove price caps on .org domain names despite the groundswell of opposition from stakeholders.” The National Council of Nonprofits submitted comments in opposition of the price cap elimination, along with 3,251 other organizations.
Respect for the Economic Impact of Smaller Nonprofits
“Nonprofits mean business!” declared the Advocacy Office of the Small Business Administration as it announced publication of a new resource: Small Business Facts: Spotlight on Nonprofits. The fact sheet opens by explaining the importance of charitable
organizations: “Nonprofits, tax-exempt organizations that further a mission instead of earning profits for their owners, are a big part of the small business sector and economy in general.” Nonprofits account for around 10 percent of businesses and employment, which are commonly cited statistics, but other details are quite interesting. Over 99 percent of nonprofits have fewer than 500 employees, and these firms represent 45 percent of nonprofit employment. In 2017, Alaska and the District of Columbia had the highest share of 501(c)(3) nonprofit establishments relative to total establishments. Nonprofit salaries in Idaho and South Dakota tended
to be higher than for-profits that year. In addition to confirming the economic impact of nonprofits in local economies, the fact sheet demonstrates the respect the SBA Advocacy Office has for the work of charitable organizations.
States Bring Suit Against SALT-State Tax Credit Regs
Three states filed a lawsuit earlier this month against the Treasury Department and Internal Revenue Service challenging the new final regulations that curb the federal tax benefits of state and local tax (SALT) credit programs. In 2018, Connecticut, New Jersey, and New York enacted workaround legislation allowing taxpayers to donate to government-run
nonprofits and claim the payments as charitable deductions, rather than tax payments, thus enabling taxpayers to avoid the $10,000 cap on SALT deductions under the 2017 federal tax law. The regulations, however, limit the federal tax benefits of donations taxpayers make to entities, including some community foundations, that also entitle the taxpayers to state or local tax credits for the contributions. The three states allege that the Final Rule goes against longstanding case law and IRS rulings, which hold getting a tax benefit does not diminish charitable intent and the expectation of a tax benefit does not give rise to an impermissible quid pro quo. In short, the States claim that the Final Rule “undermines state and
local programs designed to promote charitable giving through the use of state and local credits.” The case was filed in the U.S. District Court for the Southern District of New York.
Kentucky Pension Crisis Sounds Alarms Nationwide
Some nonprofits in Kentucky are on the verge of bankruptcy because they joined the public pension system several years ago and are now confronting crippling funding liabilities. Last week, the Commonwealth enacted a partial pension relief law that provides a one-year freeze on premiums for nearly 120 “quasi-governmental” organizations, a term that includes many nonprofits, such as rape crisis centers, domestic violence shelters, children’s advocacy centers, and community action agencies. The law permits organizations to elect to leave the pension system, but the departure
would be under very unfavorable terms. Organizations and agencies are permitted to pay off their debt over the next 30 years, with interest, and push newer hires out of the retirement system, which may affect an estimated 7,000 employees who would be enrolled into defined contribution plans, such as 401(k)s and 403(b)s.
Kentucky’s public pension system is the least funded in the nation and has been the subject of several reform plans over the years, such as a proposal to cap all itemized deductions, including charitable deductions. The Kentucky experience is not unique; nonprofits in states with severely underfunded public pension plans (e.g., Illinois and New Jersey) can see severe spending cuts to state programs as legislatures divert funds to make accelerated pension payments. Similarly, nonprofits should study the Kentucky example before deciding to join their state public
retirement and health plans.
Advocacy Rights at Risk in Boston
New sweeping regulations in Boston, Massachusetts could “chill civic engagement” among nonprofits as the new ordinance lowers the thresholds for defining lobbyists’ involvement, hours, and salary for disclosure purposes. The ordinance was passed in response to rising concerns about scandals and unregulated lobbying in City Hall. The new expansive definition requires anyone involved in strategic planning and background research to register as a
lobbyist and pay a $1,000 fee per person. In a letter to city officials explaining the undue burden of this new regulation, stakeholders charged that “hundreds of individuals will face registration and reporting burdens for activities that are not traditionally considered lobbying as they go about their normal course of business.” The letter, signed by the Massachusetts Nonprofit Network and 15 business associations, offered new amendments and guidance for officials to consider moving forward. “When the law is made in such an imprudent fashion, there will be unintended consequences.
So I’m not surprised the nonprofits are concerned about the final product,” said Representative Barnstable, who refused to sign the final bill and called the process a “political rush job.”
Advancing Mission During the August Recess
By the end of this week, both the House and Senate will be on recess and almost every state legislature will have adjourned for the year. Nonprofit missions won’t be on hiatus in August, however, and public policy needs will continue even while lawmakers are taking a break. There’s an opportunity waiting to be seized: Meet with your elected officials in the coming weeks – while they are home! So, HOW do you meet with them and WHAT should you talk about? We’re glad you asked.
The HOW is the easiest part
Contrary to popular belief, lawmakers don’t take August off; they are typically holding meeting in their offices, traveling about their districts/states, and engaging with constituents and potential voters at every opportunity. In short, they are there to meet with you and hear from you.
The simple task is to set up a meeting or event and coordinate your message to have an influence on how the lawmaker acts in the future. Rather than go into the ins and outs of setting up and conducting a meeting, we refer you to this brief recording: Meeting with Policymakers: (Back) Home Edition (18:48). In it, policy staff of the National Council of Nonprofits channel the experiences of thousands of nonprofits to demonstrate that meeting with policymakers in their states/districts is easy and effective. They also lay out the one-two-three steps for planning and conducting a successful meeting.
The WHAT is pretty easy too
It may not be intuitive, but the first step in effective advocacy during the recess is Introduce Yourself. Every relationship must start with understanding. So the topic of every initial conversation should include an explanation of your nonprofit’s mission, impact, and effectiveness. Those may not seem like public policy topics, but they are how your organization distinguishes itself from everyone else wanting to talk to your elected official (including others reading this article).
The Issues: The public policy needs of individual nonprofits vary widely depending on their mission, focus area, size, and location. At the federal level, charitable organizations of all types have the following issues in common. Each is explained in more detail in the links, but here’s the gist and “ask”:
- Tax on Nonprofit Transportation Benefits: The 2017 tax law imposed on nonprofits a 21-percent income tax on expenses for providing transportation benefits, such as transit passes and parking. This new tax is unfair, costly, and burdensome for charitable nonprofits, houses of worship, and other nonprofits. The tax is expected to divert up to $200 million in resources away from nonprofit missions in just 2019 alone. It has become clear that no one on Capitol Hill supports the tax on nonprofit transportation benefits, but real action to repeal it is being
held hostage to partisan squabbling about every other tax issue.
The Ask: Encourage Representatives and Senators to cosponsor one of the bills to repeal the tax: H.R. 1223 (Clyburn), H.R. 1545 (Walker), or S. 632 (Lankford), and deliver the message: “Don’t hold community nonprofits hostage to partisan bickering; repeal the nonprofit transportation tax
- Nonprofit Relief Act, H.R. 3323: A bill introduced by Representative Carolyn Maloney (D-NY) would repeal the new tax law Section 512(a)(6) (the silo-ing UBIT provision), extend the paid leave tax credit to nonprofits, and stop the treatment of volunteer mileage reimbursement as taxable income to the volunteers. Here’s the news release describing the bill,
along with the related Dear Colleague letter inviting co-sponsors.
The Ask: Encourage your Representative to cosponsor the Nonprofit Relief Act, H.R. 3323.
- Universal Charitable Deduction: The recent increase in the standard deduction cut in half the number of taxpayers who will benefit from a tax deduction for charitable donations, resulting in reduced giving to the work of charitable nonprofits in communities throughout America. Congress needs to enact a new deduction to provide all taxpayers a charitable giving incentive (known as a universal or non-itemizer deduction), regardless of whether they itemize on their tax forms. See H.R. 1260 (Davis) and H.R. 651 (Smith).
The Ask: Encourage your Members of Congress to make a clear statement in support of the charitable giving incentive and support a universal (non-itemizer) deduction that provides a tax incentive for all Americans by cosponsoring Universal Deduction legislation.
Good luck. Your mission is counting on you!
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Matters.