Nonprofit Impact Matters
Think you know everything about charitable nonprofits? Think again.
The National Council of Nonprofits has compiled in one convenient spot the latest data on the national scope and impact of charitable nonprofits. The report, Nonprofit Impact Matters, tells the nonprofit story from the nonprofit perspective for a nonprofit audience. The free report can be found on a related microsite that provides easy access to even more information, including valuable state-by-state data.
The report analyzes what the data show in today’s context, identifies challenging trends confronting nonprofits, and offers recommended action steps that those who care about nonprofits can take together to overcome those challenges. Along the way, it busts myths and shares inspiring images and stories of the positive impact that nonprofits like yours are having on people in local communities every day. We encourage everyone associated with nonprofits – staff, board members, volunteers, donors, and clients – to:
Partisan Budget Cease Fire Declared, For Now
Congress has yet to resolve any of the major funding and policy issues that divides it, but lawmakers have at least agreed not to shut down the federal government as they work through their differences. Last Thursday, the House passed a short-term funding bill, known as a continuing resolution or “CR,” that would maintain existing spending levels past the start of the new fiscal year on October 1 until just before Thanksgiving. The Senate is expected to take up the legislation this week. The temporary bill, which normally only extends existing funding levels, includes a few funding adjustments, like additional money for the 2020 census and extension of funding for community health centers and money for other health care programs set to expire Sept. 30. Other, more contentious issues, however, continue to frustrate the effort to fund the federal government. The House CR fails to address the President’s demands for money to construct a wall across the southern border and his requests for aid to farmers hurt by trade wars and to replace most of the $3.6 billion funds he diverted from the Pentagon’s budget to pay for wall construction.
- Reining in Hate Groups: At a House tax subcommittee hearing last week, lawmakers considered whether and how federal tax law could be altered to prevent hate groups from benefitting from tax-exempt status and tax-deductible charitable donations. Ways and Means Committee Chair Neal (D-MA) set the theme of the hearing by stating, “Groups that propagate white supremacy, anti-Semitism and hatred for the LGBTQ community, among others, do not deserve government subsidies through tax exemptions.” Republicans at the hearing likewise expressed concern about illegal and immoral conduct of hate groups while raising concerns about First Amendment protections. Most participants expressed interest in how the rules at the IRS could be strengthened to make it more difficult for hate groups to qualify for tax-exempt status. In the past, the National Taxpayer Advocate, the National Council of Nonprofits, the National Association of State Charity Officials, and others objected to an application process adopted by the IRS in 2014 that virtually guaranteed that bad actors can gain tax-exempt status and endanger the public. Learn more about the problems with the IRS Form 1023-EZ.
- Scrutinizing Land Conservation Easements: The Senate Finance Committee is investigating partnerships as possible tax avoidance schemes under circumstances in which land donations generate outsized tax benefits. Committee Chair Grassley (R-IA) and Ranking Member Wyden (D-OR) issued subpoenas to six lawyers representing partnerships claiming deductions that the lawmakers believe may be abusing donations of land conservation easement and conflating appraisals to increase the value of the deduction. The attorneys failed to answer previous requests by the committee. “Generally, conservation easements are a legitimate tax tool to promote land conservation, but some of them in recent years may have allowed some taxpayers to profit from gaming the law – depriving the government of billions in revenue,” Chair Grassley said in a news release. Two bipartisan bills (H.R. 1992 / S. 170) would limit the practice. The investigation and legislation are supported by the Land Trust Alliance, which stated in a message to its members, “As you know, conservation easement donations, like other charitable donations, are not intended to be profit opportunities. It’s time to end the abuse.”
- Narrowing SNAP Eligibility: The public has until today, September 23, to submit comments in response to a U.S. Department of Agriculture proposed rule that, if implemented, reportedly would remove approximately 3.1 million people from the Supplemental Nutrition Assistance Program (SNAP) (commonly known as food stamps). The proposal provides that 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.” The National Human Services Assembly submitted comments expressing concerns that the “proposed rule would negatively impact working families, state and local governments, and direct service nonprofits,” and is urging the USDA to “withdraw the harmful proposal in its entirety.” All affected organizations and individuals are encouraged to submit public comments by today, September 23.
States, Nonprofits, Foundations Prepare for 2020 Census
After a slow start, some states are stepping up and providing funding for community efforts to get out the count in the 2020 census. During a one-day special session recently, Utah lawmakers appropriated $1 million for a statewide outreach campaign and grants to act as “seed money” to encourage cities and counties to match investments in their communities. The State of New Jersey announced two grant programs, one for nonprofits and one for county governments, focusing on hard-to-count populations. Similarly, requests for proposals have gone out from foundations and governments in Arkansas, Boston (Massachusetts), and Miami-Dade (Florida) for grant programs to fund community groups. Nonprofits are encouraged to apply. Learn more at the Funders Census Initiative 2020 and the National Conference of State Legislatures web resources, 2020 Census Resources and Legislation.
Labor Standards Update
As employers and employees await the release of the long-awaited U.S. Department of Labor overtime rules, states are taking action on their own – often in different directions – to adjust labor standards and address cost issues:
- Washington State: The comment period ended last week for the Washington State Department of Labor Industries proposal to raise the overtime salary threshold. Under the proposal, the minimum required salary level for exempt employees would increase from the current $455 a week (under federal rules) to $675 a week for small employers, and $945 a week for large employers (with more than 50 employees). This salary level is based on the state’s 2020 minimum wage requirement. Learn more by watching a video by Washington Nonprofits.
- Arizona: A new law requires the State to determine the additional costs of any city or county minimum wage increase above the state rate. The state statute discourages cities from adopting higher standards for minimum wages because the new required calculations may result in the state billing localities for the additional costs the state incurs for services in that locality.
State Tax Reform Roundup
Kansas Governor Kelly has signed an executive order to create a tax review panel to re-evaluate income, sales, and property taxes. The action sets the state up for considering a tax overhaul in 2021. The Governor’s Council of Tax Reform will be led by two former legislators, one Democrat and one Republican, and will conduct an 18-month study to result in specific statutory recommendations. Oregon and Utah have indicated tax reform will be priorities in their upcoming 2020 legislative sessions.
Taxes, Fees, PILOTs Update
- Fees: The Richland County (South Carolina) Council recently delayed action on a proposed ordinance that would require the county government to impose fees and service charges on all tax-exempt entities within its jurisdiction, with the exception of houses of worship. Reportedly in response to significant pushback from nonprofits in the county that includes the state capitol of Columbia, the sponsor of the bill called for further analysis and discussions with charitable organizations before proceeding.
- PILOTs: The annual tally is in on which Boston nonprofits made “voluntary” payments to the city’s demand for payments in lieu of taxes (PILOTs) and the results are mixed. In 2011, Boston adopted a scheme to circumvent the Commonwealth constitutional provision guaranteeing nonprofit exemption from property taxes and established an arbitrary formula for what city officials asserted would be a reasonable amount of money to demand that nonprofits pay each year. According to a new report, Boston’s universities, hospitals, and other tax-exempt organizations paid $34 million into the city’s treasury during the past fiscal year, which represents about four-fifths of what the city had hoped to reap. Hospitals paid the most, 92 percent of the amount sought by the city, while cultural institutions yielded only 59 percent of the sums demanded of them. The results for 2019 are similar to those for FY 2018.
Government-Nonprofit Contracting Update
New York City’s Commitment to Indirect Cost Reimbursement
The City of New York is in the process of implementing an initiative to fund the indirect costs of human service nonprofits providing services on behalf of the government. The Mayor’s Office has formed a City Implementation Team to establish new processes to enable nonprofit providers to claim their indirect cost rates and for the City to approve and pay those rates. To inform the City’s implementation planning efforts, the team has posted a short informational survey. Once the claims procedures are established, nonprofits will be reimbursed for their indirect cost rates on current contracts, even if that requires the City to add more funding to your contracts. Visit the city’s website to learn more about the indirect cost rate commitment.
Registering Voters: Civic Engagement … and Nonprofit Advocacy
The purely nonpartisan National Voter Registration Day is upon us – Tuesday, September 24, 2019. It presents a great opportunity to participate in and celebrate civic engagement. But is it advocacy? It’s safe to say we think so, given that we're writing about it in the Advocacy in Action section of this newsletter. And, importantly, it’s legally safe for nonprofits to engage in such activities on a nonpartisan basis.
So how is encouraging individuals to register to vote an act of nonprofit advocacy? Why are hundreds of nonprofits, including nonprofit state associations across the country, joining the nationwide effort to register over 200,000 voters on September 24?
First, there’s the recognition that nonprofits are everywhere and can do a world of good. As presented in Nonprofit Impact Matters, there are 1.3 million charitable nonprofits employing 12.3 million employees and supported by more than 64 million nonprofit board members and other volunteers. Nonprofits operate in every community, touching the lives of every person in the country every day. There is perhaps no better group of organizations in the country that has the trust and influence to connect with individuals and turn them into voters.
Next, nonprofit and voter registration go hand-in-hand because we are both the product and beneficiaries of democracy. Nonprofit VOTE puts it this way: “Nonprofits represent democracy’s highest ideals of public service, active citizenship and commitment to a better society. With their natural engagement assets and unparalleled reach, nonprofits are particularly well suited to encourage voter participation. And they have a proven impact on participation when they do.”
Essentially, nonprofits are effective – in advancing their missions as well as bringing individuals into civil society – because by law and in fact we are gloriously nonpartisan. We don’t pick and choose who we serve and don’t promote voting because one political party or partisan donor says so. Nonprofits transcend partisan politics – usually providing local solutions to local problems long after candidates and issues of the day are forgotten.
The bottom line is that voting is a core component of our democracy. A healthy representative democracy like ours sets its priorities and resolves its disputes through elections. Disenfranchised voters, low turnout, and impossible barriers to voting undermine the value of elections and democracy itself. It’s in the interest of every charitable nonprofit to help make our democracy work for everyone. So it makes sense to help make sure everyone has a say – a vote – in their collective future.
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Matters.