Nonprofit Overtime Webinar
Tomorrow, Tuesday, November 5 at 3:00 pm Eastern, the networks of the National Council of Nonprofits are hosting a national presentation to help all in the charitable community understand what the Department of Labor’s Overtime Final Rule means to nonprofit operations and missions, and what nonprofits should be doing now to prepare. We will be joined by officials from the U.S. Department of Labor and experts from groups representing workers and employers who will present their unique perspectives and answer questions from nonprofits. View the National Council of Nonprofits’ resource page and read the analysis, Understanding the New Overtime Final Rule.
Spending Uncertainty Continues as Congress Is Otherwise Occupied
While the nation focuses on the impeachment inquiry drama and military actions in Syria, the clock is ticking as the federal government will run out of money in less than three weeks unless Congress either enacts a dozen appropriations bills or adopts another stopgap spending measure to give itself more time. It is unclear whether President Trump will agree to sign whatever is passed. Just before the federal fiscal year began on October 1, Congress and the President agreed to a continuing resolution to fund the government through November 21. Since then, however, none of the must-pass spending bills has yet been enacted. The House previously approved its versions of the dozen required bills, but until recently, the Senate had not taken any to the floor for votes. Last week, the Senate passed its versions of four appropriations bills that would pay for the operations of major agencies such as Agriculture, Transportation, and Interior. But even on those, the two chambers have not negotiated the final language or numbers. Further, there appears to have been no progress on the biggest spending bills or resolution of the controversial issue of whether to fund the President’s border wall. That is the issue that led to the 35-day partial federal government shutdown earlier this year (see related article, below). House Speaker Pelosi (D-CA) and Senate Majority Leader McConnell (R-KY) reportedly have agreed to advance another short-term continuing resolution to run into December, but there is talk of Congress adopting a longer version that would put off the tough decisions until February or March 2020.
- Gauging Charitable Giving Incentives: The decline in civil society can be reversed, in part, through reforms to the federal charitable giving incentives, according to a new report from the congressional Joint Economic Committee. The report, Reforming the Charitable Deduction, tracks data showing that the number of households giving to charitable nonprofits has declined over the past 15 years, while identifying general giving patterns by income levels. It further discusses perceived flaws in the current charitable tax deduction and proposes reforms to make tax policy fairer toward charitable giving and civil society. Among the reforms discussed are the non-itemizer or above-the-line deduction for those who do not itemize and conversion to a tax credit for charitable giving. However structured, the report concludes, a reformed charitable deduction “would be a means of making our tax code fairer, a precautionary defense against one obstacle to civil society, and a step towards a renewal of America’s voluntary institutions.”
- Needing to Cull Abusive Comments: Federal agencies lack the ability to protect, process, and reduce harm caused by abusive and fraudulent comments submitted during public rulemaking, according to a new Congressional report. A U.S. Senate committee recently found that most agencies do not have adequate processes in place to identify, protect against, or remedy abusive or fraudulent comments from individuals who use false identities and computer bots. The report makes several recommendations to protect the public, including: agencies should refuse to accept or post abusive, profane, or threatening comments or comments submitted using a false identity; protect against bots; reduce duplicates; allow other submission options; and refer allegations of identity theft to law enforcement.
- Voting Fails to Disapprove SALT Workaround Regulations: The U.S. Senate rejected, mostly along party lines, a resolution to strike down Treasury and Internal Revenue Service regulations limiting state and local tax (SALT) credits and deductions. There are more than 100 state tax provisions encouraging taxpayers to donate to government-run or government-supported nonprofits that allow donors to claim the payments as charitable deductions, rather than tax payments, to avoid the $10,000 SALT cap under the 2017 federal tax law. The vote was the first time the Senate has attempted to overturn IRS regulations under the current Administration.
- Encouraging Donations for Mass Shooting Victims in VA: Contributions intended for the families of the dead or wounded victims of the mass shooting in Virginia Beach, Virginia, on May 31, 2019, would be tax deductible under a bill (R. 4566) introduced in the U.S. House of Representatives. The Virginia Beach Strong Act would clarify and “confirm cash contributions and organizational donations made for the exclusive benefit of the families” to a government-run fund before June 1, 2021 would be tax deductible under the Internal Revenue Code. “This legislation will further incentivize donations to the Virginia Beach Tragedy Fund by making sure that contributions to victims and families are permitted to be treated as charitable contributions,” according to Rep. Luria (D-VA), who sponsored the bill. The United Way of South Hampton Roads is helping administer the fund, and Board Chair Dawn Glynn responded, “We were honored to stand with the Virginia Beach community in some of their darkest days."
- Paying the Higher Education Endowment Tax: Harvard University is expected to owe nearly $40 million under a new 1.4 percent levy on certain college and university endowments, enacted as part of the 2017 tax law. The tax applies to about forty higher education institutions with more than 500 students and endowments of at least $500,000 per student. The taxes are due in November, despite expected Internal Revenue Service regulations that may expand how the tax applies to investment income in addition to endowments. The National Association of College and University Business Officers (NACUBO) strongly opposes the tax, stating, “It will diminish charitable resources available for financial aid, research, academic support, public service, and innovation." The National Council of Nonprofits has also objected to the endowment tax as “unsound policy objectionable to all charitable organizations that have the foresight and ability to build reserves that are dedicated to advancing their missions.”
Federal Government Shutdowns
Congressional leaders are expressing confidence that they can avert another government shutdown, but rank-and-file members are warning that intransigence by “the other side of the aisle” and/or the President make a shutdown more likely. The same combination of confidence and concern occurred in 2018, raising the questions of whether recent history will repeat itself and what is the impact of shutdowns. The former will play out in the coming weeks, but the latter is better known due to analyses by government scorekeepers. The 35-day partial government shutdown at the end of 2018 and beginning of 2019 cost the U.S. economy $11 billion in lost economic activity, according to the Congressional Budget Office. Nearly 400,000 employees from nine federal departments were furloughed for the duration of the shutdown and a greater number were forced to work without pay for those five weeks. Nonprofits and businesses throughout the country stepped up and provided food and other assistance to the adversely affected workers.
During the last shutdown, several agencies that touch the lives of the public, as opposed to government employees, improperly continued operating without congressional appropriations. For example, according to a recent Government Accountability Office report, the IRS illegally processed tax refunds and took other actions that violated the Antideficiency Act. A separate GAO report dinged the Agriculture Department for prepaying Supplemental Nutritional Assistance Program (formerly known as food stamps) benefits out of moneys that were not available to it. These findings put the Executive branch on notice that it cannot use illegal methods to dampen public outcries about a shutdown when politicians next fail to reach agreement on funding the government.
Behold Election Day 2019
Tuesday, November 5, is Election Day for voters in many jurisdictions to elect their public officials and decide the fate of numerous ballot measures in several more. Voters in Mississippi, New Jersey, and Virginia will pick winners in nearly 400 seats in their legislatures. Gubernatorial and other statewide races are being held in Kentucky, Louisiana, and Mississippi. Six additional states are holding elections to consider twenty statewide ballot measures. Taxes, criminal justice, redistricting, affordable housing, disability rights, as well as funding for transportation, education, and flood infrastructure, are all hot topics. Oklahoma voters will consider Medicaid expansion after grassroot supporters managed to collect nearly twice the number of signatures needed. Colorado voters will decide whether to pare back the austere budgeting restrictions known as Taxpayer Bill of Rights (TABOR); if successful, the measure would repeal the mandatory taxpayer refund provision in the law and shift any surplus revenues to public schools, higher education, and transportation. Local ballot measures range from an arts funding sales-tax provision in Charlotte, North Carolina, to dozens of tax advisory notes to shape policy and help fund the state operating budget in Oregon. There are 45 ballot measures across California, including one to restrict campaign contributions and require certain disclaimers.
States Overtime Protections Exceed New Federal Rule
The Governor of Michigan announced last month her intention to expand the number of people qualifying for overtime pay by increasing the minimum salary threshold under state law for determining whether employees can be categorized as exempt white-collar employees. As will be discussed in detail during the Council of Nonprofits’ Nonprofit Overtime Webinar on November 5, the Overtime Final Rule from the U.S. Department of Labor increases the salary minimum to $684 per week (about $35,500/year). Governor Whitmer reportedly will seek a higher threshold more in line with the level initially set by the Obama Labor Department in 2016, which would be about $51,000 per year now. If successful, Michigan will join several other states that have set state overtime standards that are higher than federal law. California and New York have adopted thresholds of about $62,000 and $58,000 respectively. Maine sets the minimum salary threshold at $36,000/year based on a multiple of the state minimum wage (which is rising to $12/hour in January). A final rule adopted by Pennsylvania recently will raise the threshold to $45,500 by 2022, and a pending proposal in Washington State would up the pay level that qualifies a salaried person for overtime to nearly $80,000 by 2026.
Nonprofit Nonpartisanship Strengthened in New York State Law
This month, New York Governor Cuomo signed legislation that updates state tax law to include the current federal version of the Johnson Amendment that prohibits charitable nonprofits, houses of worship, and foundations from endorsing or opposing candidates for public office. New York codified the Johnson Amendment years ago but had not included the tougher federal language signed into law by President Reagan in 1987. In signing the new law, the Governor stated, "New Yorkers have a right to free and fair elections, and this law will further protect our democracy from unjustified interferences once and for all.” Learn more about the Johnson Amendment and the values of nonprofit nonpartisanship.
Voter Registration Day a Big Success
Nonprofits stepped up big to help nearly 475,000 individuals register or update their voter registrations during this year’s National Voter Registration Day on Sep. 24 – a record-breaking number for an “off-year.” Thousands of nonprofits, including libraries, universities, fraternities, and sororities, participated as part of the 4,083 community partners and 54 premier partners to help get out the word to their communities. #NationalVoterRegistrationDay trended #1 on Twitter for most of the day with approximately 260 million Facebook impressions from celebrities, politicians, sports stars, and – most importantly – nonprofit people doing work in their communities. Dozens of national publications and more than a thousand local news outlets covered the story in most states and localities across the country.
The following is an Advocacy in Action excerpt from the new report: Nonprofit Impact Matters, pages 34-35.
Advocate for Your Mission
Nonprofits often work on the front lines of pressing social challenges. That position of being so close to the problems means that nonprofits are also closest to possible solutions. Nonprofits should not hoard these insights; rather, they should share their views of the actual problems and practical solutions so policymakers can make better-informed decisions.
It sometimes comes as a surprise to people in the nonprofit sector that we have the constitutional right, statutory authority, and moral obligation to advocate and even lobby on behalf of our organizations and the individuals and communities we serve. In fact, charitable nonprofits can—and absolutely should—speak out on matters of public policy that affect their missions.
Research shows that nonprofits with the most extraordinary levels of impact do not focus exclusively on either advocacy or direct service; rather, the highest-performing nonprofits do both, creating a virtuous cycle in which policy advocacy and service delivery each inform and enhance the impact of the other. Yet, compared to the business sector and government sector, nonprofits have been sitting silently on the sidelines.
Mission-focused organizations are being out-positioned as advocates. For-profit businesses and governments recognize the value of engaging in lobbying activities. In 2016, the U.S. Chamber of Commerce had 158 registered lobbyists and lobbying expenditures of $103,950,000, according to its federal lobbying expenditure reports. Meanwhile, government groups of all kinds—representing specific types of government officials (such as the National Governors Association) and levels of government (such as the National League of Cities)—lobby as well.
Individual nonprofits will never have enough money to lobby in the same way or to the same extent as the business sector (paid for by profits) or government sector (paid for by taxpayers). But we don’t have to spend a lot of money to be effective advocates for our missions. Indeed, look at the examples above: Like-minded businesses and similarly situated governments and officials joined together to increase their lobbying power. Nonprofits can join together to lobby too. Otherwise, nonprofits are sidelined, leaving the playing field wide open for others to score policy wins that can hurt nonprofit missions. Advocacy is much broader than legislative lobbying. Advocacy also includes activities such as administrative advocacy (rulemaking and enforcement), research and analysis (documenting the reach and effects of an issue), media advocacy (educating the public), and judicial advocacy (litigation and filing amicus briefs), to name a few.
Thus, lobbying activity is only a very loose proxy for measuring advocacy, which covers much more than just legislative lobbying.
Still, the numbers are startling when considering how very little lobbying nonprofits do.
For this report, we collected the newest-available data on how many 501(c)(3) nonprofits reported lobbying activities in 2016. The results are sobering: On average, fewer than 3 percent of nonprofits engaged in any lobbying at the local, state, or federal levels. Just 3 percent, compared to the 100 percent with the legal right to do so.
That’s not to say that every nonprofit should immediately start lobbying Congress, its state legislature, and city hall. But common sense says that if 97 percent of nonprofits are passive, sitting quietly and politely on the sidelines, not standing for or speaking out for their missions, then nonprofits are ceding the playing field to others who will influence decisions by policymakers, potentially endangering nonprofits’ missions and the people and communities they serve.
That’s, in part, why BoardSource and five collaborating groups came together a few years ago to provide greater clarity about the importance of nonprofit advocacy. Among other things, BoardSource rewrote some of its core materials to declare the “expectation” that nonprofit board members will engage in advocacy. For more information, check out the Stand for Your Mission initiative.
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Matters.