Welcome to the Nonprofit Champion, our biweekly public policy newsletter. This email format provides brief digests of the full articles to help readers quickly access information. For more details about a specific item, see the full newsletter posted online Nonprofit Champion | February 26, 2024.

Top of the News

Nonprofits – as significant contributors to American society, economy, and democracy – have much at stake in the coming weeks as Congress returns from recess to confront an astounding array of self-imposed crises. Once again, government shutdowns are looming as lawmakers fight over the details of $1.7 trillion in appropriations. In the coming days, they must pass appropriations bills, give themselves another extension, or allow the federal government to shut down. Also on the immediate agenda is passage of a foreign aid package to provide support for Ukraine, Israel, humanitarian relief in Gaza, and Taiwan. [Read more]

• Why It Matters: A federal government shutdown would be particularly damaging to charitable nonprofits and the people they serve, as government programs would come to a halt, individuals in crises would turn in even greater numbers to charitable organizations, disaster relief would not flow, and payments and renewals for government grants and contracts would cease.

In the Senate, no clear path has emerged for passage of a bipartisan tax bill, the Tax Relief for American Families and Workers Act. The House-passed bill would expand the refundable child tax credit, restore three tax benefits for businesses, increase subsidies for affordable housing, and significantly curtail the Employee Retention Tax Credit. The legislation does not yet include restoration of the non-itemizer (universal) charitable deduction, an expired incentive that had provided taxpayers claiming the standard deduction the opportunity to get a tax break for donating to the work of charitable organizations. [Read more]

• Take Action: Senators need to hear immediately from the charitable nonprofit community. Call your Senators today and tell them: “The Senator must insist on restoration of the non-itemizer (universal) charitable deduction as a provision in any tax package under consideration.” You can also write your  Senators to deliver the message via email. 

Federal News

• SALT Relief Rejected: The House rejected on a procedural vote an effort to raise the cap on how much taxpayers claiming itemized deductions can deduct for state and local taxes (SALT). The legislation (H.R. 994) sought to raise the cap from $10,000 for households to $20,000 for couples. [Read more]
  
  
• Heads Up: Dates of Posted Form 990s May be Inaccurate. The Form 990 information showing up on public-disclosure sites (e.g., GuideStar and ProPublica) may be incorrect due to an IRS technical glitch. The problem appears to superimpose 2022 data onto 2021 forms. A technical fix reportedly is in the works. [Read more]
  
  
• Counting Nonprofit Workers: Acknowledging that it is crucial for policymakers to have objective and accurate measures of labor market activity, two Senators recently urged the Labor Department and Office of Management and Budget to include funding to ensure that nonprofit workforce data is included in Bureau of Labor Statistics (BLS) quarterly surveys. [Read more] 
  
  
• Federal Tax Code and Racial Disparities: While some tax policies help alleviate racial and income inequities among working families with children – such as the earned income tax credit and the child tax credit – others exacerbate inequities in wealth and income and disproportionately benefit White taxpayers, according to new research from the Tax Policy Center. [Read more] 
  
  
• Child Care Tax Credit Improvements Proposed: Bipartisan legislation to update federal child care incentives and improve access to affordable and high-quality child care for American families was introduced earlier this month. [Read more] 

A comprehensive analysis of donor advised funds (DAFs) finds that over a nine-year period only 7% had balances of $1 million or more, and nearly half of all DAFs had total assets of $50,000 or less. Reviewing giving patterns over a three-year period, the median payout for all accounts was 9%, although approximately 22% of DAFs were inactive, i.e., had a zero payout rate. [Read more]

State & Local News

With most state legislatures well into their stride for the year, several trends affecting the work of charitable nonprofits have emerged.

Child Care

• Legislation in Arizona, Delaware, and Nebraska propose increasing government subsidies for families to pay for child care or limiting copays in certain programs.

• Measures in Maine would encourage employers to help pay for child care by creating a refundable income tax credit.

• A comprehensive bill in Missouri would create three tax credits to help providers, employers, and promote charitable giving.

Government Grants and Contracting Reform

• Bills in California would extend the recently enacted Prompt Payment Act to all signed final agreements with charitable nonprofits and make other nonprofit friendly changes to the government grants process. 

• Kentucky legislation seeks to help nonprofits identify funding opportunities by establishing a database of all state grants.

• A measure in Vermont would, among other things, mandate prompt payment, streamline the grant application and reporting processes, and promote adequate indirect cost rates.

Sales Tax Exemptions

• Maine Governor Mills’ supplemental budget proposes extending the current partial exemptions to all charitable nonprofits in the state.

• Legislation in Kentucky would exempt all resident, nonprofit educational, charitable, or religious institutions from sales taxes on both purchases by and sales from the nonprofits.

[Read more]

State, local, Tribal, and territorial governments have until December 31, 2024, to commit to how they will spend (obligate) their specific allocations of the $350 billion in State and Local Fiscal Recovery Funds (SLFRF) enacted as part of the American Rescue Plan Act (ARPA). Recent examples include:

• Funding for a nonprofit theater in Connecticut.
• A Senior Volunteerism Grant program in Michigan.
• The reopening of applications for a North Carolina to expend remaining funds.
• A Wisconsin community’s plan to allocate another $1.5 million in competitive grants for nonprofit organizations to support early childhood development, child care and families.

[Read more]

Read the full newsletter for additional quotes, research, Numbers in the News, and upcoming advocacy events to put the news in greater context and help you frame the debate.

Nonprofit Library

On accessing State and Local Fiscal Recovery Funds

• Remarks by Deputy Secretary of the Treasury Wally Adeyemo Before the National Council of Nonprofits, delivered Jan. 30, 2024.
• Recording: Accessing Remaining COVID-Relief Funds Before It Is Too Late (1:00:31), National Council of Nonprofits, Jan. 30, 2024.

On bias in federal tax policy

• The 2024 National Study on Donor Advised Funds, DAF Research Collaborative, Feb. 2024

On child care tax relief

• Representatives Tenney, Schneider Introduce the Promoting Affordable Childcare for Everyone Act, Office of Representative Tanney, Feb. 14, 2024.

On data and equity

• Do No Harm Guide: Crafting Equitable Data Narratives, Jonathan Schwabish, Alice Feng, Wesley Jenkins, Urban Institute, Feb. 16, 2024.

On elections and nonprofit nonpartisan activities

• Voting and Community Engagement, National Council of Nonprofits
• Permissible Election Activities Checklist, Nonprofit Vote
• Political Campaigns and Charities: The Ban on Political Campaign Intervention, Internal Revenue Service, updated Feb. 7, 2024.

On the employee or independent contactor classification

• Final Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act, RIN 1235-AA43, U.S. Department of Labor, Jan. 10,2024.
• Frequently Asked Questions - Final Rule: Employee or Independent Contractor Classification Under the FLSA, U.S. Department of Labor.
  

On promoting nonprofit advocacy 

• Boardroom Buzz: Talking Advocacy and Policy With Your Directors, Tennessee Nonprofit Network, Feb. 15, 2024.

Advocacy in Action

Data show that the charitable nonprofit sector collectively earns nearly two and one-half times more revenue by performing under government grants and contracts (31.8%) than it receives via donations from individuals, foundations, and corporate giving combined (13.1%). See Nonprofit Impact Matters. Governments at all levels often “come calling” on nonprofits to provide services for the governments, or they publish notices of funding opportunities (or request for proposals) with specific application forms and due dates. But, sometimes governments have money to spend, and don’t even think of turning to charitable organizations as being eligible, appropriate, or available. In those cases, nonprofits have to create their own opportunities through effective advocacy.

Subscribe to this newsletter | Unsubscribe
©2023 National Council of Nonprofits. All rights reserved.
1001 G Street NW, Suite 700 East | Washington, DC 20001