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 | December 16, 2024.

Free Webinar Series

• The 2017 Tax Debate Experience and Budget Reconciliation,
  Thursday, January 9, 2025 | 4:00 – 5:00 pm Eastern

• Hot Tax Issues in 2025 and Nonprofit Priorities,
  Thursday, January 16, 2025 | 4:00 – 5:00 pm Eastern

Top of the News

The plan by congressional leaders for the week is to adjourn after passing another stop-gap spending bill which is expected to also include disaster relief funding and extension of the farm bill. Negotiators hit an impasse on several issues over the weekend raising concerns over whether Congress can get its work done before the current spending patch expires on Friday.

• Why It Matters: Numerous last-minute issues affecting charitable nonprofits remain up in the air, including a proposal to extend temporary, targeted tax relief for nonprofits working in disaster areas, as well as funding levels for hundreds of federal programs that typically hire nonprofits to fulfill federal commitments.

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As of today, 15 days remain to advocate for a share of State and Local Fiscal Recovery Funds (SLFRF) from the American Rescue Plan Act. After January 1, all unobligated SLFRF dollars held by state or local governments will be returned to the federal government, leaving nonprofits without access to this key funding source to address challenges like decreases in revenue, increases in costs, and workforce shortages.

• Why It Matters: Before December 31, charitable organizations need to (1) contact their state and local offices to inquire about the availability of unobligated funds; (2) send a SLFRF proposal to their elected officials, commissioners, city managers, and other leaders; and (3) repeat to cover your local town, city, county, and state/Commonwealth.

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Federal News

Last month, the House narrowly passed the Stop Terror-Financing and Tax Penalties on American Hostages Act (H.R. 9495), a bill the charitable nonprofit sector vigorously opposes out of concern that it would trample due-process rights of organizations accused of violating the law that fails to define what acts would be deemed “supporting terrorism.” Significant procedural burdens and the very slim margins in the House and Senate make passage in its current form virtually impossible.

[Read more]

• SCOTUS to Consider UI Religious Exemption: The U.S. Supreme Court has agreed to hear a case to determine whether a state unemployment insurance tax system denying certain organizations an exemption violates the First Amendment. The case turns on whether sub-entities of Catholic Charities are “operated primarily for religious purposes” and therefore should qualify for a religious exemption.
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• Senators Urge Nonprofit Hospital Scrutiny: As a precursor to the 2025 tax debate, Senators Warren (D-MA) and Grassley (R-IA) are urging the IRS to increase oversight of nonprofit hospitals. Specifically, their letter to IRS Commissioner Werfel points to high medical debt and casts doubt on whether some nonprofit hospitals are providing sufficient charitable benefits to justify their tax-exempt status.
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State & Local News

Among the 27,566 statutes enacted in state legislatures this year are numerous laws affecting nonprofit budgets, operations, tax status, advocacy rights, and more. Here are some highlights:

• Tax: Lawmakers in four states expanded charitable giving incentives for certain donations. Maine exempted nonprofit purchases from sales taxes, while Louisiana curbed its existing sales tax exemption for many charitable nonprofits. Mississippi limited nonprofit property tax exemptions for foundations, and Louisiana is placing a measure on an upcoming ballot to remove property tax exemptions from the state constitution and placing them instead in state statute.
  
  
• Employment: Four more states have joined the trend of requiring employers to include wage and salary information in job postings, joining Illinois whose law takes effect on New Year’s Day. Rhode Island enacted a retirement savings plan and Kentucky now authorizes insurers to provide disability income insurance and paid family leave insurance. Four states approved measures to increase and expand access to childcare and support childcare workers in their states.
  
  
• Government Grants and Contracts: States responded to pressure from the nonprofit sector to reform outdated grantmaking and contracting systems. Among recent changes across the country. Utah has updated reporting requirements for disbursements of grants and contracts.
  
  
• Advocacy Rights: Maryland exempted charitable nonprofits from disclosure requirements of personal political contributions for state lobbying purposes.

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While they don’t always heed the data they have, policymakers need it to make informed decisions. State associations of nonprofits provide information such as the number of people employed by charitable organizations, budget size, and the economic impact in their states to ensure that data are available on the consequences of policy decisions. Three new reports from Colorado, Florida, and Minnesota provide the critical data policymakers need to succeed.

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In Focus for 2025

Data from the Nonprofit Workforce Survey showed that challenges caused by government grants and contracts affected nonprofits’ ability to recruit and retain employees: one of five nonprofits (20.6%) identified this as an issue. However, data alone cannot make the case for much-needed reforms. New testimonials and reports from around the country confirm that challenges continue in New York City, Pennsylvania, and Oregon.

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Noting the 15-day countdown for governments to obligate their remaining State and Local Fiscal Recovery Funds (SLFRF), we share some recent examples that show governments are actively seeking partnerships with nonprofits in these final days of SLFRF outreach and making progress in obligating as many dollars as possible before December 31.

• Connecticut: The West Hartford Town Council has additional funds to spend because of “projects that came in under budget” and is re-obligating their remaining SLFRF money to numerous projects, including $175,000 that will be divided among 10 local nonprofits.
  
  
• Ohio: The Cleveland Heights City Council approved another $650,000 in SFLRF resources for two local nonprofits that will rebrand the local arts district into a “unified, vibrant destination” and improve another nonprofit’s Home Maintenance, Repair, and Accessibility Program.

[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 anti-terrorism legislation and due process

• Position on H.R. 9495, National Council of Nonprofits, Dec. 12, 2024
• H.R. 9495 – Some Definitions, Gene Takagi, Nonprofit Law Blog, Dec. 14, 2024.

• Bill could strip tax exemptions from nonprofits accused of supporting terrorism (1:37), Jackie DeFusco, Hearst News Service, Dec. 1, 2024.

On natural disaster tax relief

• The Charitable Giving Coalition Applauds Bipartisan Push to Boost Charitable Giving for Hurricane Relief, Charitable Giving Coalition, Dec. 11, 2024.
• Endorsement of the Hurricane Helene and Milton Tax Relief Act of 2024, National Council of Nonprofits, Dec. 2, 2024.

On nonprofit employment

• 2024 Nonprofit Employment Report: New Data Reveal Nonprofits’ Strengths and Challenges in the COVID-19 Era, Center on Nonprofits, Philanthropy, and Social Enterprise at George Mason University, Dec. 2024.

On nonprofit voting impact

• National Voter Registration Day Annual Report, Nonprofit VOTE, 2024.

On State and Fiscal Recovery Funds (SLFRF)

• Accessing State and Local Fiscal Recovery Funds, National Council of Nonprofits, updated regularly.
• Time Is Running Out for State and Local Governments to Protect Pandemic Funds, Carl Smith, Governing, Dec. 13, 2024.

On state legislative outlook for 2025

• Special Report: A Look at 2025’s Trending Legislative Topics, National Conference of State Legislatures, November 2024.

Advocacy in Action

Sure, sure, most of us grudgingly respect (or thoroughly dislike) the classmates who use the holidays to get ahead for next year. It doesn’t help that Thomas Jefferson opined that the harder he worked the luckier he got. Or that Thomas Edison said, “success is 10% inspiration and 90% perspiration.” Either way, it means having to work over the holidays. But we share a friendly reminder that a) you’re in this for the mission – as in advancing it and not losing ground, and b) 2025 offers tremendous challenges and opportunities for said mission that will require both luck and success. All of which leads us to the unpalatable task of assigning readings … for the public good.

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