Administration Proposes Expanding Exemption from Employment Discrimination Protections
The U.S. Department of Labor has issued a proposed rule to expand religious exemptions for federal contractors under the anti-discrimination provisions in the longstanding Executive Order 11246. Currently, religious organizations, including some nonprofits, “may make employment decisions consistent with their sincerely held religious tenets and beliefs without fear of sanction by the federal government,” according to a DOL statement. Government contractors – typically for-profit businesses, but also some nonprofits – are prohibited from discriminating on the bases of sexual orientation or gender identity. The proposed regulations would extend the religious exemption to government contractors, which the Labor Department believes may have been apprehensive about applying for government contracts due to religious views.
Many nonprofit groups are expressing concern that the change would grant permission to discriminate against various classes of people protected against discrimination, including LGBTQ, unwed mothers, non-Christians, people of color, and other protected classes. Rachel Laser, President and CEO of Americans United for Separation of Church and State, stated, “We believe no one should be disqualified from a taxpayer-funded job because he or she is
the ‘wrong’ religion, does not follow the same religious ‘tenets’ as the employer or cannot pass an employer’s religious litmus test.” Holly Hollman, General Counsel for BJC (formerly known as the Baptist Joint Committee for Religious Liberty), noted that anti-discriminatory state laws would still apply. Public comments are due September 16.
- Analyzing 2018 Tax Returns: Data released by the IRS for 2018 individual federal tax returns filed through July show significant year-to-year changes due to the 2017 tax law. As expected, there has been a sharp rise in the number of taxpayers claiming the standard deduction, with more than 126 million returns taking it out of 141 million filed. This is an increase of 26 million over the same period in 2017. Around 12 million returns claimed deductions for charitable contributions totalling $103 billion for 2018, which is a decrease of 22 million returns from 2017 when 34 million claimed $160 billion in charitable donations. The decline by more than a third of itemized charitable deductions does not by itself
prove that charitable giving has plummeted by $57 billion in 2018; individuals taking the standard deduction may still be giving to the nonprofit missions they care about. The new data provide only partial evidence about the impact of the 2017 tax law; the full effect on charitable giving may not be known until this time next year or later. See IRS Mid-July Filing Season Statistics by AGI for 2018 and 2019.
- Challenging the Public Charge Rule: Thirteen states have filed a lawsuit alleging that the Administration is targeting for exclusion certain groups seeking legal immigration. The new Public Charge rule, published earlier this month, expands the definition of who constitutes a “public charge,” i.e., someone who is “more likely than not to use” public benefits and become a burden on the nation. The new rule added several programs to the list of public benefits that could
disqualify individuals from legal immigration, programs such as the Temporary Assistance for Needy Families, Supplemental Security Income, Supplemental Nutrition Assistance Program, Section 8 Housing, and non-emergency Medicaid. In support of the lawsuit challenging the rule, the Washington State Attorney General stated, “This rule is un-American, anti-immigrant, and unlawful.” Learn more about the public charge regulation on the National Human Services Assembly blog.
- Litigating the 2020 Census: A federal judge in Maryland has dismissed a case brought by the NAACP last year to protect communities of color in the upcoming 2020 Census. The lawsuit against the U.S. Census Bureau and Administration alleged that the Bureau failed to count people of color since the writing of the U.S. Constitution, which included the Three-Fifths Clause in the same provision of mandating the actual enumeration of every person. The complaint had alleged that the Administration’s lack of sufficient funding, staffing, and preparation continues this discrimination and will result in a
“massive undercount of communities of color.” The final opinion stated that circumstances have changed since the filing of the suit, and the Census Bureau received proper funding.
Time is Running Out
Continue Advancing Your Mission Through the August Recess
There are still two weeks to make a difference on the policy issues that matter to charitable organizations throughout the country. Public policymakers at all levels of government are back home this week and maybe next, closer to you the people they represent. Take advantage of them being home and closer to you to meet in their offices, host an event at your facilities, or catch them at public events around town. Here’s a quick video guide for setting up and conducting meetings. What should you talk about? Any topic that advances your nonprofit’s agenda. For Members of Congress, we suggest these action items:
- Repeal the Tax on Nonprofit Transportation Benefits.
- Cosponsor the Nonprofit Relief Act, H.R. 3323.
- Support the Universal Charitable Deduction.
Learn more about each issue by following the links or read about how to advance your nonprofit’s mission during the August recess.
States Report Budget Surpluses, Shortfalls
The 2017 federal tax law anticipated significant deficits for the federal government, but had the effect of generating extra revenues for states that were slow to conform their tax codes to federal policies. Virginia lawmakers are looking at a one-time surplus of $797 million as a result and are expected to pay out some the surplus to taxpayers. Utah lawmakers are expecting a $97 million budget surplus as part of anticipated tax
reform for the upcoming session. The action before the North Carolina Legislature is a mixed bag: one chamber is scheduled to vote this week on a bill to provide $700 million in tax refunds in response to an expected $900 million surplus, yet the state still does not have a budget for the new fiscal year that started July 1. An outlier is Alaska, which has no state income tax. Elected officials there continue to struggle with reduced oil revenues; the Governor vetoed more than $640 million in spending on programs ranging from social services to higher education. The Governor has backed off some
cuts, but the state’s fiscal crisis is not over. The Foraker Group, the state association of nonprofits for Alaska, is asking organizations to share information about the “immediate impacts of the state budget on your organization, the people you serve, and the staff you employ.” The survey is open until August 30.
Illinois Rejects Tax on Nonprofit Transportation Benefits
On Friday, Illinois Governor Pritzker signed legislation to decouple state law from the federal tax on nonprofit transportation benefits. A provision in the 2017 federal tax law imposes a 21-percent unrelated business income tax (UBIT) on expenses nonprofits incur in providing their employees with transit passes and parking. Several states impose their own taxes on top of federal UBIT. Illinois now joins four other states, Hawai`i, Minnesota, New York, and North Carolina in enacting laws to in prevent an automatic increase in
state taxes resulting from the unfair and illogical federal tax.
Taxes, Fees, PILOTs Update
- PILOTs: Local governments in Pennsylvania are studying the status and potential revenue impact of Payments in Lieu of Taxes (PILOTs) in the Commonwealth. The goal of the research is to “be able to analyze the current status of PILOT agreements within Pennsylvania, and with other state case studies for comparison, prepare a ‘best practices’ guide for municipalities who may be considering starting a program,” according to a notice from the Local Government Commission, Pennsylvania Municipal League, and Pennsylvania State Association of Boroughs. The coalition has posted
a survey for municipal representatives about fees, assessments, and PILOT programs for tax exempt properties (owned by churches, hospitals, schools, and other nonprofits) and immune properties (meaning government-owned). Access to the online survey is not restricted to governmental entities.
- PILOTs: Last month, the Pasadena City Council in California approved a new policy for negotiating payments in lieu of taxes when nonprofits developing property in the city submit a Master Plan and Development Agreement. Nonprofits are not required to enter into these Development Agreements; however, the agreements allow for certain guarantees like consistent regulations for the term of the agreement. PILOTs can only be negotiated when a nonprofit developer requests an agreement. “I have concerns about this… This is dangerous because it gives so much discretion to impose
taxes on institutions that are legally exempt from taxes,” said Councilmember Steve Madison, one of only two Councilmembers who opposed the policy. The City Council is scheduled in September to provide more details on the policy.
Subsidies to For-Profit Businesses Scrutinized
Nonprofits are significant job creators in all states, but, as discussed in the above articles, are frequently targeted for additional payments of taxes, fees, and payments in lieu of taxes. States regularly lavish large tax breaks on for-profit businesses based on promises to create new jobs, many of which fail to materialize. According to Good Jobs First, states have provided 400,226 awards of cash or tax cuts totaling more than $227 million in subsidies since 2018. Notably, Amazon was initially promised $2.4 billion in tax
incentives from Virginia, New York, and Tennessee for its split second headquarters. The office in New York has since been dropped, partly due to backlash about the subsidies. Mississippi earmarked more than $9 million to help the two food processing companies recently targeted in immigration enforcement raids in early August, although not all of that money was spent. Nevada lawmakers provided tax subsidies costing hundreds of millions to
some of the largest for-profit companies in the world, including Apple, Amazon, and Tesla since 2010. Yet, according to a recent study by the Governor’s office, the corporate job-creation promises to state officials often are not kept.
California Considers Student Debt Legislation
Student debt isn’t only a personal problem, it’s also a problem for the nonprofit community. An estimated 160,000 nonprofit employees in California have student debt, and according to CalNonprofits, that’s a problem for the nonprofit sector as a whole. In a recent notice, the state association explained, "Graduates with large loan balances hesitate to join the nonprofit sector, and when those balances don’t go down, talented staffers with years of experience decide to leave.” CalNonprofits is encouraging nonprofits to advocate in support of The Student Borrower Bill of Rights (AB 376) that seeks, among other things, to curb abusive practices by the student loan industry, protect borrowers from fees and credit damage due to mistakes made by loan servicing companies, and create a new California Student Borrower Advocate position in state government. Go to the Nonprofit Student Debt Project website to learn more about student debt and the federal Public Service Loan Forgiveness program.
In Defense of Defensive Advocacy
How many nonprofit professionals have heard (or even uttered) the complaint: “I wish our advocacy could be in favor of something and not always opposing things?” Sure, we’d all like to use the “white hat” status of charities to make significant policy changes like generous tax incentives, full funding, workable anti-discrimination, child welfare, and other mission-advancing
laws. The reality, however, is that the world doesn’t often put our priorities first. Conflicting priorities in society mean that the work that nonprofits advance is often on the defensive. Most of the time. So, understanding and embracing the value of defensive advocacy is essential both to protect and advance nonprofit missions.
New research proves this point. Sarah Stachowiak and Joel Gutierrez of the consulting firm ORS Impact recently published When the Best Offense is a Good Defense. The report’s tagline is instructive: “Understanding and Measuring Advocacy on the Defense.” The report provides insights on research into the many types of defensive work, such as “holding the line,” “killing a bill,” “maintaining a win,” “using defense to get to offense,” and more simply, “stopping bad stuff from happening.” They broadly categorized various types of defensive advocacy as
reactive work, the long game, and “proactive defense.”
Reactive defense is what most people will think of when discussing defensive advocacy: a new bill with negative effects gets proposed, or a prior win’s funding is going to be slashed. But the researchers identify other types of challenges and strategies. Maintaining a past win or preserving the status quo is a type of defense that focuses on maintaining an existing law or policy
from being repealed or changed for the worse. There’s another form of advocacy with creative labels like “preventative defense,” “proactive defense,” and “anticipatory defense.” The authors describe these as terms used to explain strategies that were not about reacting in the moment to a policy moving through a policy window, but of shoring up support for existing policies or laying the groundwork for future proactive agenda items.
The whole report is an interesting read, providing insights on measuring defense-specific outcomes, ways for gauging interim progress, and additional recommendations. The following observation is telling (and perhaps haunting to longtime advocates): “We also heard that one of the challenges for advocates on the defense is accurately describing and exciting funders about impact that doesn’t necessarily match up well with ingrained ideas of success: i.e. a pronounced and consistent upward trajectory of positive change for certain populations or environments.”
Indeed, the popularity of focusing on proactive advocacy is rooted in the desire of funders and others to create the “change” their missions desire. Yet, policy progress does not happen in a vacuum; the legislative, administrative, and judicial processes are weighing very many competing priorities. Defense is, and must remain, central to all public policy programs. As the authors of When the Best Offense is a Good Defense make clear, there are many forms of defensive advocacy, each supporting, maintaining, and advancing the missions of nonprofits.
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Matters.