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National Council of Nonprofits


Sign Up to Promote National Voter Registration Day

National Voter Registration Day will take place on Tuesday, September 27, 2016. This is a single day of coordinated, nonpartisan activities aimed at registering as many eligible Americans as possible. It is a great opportunity for nonprofits to help ensure that their staff, board, volunteers, and the people they serve are registered to vote. 


Sign up today to participate as a nonprofit partner on this special day, and learn more through the following webinars hosted by Nonprofit VOTE:

Federal Issues


Scrutiny of Education Endowments, PILOTs Grows

National and congressional attention on college and university endowments is growing, generating various policy proposals that could limit the work of charitable nonprofits. This month, a Washington, DC think tank, The Education Trust, published findings indicating that educational institutions with endowments of $500 million or more tend to enroll fewer low-income students, leading it to assert that “dedicating more endowment assets toward supporting low-income students is sorely needed and is doable.” Earlier this year, House and Senate tax committee leaders sent letters to dozens of colleges and universities seeking information about endowment practices and support for student financial assistance. They reportedly are planning congressional hearings in the fall.


Local governments, such as Washington, DC, are piggybacking on the threat of congressional action to draw attention to their desire to force nonprofit educational institutions to make “voluntary” payments in lieu of taxes (PILOTs) to provide new revenue for the cities. Last week, the Washington Post and Washington Business Journal accepted without questioning the pronouncements of city officials that Congress will be focusing on PILOTs, when in fact Congress has no jurisdiction over property tax exemptions, which are matters for state and local governments. Indeed, congressional leaders clearly stated their interest, and jurisdiction, is on the federal implications of the endowment payout questions that they have raised. Entities with endowments and payout requirements need to be aware of the federal hearings, while keeping a watchful eye for attempts by local governments to use the publicity for their own unrelated policy agendas.


State and Local Issues


State-Level Preparations Underway for Federal Overtime Rules Change

Employers across the country, including nonprofits, foundations and governments, are becoming more aware of the need to take steps to adjust operations and practices to comply with the Overtime Final Rule that goes into effect on December 1. The regulation from the U.S. Department of Labor will, among other things, double the salary level that white collar employees must be paid in order to be exempt from overtime pay under the federal Fair Labor Standards Act. The impact of the rule varies across the states. In at least 10 states and the District of Columbia, the new federal overtime rules will automatically apply to virtually all employees and employers because the state laws extend federal rules to even the smallest workplaces. In all other states, the federal wage and hour law applies to most employers and employees, but there are exceptions depending on the commercial revenue and specific work duties involved. Nonprofits have been attending trainings by state associations of nonprofits and others to prepare for the change. (See upcoming overtime training opportunities in the sidebar to the right.)


State and local governments likewise are required to follow the new overtime rule. Writing in Governing Management & Labor, Liz Farmer highlights that state and local governments are already aware that they will experience increased personnel costs for public employees. She points out that governments should also anticipate higher operating costs as the work performed for governments by nonprofits working under grants and contracts will have to be increased to account for changes in wage and hour laws. The National Council of Nonprofits’ recent report, The Nonprofit Overtime Implementation Conundrum, recommends that governments immediately reopen or renegotiate existing grants and contracts with nonprofits either to revise reimbursement rates that incorporate the increased costs of the overtime rule or to adjust performance obligations. Reopening grants and contracts now to address the intervening change in federal law will prevent a crush of activity on governments and nonprofits alike in December when the new rule takes effect.

Massachusetts Reject Nonprofit Taxation Proposal

The Massachusetts Legislature stripped from a larger bill a provision that would have imposed property taxes on some nonprofits, but the underlying dispute continues to generate controversy. A state representative from Lowell, Massachusetts attached an amendment to an economic development bill that would have required nonprofits purchasing property currently on the tax rolls to pay property taxes over a period of four years. The amendment was in response to news that UMass Lowell, a state school and not a nonprofit, was seeking to purchase an apartment building and turn it into a dormitory. Nonprofits rallied in opposition to the legislation. “This is a wide, sweeping attack on our tax-exempt status that we think is misguided and unfair,” said Michael Weekes of Providers’ Council in a Boston Globe article. Jim Klocke of the Massachusetts Nonprofit Network explained in an op-ed that the nonprofit “contributions add up to a social compact that is based on nonprofits’ charitable missions — addressing society’s most pressing needs. This social compact is the reason for nonprofits’ tax-exempt status, and the reason why it should stay in place.”


Back in Lowell the dispute is not going away, or getting resolved amicably. The Lowell Sun reports that the City Manager shared a draft agreement with City Council members that presumes payments by the university to the local government coffers. The University Chancellor, Jacquie Moloney, said that many of the items listed in the draft Strategic Partnership Master Agreement were never on the table for discussions, and that many are senseless since the university is by law precluded from agreeing to, such as making payments in lieu of taxes (PILOTs). Noting that the university is owned by the Commonwealth of Massachusetts, Chancellor Moloney asked, "Is the manager trying to tax the courthouse?" 

Additional Taxes, Fees, PILOT Stories

  • Fees: Nonprofits may be charged food service permit fees if the Boone County (Illinois) Health Department is successful in securing a change to the county code. The county, near Rockford on the border with Wisconsin, estimates that it would raise an additional $22,000 from about 30 nonprofits if the law is changed. Nonprofits and some residents reportedly are opposing the proposal, stressing it would be unfair for nonprofits to start paying the permit fee while the state's budget impasse continues to impose unfair burdens on nonprofits providing services in the community.
  • PILOTs: While continuing to assert that the Boston PILOT scheme is a success, the Mayor’s office is acknowledging that participation by nonprofits is declining and that the City is receiving less in “voluntary” payments in lieu of taxes (PILOTs) than it demanded. In 2011, Boston launched its plan to divert money from nonprofit missions by demanding "voluntary" annual payments from nonprofits owning property in excess of $15 million. This past year, only 29 of 49 nonprofits contributed the full amount sought by the City, down from 31. The PILOT program generated revenues of $32.1 million, or 68 percent of the $47.4 million elected officials assumed they were somehow entitled.

Honolulu Grant-in-Aid Program for Nonprofit Work Preserved

The Honolulu City Charter Commission has voted not to add a ballot amendment in the November election that would have removed a current requirement that one-half of 1 percent of Honolulu City general fund revenues (about $6 million annually) go to nonprofits via a Grants in Aid program. The funding, approved by an impartial panel, goes to nonprofits that provide services to economically and socially disadvantaged populations, or work for the public good through the arts, culture, economic development or the environment. Voters approved the guaranteed revenue stream for the work of nonprofits in 2012. The Commission rejected the new ballot proposal after hearing from nonprofits and constituents who shared how Grants in Aid support has proved essential to nonprofit services. The Honolulu Star-Advertiser also opposed the proposed ballot measure. The Commission did pass an amendment that will clarify the GIA Fund as "the sole source of funds" to award Grants in Aid to nonprofits. This does not pertain to other funds that might be reimbursed through federal, state, and local grants and contracts.

Volunteer Drivers Experience Liability Limbo

Volunteer driver programs are a big help for seniors who may not have the mobility to drive themselves to doctor’s appointments and other outings. Throughout the United States, 800 volunteer driver organizations exist in 37 states, where last year 74,000 drivers provided rides to 471,000 individuals, Stateline reports. A 2011 study from the National Conference of State Legislatures and AARP, Aging in Place: A State Survey of Livability Policies and Practices, found that “significant legal ambiguities” abound concerning volunteer driver programs. Currently, only six states provide legal protections for volunteers who may face raised rates or cancelled policies from insurance companies. This year Maryland enacted a law protecting volunteer drivers from discrimination by insurers. Many nonprofit organizations purchase additional insurance that shields them and their drivers, but it is up to state lawmakers across the country to introduce legislation that fills in the gap for drivers and their organizations.

Kalamazoo, Michigan to Get $70 Million Cash Infusion from Private Donors

A group of anonymous donors has agreed to contribute $70 million to a fund to help fix municipal budget problems, support “aspirational” projects such as small business loans and sidewalk improvements, and enable the city government to lower property taxes by a third, the City of Kalamazoo, Michigan announced. This windfall comes after the Kalamazoo government has faced structural budget shortfalls, forcing Moody’s to downgrade the city’s credit rating twice. The donations reportedly will contribute to the creation of a new charity, the Foundation for Excellence, which planners expect will be fully funded by a broad donor base by 2020. That new foundation is expected to provide $13.8 million each year to the city’s general fund, and city officials will have full authority on how the money will be spent. Another Kalamazoo foundation, the Kalamazoo Promise, was founded in 2006 to send local public school students to college free of charge. 


Advocacy in Action


Nonprofits Provide Clarity in Election Year Turmoil

Perhaps more than any other year, the public has every right to be confused about who can vote and when, and about what charitable nonprofits can and can’t do when political candidates are involved. In both sets of questions – election law and tax law – state associations of nonprofits are stepping up to provide clarity.


The Rules on Voting

In recent days, restrictive election laws in Kansas, Michigan, North Carolina, North Dakota, Texas, and Wisconsin were struck down by federal courts, leaving voters to wonder what rules will apply and how their constitutional rights will be protected. Judges are rejecting strict voter identification requirements, limits on early voting, restrictions on voting by provisional ballots, and more, ruling that the restrictive laws unfairly discriminate against minorities. In most instances, the courts declared that prior laws will control during upcoming primaries and the general election, but legislatures could intervene and draft new election laws.


Seeing the election-law turmoil as a threat to democracy, the North Carolina Center for Nonprofits is going out of its way to clarify what voters can do. “Last Friday, the U.S. Court of Appeals for the Fourth Circuit struck down several changes to election laws that were enacted in 2013,” the Center wrote to its members. It explains that, as a result, North Carolinians will not be required to show photo IDs to vote in the 2016 general election, the Early Voting period for the 2016 general election will be run from October 20 to November 5, same-day registration will be available during the Early Voting period, and registered voters who show up at the wrong polling place on Election Day will be allowed to vote with a provisional ballot.


The Center also prepared a guide of what North Carolina nonprofits need to know for the 2016 election and compiled links to other useful resources for nonpartisan voter registration, voter education, and get-out-the-vote efforts for North Carolina nonprofits. Always the advocate for nonprofits and democracy, the Center reiterates tips on several easy and nonpartisan things nonprofits can do to maximize public participation in the 2016 election.


The Rules on Nonpartisanship

Questions about endorsement of candidates recur every election season, but the uncertainty may be growing. Earlier this year, nonprofit Georgetown University barred students from displaying partisan campaign signs and distributing literature on campus. Liberty University President Jerry Falwell publicly endorsed a presidential candidate, but took pains to stress that his endorsement was personal and not on behalf of the nonprofit university. In May, the Chicago Sun Times reported it had found instances in which nonprofits had made campaign contributions over the past ten years. A mayoral candidate in Hilo, Hawai`i is complaining that he was excluded from participating in a nonprofit-hosted candidate forum.


The common thread in each of these stories is the tax-law provision that forbids charitable nonprofits and foundations from using their resources or otherwise engaging in partisan electioneering. The law is clear: Section 501(c)(3) of the Internal Revenue Code expressly directs that charities or foundations shall “not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.”


This means that campaign contributions and endorsements made in the name of the 501(c)(3) organization are not allowed. In the case of the Hawai`i candidate forum, “It’s a best practice to invite all candidates,” said Lisa Maruyama, president and CEO of the Hawai`i Alliance of Nonprofit Organizations, when interviewed about the candidate’s complaint.