Congress Returns to Tackle Major Priorities
Congress returns after a recess to work through daunting legislative priorities in a short amount of time. Starting next week and for the remainder of July, the House is scheduled to take up and pass as many as possible of the dozen appropriations bills for fiscal year 2022 that begins on October 1. Each measure reflects thousands of decisions on funding levels, congressionally directed spending (“earmarks”), and policy changes. Most of the attention, however, will focus on the Senate where Majority Leader Schumer (D-NY) has announced his goals of enacting the $1.2 trillion bipartisan infrastructure package while also moving a budget resolution that would pave the way for a multi-trillion dollar bill (known as a budget reconciliation bill) that could be enacted without Republican support. The infrastructure package, which as yet has only been seen in outline form, primarily addresses so-called “hard” infrastructure items such as roads, bridges, and broadband, and not the expansive social programs proposed by President Biden in his American Families Plan. The 58-member House bipartisan Problem
Solvers Caucus endorsed the Senate infrastructure outline last week, suggesting support of moderates in the House.
Supreme Court Analysis
Voting Rights and Donation Reporting Cases
On July 1, the U.S. Supreme Court issued its final two decisions of the term, both of which split 6-3 on ideological grounds, both of which involve elections, and one of which also is of direct concern to charitable nonprofits. In the first case, Brnovich v. Democratic National Committee, the majority further constricted the enforceability of the Voting Rights Act when ruling that
two Arizona voting laws did not violate Section 2 of the VRA, notwithstanding the court of appeals' findings of both racially discriminatory intent and impact. The second case, which has more immediate impact on nonprofits, Americans for Prosperity Foundation v. Bonta, involved California’s requirement that organizations seeking charitable contributions file with the state – on a confidential, non-public basis – a copy of their Schedule B to Form 990 that they already filed with the IRS to report how much their most "substantial contributors" gave. Two powerful nonprofits, one of which is closely
affiliated with politically active organizations, refused to comply with California’s reporting requirement, claiming infringements on their associational rights. The Court reversed an appeals court ruling in favor of the state and found that California’s requirement to report donations of major donors to be unconstitutional. The 6-3 majority ruled that the blanket reporting requirement is not valid if the state could accomplish its legitimate law-enforcement responsibilities in more specific ways.
For nonprofits, the ruling will make it more difficult for states to prevent fraudsters and scam artists from destroying public trust and hurting the work of nonprofits. See CalNonprofits’ Statement (“we have lost an important means of keeping bad actors from using tax-exempt status to commit harmful and unlawful acts against the public”), and Why We Filed an Amicus Brief in the U.S. Supreme Court to Protect Charitable Nonprofits, National Council of Nonprofits ("charitable nonprofits want state and
federal law enforcement to have information for oversight that keeps bad actors from masquerading as nonprofits and stops misuse of charitable assets"). Worse, the Court in this case exacerbates the challenges created under the 2010 Citizens United decision by further altering the legal standard of review in ways that will make it easier for powerful special interests to challenge and overturn the remaining laws that keep them from pumping even more untraceable "dark money" into political campaign to influence the outcome of elections. As Justice Sotomayor warned in her dissent, the majority’s decision “marks reporting and disclosure requirements with a bull’s-eye. Regulated entities who wish to
avoid their obligations can do so by vaguely waving toward First Amendment ‘privacy concerns.’”
- IRS Dirty Dozen Tax Scams: The Internal Revenue Service included a warning in this year’s list of “Dirty Dozen” tax scams for people to watch out for predators using tax-related schemes ranging from fake charities to scams targeting seniors and immigrants. The announcement on June 30 stated, “The IRS continues to see a group of ruses by dishonest people who trick others into doing something illegal or which ultimately causes them harm. Predators encourage otherwise honest people to do things they don’t realize are illegal or prey on their good will to take something from
them.” High on the IRS’ watch list are scams, usually committed via phone calls, requesting donations for disaster relief efforts. The report offers several tips for taxpayers, including urging them to check the status of a charity using the IRS online Tax Exempt Organization Search Tool. See all Dirty Dozen “worst of the worst” tax scams for 2021.
- SBA to Eliminate PPP Loan Necessity Requirement: The Small Business Administration has quietly begun informing lenders that it is eliminating the loan necessity review for Paycheck Protection Program loans of $2 million or more, Inc. is reporting. Last year, in response to revelations that publicly traded companies were accessing PPP funds intended for small businesses and nonprofits, the SBA began requiring entities seeking larger loans to submit a questionnaire (SBA Form 3510 for nonprofits)
providing extensive financial details sufficient to demonstrate to SBA’s satisfaction “that economic uncertainty made the loan request necessary.” The National Council of Nonprofits and other national organizations objected to the form when it was first announced and urged the SBA to either withdraw or substantially revise SBA Form 3510. The Inc. article reports that the SBA is expected to issue public instructions and FAQs in the coming week formally announcing the policy change.
- Bipartisan National Service Legislation Introduced: Members of the Congressional National Service Caucus have introduced the bipartisan Cultivating Opportunity and Recovery from the Pandemic through Service (CORPS) Act, legislation (H.R. 4100/S.1165) to expand national service positions to provide meaningful service opportunities for individuals while supporting the needs of local communities and
economies. Specifically, the bill would provide funding for more service positions through the Corporation for National and Community Service through 2024, increase stipends, provide flexibility in programs, and prioritize funding for communities disproportionately impacted by COVID-19, and using culturally competent and multilingual strategies, among other things.
- Judge Blocks ARPA Tax Cut Ban: A federal district judge has blocked a key limitation on how states may spend their allocation of American Rescue Plan Act monies -- specifically, the mandate that forbids states from using the federal funds to pay for state tax cuts. Ohio made several arguments challenging the law, including that the tax-cut prohibition under the ARPA is impermissibly ambiguous and an intrusion by the federal government on the state’s sovereign authority to tax. In the case of Ohio v. Yellen, the judged only ruled on the first challenge, that the ARPA language is too ambiguous to withstand scrutiny using separation-of-powers principles under Supreme Court precedent. Several other states have filed similar challenges to what they call the “tax mandate.” The federal government is certain to appeal the decision.
Guiding ARPA Funds
Providing Input on Spending of Coronavirus State and Local Fiscal Recovery Funds
State and local governments are actively deciding how to spend the funds allocated to them under the American Rescue Plan Act. To equip governments and nonprofits with the best information and framework for prioritizing this spending for the public good, the National Council of Nonprofits
published a Special Report, Strengthening State and Local Economies in Partnership with Nonprofits: Principles, Recommendations, and Models for Investing Coronavirus State and Local Fiscal Recovery Funds. It shares guidance based in part on recent examples from across the country to help governments and charitable nonprofits work together serving people in local communities. We encourage readers to share this Special Report with your elected officials to build relationships and partnerships between the sectors and to encourage sound investment decisions. When we all work together, we all win.
- Special Report: Strengthening State and Local Economies in Partnership with Nonprofits: Principles, Recommendations, and Models for Investing Coronavirus State and Local Fiscal Recovery Funds, National Council of Nonprofits, June 22, 2021.
- Making the Case for Investing Coronavirus State and Local Fiscal Recovery Funds in Charitable Nonprofits, Special Edition of Nonprofit Advocacy Updates, June 22, 2021, announcing the Special Report.
- Nonprofits Must Speak Up Now to Protect COVID-19 Recovery Funds, Tim Delaney and Tiffany Gourley Carter, Nonprofit Quarterly, June 23, 2021.
- Using the Advocacy Tools You Have, National Council of Nonprofits, June 28, 2021.
Spending ARPA Funds
Focus on Relieving Unemployment Costs
States are beginning to use some of their share of Coronavirus State and Local Coronavirus Fiscal Recovery Funds allocated under the American Rescue Plan Act (ARPA) to reduce the pandemic-related unemployment costs of employers forced to lay off staff. Here are some recent examples of that relief:
- Replenishing State Unemployment Trust Funds: Last month Louisiana lawmakers enacted a budget bill that appropriates $400 million in ARPA funds to bring the Louisiana Unemployment Compensation Fund up to pre-pandemic levels. As a result, the state will avoid automatic tax increases on contributing nonprofit and for-profit employers, i.e., those that make quarterly contributions into the state unemployment system. Earlier this year, Maryland agreed on a spending plan that calls for using $1.1 billion of the state’s ARPA funds to shore up the state's unemployment insurance
- Paying Off UI Loans: During the pandemic, Ohio ran up a nearly $1.5 billion loan debt at the U.S. Labor Department to keep the state’s unemployment system solvent. Late last month, the Governor signed legislation to pay off that loan and prevent unemployment tax increases of between 50% and 150% over the next three years. Presently, 17 states owe more than $53 billion in unemployment loans to the Labor Department.
- Covering Reimbursing Employers: Newly enacted legislation in New Jersey provides full unemployment relief to reimbursing employers – nonprofits and local governments that in the past elected to reimburse the state for the costs of unemployment benefits paid to former employees. The Garden State joins nearly twenty others that provided some relief during the pandemic to reimbursing employers.
- Ignoring Experience Ratings: Vermont enacted a law that excludes employer unemployment claims experiences in 2020 from future unemployment tax rate calculations. The relief is expected to save contributing employers an estimated $400 million.
Read the Special Report, Strengthening State and Local Economies in Partnership with Nonprofits, for more ideas for investing ARPA funds to support the work of charitable nonprofits.
Keeping Track of State ARPA Spending
The National Conference of State Legislatures launched a database, ARPA State Fiscal Recovery Fund Allocations, to illustrate the ways states are utilizing their share of Coronavirus State and Local Fiscal Recovery Funds. The database provides detailed information on actions in each of the 50
states and DC, broken down into 15 subject areas and updated daily. For example, the category “Economic Relief and Development” lists 27 actions in nine states so far, including an Alaska $20 million grant program to offset nonprofit lost revenues and $10 million program for Louisiana nonprofits and small businesses. A search for the word “nonprofit” identifies five actions in four states, e.g., a $221.9 million program for rental assistance and project-based vouchers for nonprofit housing providers and related services. Check this resource often to learn what your state policymakers view as priorities.
Descendants of Enslaved People Included in Management of Montpelier
The nonprofit Montpelier Foundation has adopted bylaws giving the Montpelier Descendent Committee equal responsibility and power over James Madison’s estate, Montpelier, in Virginia. The estate of the fourth President of the United States and Father of the U.S. Constitution once had more than 300 enslaved people working on the property and is now a museum open to the public. The equal governing power given to descendants of enslaved African Americans marks the first time descendants of enslaved people will co-oversee a
major historic site in the United Sates. “The true history of Montpelier cannot be known or shared without including the stories and perspectives of those who were enslaved,” said James French, founding chair of the Montpelier Descendants Committee and Board Member of the Montpelier Foundation.
Recognizing Advocacy Excellence
EGOT’s got nothing on nonprofit advocates. While entertainers may celebrate receiving Emmys, Grammys, Oscars, and Tonys (EGOT), equally important (to us) is the recognition awarded by nonprofit state associations to excellence in nonprofit advocacy. Here are two awards in the works:
Providers’ Council in Massachusetts honors deserving individuals and organizations each year with their Awards of Excellence program, regularly inviting members to nominate direct care professionals, supervisors, managers, executive directors, chief executive officers, volunteers,
advocates, innovative businesses, state employees, municipal officials, legislators, business partners and members of the media. Our favorite of the 10 awards is the Advocate of the Year. According to the Providers’ Council summary, the award goes to advocates who “work tirelessly to secure the funding, services and supports that are necessary for people to reach their greatest potential.” This award will be announced during the Providers’ Annual Convention & Expo in October to “an individual who
demonstrates conviction, devotion and tenacity in support of human services.”
The Montana Nonprofit Association similarly celebrates excellence in six categories. The Champion for the Common Good award recognizes a nonprofit organization whose work has resulted in significant progress on a policy issue impacting constituents
or the community. That impact could be registered at a systems level, in areas such as representation, equitable access to resources, and/or a state or federal advocacy issue addressed through either the State Legislature or Congress. Nominations closed at the end of June; winners will be announced during the Montana Nonprofit Association Virtual Conference on September 30.
These and similar awards create opportunities to recognize and celebrate nonprofit advocates who, in advancing the work of nonprofits to improve lives and communities, promote the public good.
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Updates.