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Congress’ Packed To-Do List in September
This month is shaping up to be one of the busiest, and perhaps most expensive, in history. Every September is busy because Congress must act to fund the federal government into the new fiscal year that starts October 1, plus renew and revise expiring laws, such as the Surface Transportation Act this year. But this particular September, Congress must do even more. First, to avoid a government shutdown, Congress must also address the government’s borrowing authority, by either raising or waiving the federal debt ceiling (see article, below). Additionally, there are two marquee issues: House passage of the $1.2 trillion bipartisan Infrastructure Investment and Jobs Act (H.R. 3684) on or before September 27, plus consideration of the $3.5 trillion budget reconciliation bill slated to expand numerous social programs like the child tax credit, free education at the pre-K and community college levels, and paid leave, while increasing taxes on higher-income individuals and corporations.
Numerous congressional committees in the House and Senate are working furiously to draft the spending and taxing measures that will be merged into the budget reconciliation bill. The date for delivering committee-approved legislation is September 15, so committee markups start this week, including two in the Ways and Means Committee to consider trillions in proposed tax changes. Democrats reportedly are seeking to “pre-conference” reconciliation items, meaning House and Senate Democratic leaders are pursuing agreements on key issues before the bills go to the floor for votes in either chamber. The total cost of the reconciliation bill remains in doubt. For instance, Senator Manchin (D-WV) recently reiterated his objection to the full $3.5 trillion price tag and is calling on Democratic leaders to “pause” action on the legislation until inflation is in check and other economic indicators provide clearer guidance on how best to proceed. The bottom line is that while much is under consideration, little is clear about how any of the provisions becomes law in just three weeks.
Call to Action
Advancing the Nonprofit Policy Agenda
Many policy priorities of the charitable nonprofit community are in play in the bills up for consideration, and nonprofit advocates are taking immediate action to advance the agenda. The priorities, as identified in an updated nonprofit coalition letter to congressional leaders, include enactment of the WORK NOW jobs bill, improving the Employee Retention Tax Credit, and extending and expanding the Universal Charitable Deduction. Last week, the members of the U.S. Conference of Mayors adopted a resolution expressly calling on Congress and the Administration to adopt all three of these priorities. Also last week, three dozen national nonprofits sent a letter to congressional and tax committee leaders calling for their support for extending and expanding the Employee Retention Tax Credit (ERTC) for nonprofits. Earlier, sponsors of the WORK NOW Act sent their own letter to Democratic leaders making the case that nonprofits have not received as much support as other industries and calling for specific relief for charitable nonprofits, including their nonprofit jobs-promoting bill and inclusion of nonprofits in all grants and contracting programs. All nonprofits interested in advancing these priorities should reach out to their Representatives and Senators now. Be sure to include the linked resources discussed above.
Federal Unemployment Relief Expires
Labor Day 2021 marked the end of federal unemployment relief for millions of workers and employers enacted at the onset of the pandemic and extended and expanded in December and March. By one estimate, seven million individuals lost all benefits on Labor Day, including gig workers, those who had worked for very small employers exempt from their state unemployment systems, and others who were receiving benefits that had been extended beyond their state’s limit. Another three million individuals reportedly will no longer see the extra $300 per week supplemental benefit provided as part of the American Rescue Plan Act (ARPA) in March. Reimbursing employers – nonprofits and local governments that had opted out of their state unemployment systems prior to the pandemic – are now responsible for 100% of the costs of benefits paid to former employees; the federal subsidy of 75% of these costs expired on September 6. In August, the Biden Administration made clear states may use a portion of their ARPA Coronavirus State and Local Fiscal Recovery Funds to provide unemployment relief to individuals and employers. See the National Council of Nonprofits’ special report on ARPA funds to learn more on how nonprofits can advocate for relief of their unemployment costs.
Federal FastView
- Nonprofit Data Released for 2018: The IRS Statistics of Income (SOI) unit has posted four tables containing data from SOI's Tax Year 2018 study of tax-exempt organizations (excluding private foundations). The tables contain balance sheet, income statement, and functional expense data from Return of Organization Exempt from Income Tax (Form 990) and the corresponding short form (Form 990-EZ) filed by organizations exempt under Internal Revenue Code sections 501(c)(3) through (c)(9). Data are classified by total end-of-year assets and IRC section. The release also includes microdata and documentation from the SOI exempt organization sample study used to create the tables.
- Public Comments on Public Service Loan Forgiveness: The U.S. Department of Education is inviting public comments on Strengthening the Public Service Loan Forgiveness (PSLF) Program for people working in public service – including at charitable nonprofits – to offer input. The announcement recognizes that the program has not lived up to expectations, acknowledging that “for too many public service workers, the program has not functioned the way they hoped it would.” The National Council of Nonprofits previously submitted comments on barriers that must be removed to promote and ensure forgiveness after program participants meet the requirements for PSLF. Individuals and nonprofits are encouraged to submit their own public comments by September 24; the more people and groups that submit separate comments, the better.
In Focus
Federal Debt Limit: Why Is It Important?
The federal government is facing another “debt limit crisis,” but what does that mean? Simply put, raising the debt limit (also called the debt ceiling) permits the federal government to borrow money to pay bills that it has already incurred. First created to help finance spending during World War I, the debt ceiling sets the legal limit on the amount of borrowing by the Treasury. Raising the debt ceiling does not authorize the federal government to increase spending beyond the level already approved by Congress. Rather, it allows the federal government to meet its existing obligations such as Social Security benefits, interest on debt obligations, or day-to-day expenses of the federal government.
What would happen if the debt limit is not raised? The Treasury Department can use accounting gimmicks (often called “extraordinary measures”) to continue paying bills for a few months after the debt limit is reached. But, without additional borrowing authority, a nightmare scenario would occur: the federal government would be unable to pay its obligations, i.e, default on payments due. Treasury Secretary Yellen recently warned that running out of cash or the ability to issue debt could “trigger a financial crisis that would threaten the jobs and savings of Americans...at a time when we’re still recovering from the COVID pandemic.”
Every president, regardless of party affiliation, has called for a “clean” increase in the debt limit, but partisan politics usually makes the exercise a painful experience for the economy. Even though Congress has never failed to raise the debt ceiling in time, there can be economic consequences when politicians wait until the last minute. In both 2013 and 2017 when Congress waited until the last minute to act, interest rates on government securities spiked upward, signaling investor concern over the possibility of default. This increased the government's borrowing costs, adding to the overall debt as well as causing ripples throughout the financial markets.
2021 Session Recap:
Sales and Use Taxes and Wayfair Today
The 2019 Supreme Court Wayfair decision allowed states to collect sales and use taxes on out-of-state or remote sellers, leading to considerable state legislative attention in the ensuing years and further complicating the tax-exempt status of charitable nonprofits. Since that decision, most states extended their taxes to cover online and other remote sales, which shot up during the pandemic. The resulting increases in sales tax collections were a main factor creating better-than-expected budgets for states. As a result, nonprofits exempt from paying sales taxes in their own states often found themselves liable for taxes elsewhere. This year, lawmakers in Florida and Missouri enacted laws to require remote sellers to collect and remit sales tax to the states. The legislation in Florida went further than most states, requiring deposit of sales tax collections from the measure into the state’s unemployment trust fund, which allowed the state to avoid increasing the unemployment insurance rates for contributing employers.
Additionally, states continued to consider changes to their sales tax laws affecting nonprofits. Utah Governor Cox signed legislation requiring Salt Lake County to set aside a percentage of earmarked sales taxes for certain botanical and cultural nonprofits and institutions located in the county. A bill died in Connecticut that would have exempted personal protection equipment from sales and use taxes for nonprofits. North Carolina lawmakers are considering a bill to exempt most nonprofits from paying sales and use tax when they purchase goods and services. Currently, nonprofits there pay sales tax on their purchases and can apply to the NC Department of Revenue for semi-annual refunds of the taxes they pay, which creates unnecessary red tape and cash-flow issues for nonprofits and state government alike. A separate measure would exempt nonprofits from collecting and remitting sales tax on the ticket price or admission fees at most fundraising events.
Investing ARPA Funding:
Focus on Nonprofit Relief Grants
Nonprofits across the country continue to advocate for investing American Rescue Plan Act (ARPA) dollars in ways that have the greatest impact at the local level. Here are a few examples of grants programs targeting the work of charitable nonprofits in communities:
- Maryland: Nearly 70 nonprofits in Baltimore City will receive $2 million collectively under the 2021 Baltimore Nonprofit Relief Fund, which will be used both to reimburse costs already incurred due to the pandemic and cover future needs. “As our nonprofit organizations continue to keep Baltimoreans afloat through this pandemic, I am proud that we are able to reciprocate the support,” Mayor Brandon Scott said in a statement. “This round of funding will supplement our economic recovery efforts and help these important organizations plan ahead and continue their services to support our residents as we continue to navigate the effects of COVID-19.” The administrator of the program, the Baltimore Civic Fund, will provide awards of up to $50,000 each.
- South Carolina: In August, Together SC, the state association of nonprofits, testified before the South Carolina House ARPA Ad Hoc Committee to advocate for creating a nonprofit grant program using part of the state’s approximately $2.5 billion American Rescue Plan Act allocation. GP McLeer, who is the executive director of the SC Arts Alliance and advocate for Together SC, urged the Legislature to create an SC Acceleration Grants Program and fund it at a “meaningful level” to accelerate growth, stabilize and grow employment, provide nonprofit grants in a coordinated manner, limit burden and unnecessary growth of state agencies, and achieve accountability, transparency, localized impact.
- Virginia: Loudon County, Virginia is awarding nearly $2.5 million in grants to 36 nonprofits and faith-based organizations out of the locality’s allotted $40.2 million ARPA funds. The nonprofit grant program provides awards for services in one of four categories: emergency food assistance, COVID-19 service expansion, service interruption, and nonprofit service continuity. The organizations receiving the funds range from adult and early education, direct assistance, domestic violence, employment assistance, food assistance, public and mental health, legal services, rental assistance and housing, transportation, and utility assistance.
- Wisconsin: Wisconsin Humanities Recovery Grant awards, which received funding from the National Endowment for the Humanities via its ARPA funding stream, have been made to 52 charitable nonprofits in the state. The grants “support cultural organizations that provide humanities programming and that have been adversely impacted by the pandemic.” More than $422,000 has been approved for historical societies, museums, libraries, and other nonprofits in a first round of funding. The funds may be used for salaries, utility bills, improving access through digitization of collections and programming, and more. A second round will be awarded this fall.
Status of Evictions Moratoriums
Late in August, the Supreme Court struck down the Biden Administration’s eviction moratorium that was intended to prevent evictions through October 3. The Court, in rejecting the moratorium issued by the Centers for Disease Control and Prevention, found that the agency exceeded its authority under law. According to Route Fifty, at least seven states — California, Illinois, Minnesota, New Jersey, New Mexico, New York, and Washington — and some cities have some form of eviction moratorium in place, but several of those are set to expire soon. Newly installed New York Governor Hochul announced plans to convene a special session “to address the impending eviction crisis, given the Supreme Court's decision.” Illinois’ Governor extended that state’s moratorium through September 18. While an eviction moratorium in Oregon expired in June, lawmakers approved a “safe harbor” law that gives tenants until 2022 to pay back rent.
Recovering from Hurricane Ida
Hurricane Ida devastated much of the country while also highlighting the value of state associations of nonprofits. The Louisiana Association of Nonprofit Organizations has curated extensive Natural Disaster Resources on its website. The Mississippi Alliance of Nonprofits and Philanthropy posted specific resources to aid clean-up efforts or to request assistance. The Center for Non-Profits in New Jersey created an extensive Hurricane Ida Resource Page on its website that identifies state and nonprofit informational resources, tips on making disaster-related donations, safety guidance, and best practices for recovery and planning. Nonprofit New York sent out a Statement in Response to Hurricane Ida, alerting people to vital resources and a HelpLine.
Become a Nonprofit Partner
2021 National Voter Registration Day
National Voter Registration Day this year is September 28. Always scheduled six weeks before the November election, the day is dedicated to promoting voter registration throughout the country in a nonpartisan way. Charitable nonprofits are encouraged to sign up as a partner in the work on this important day. Eligibility is open to all organizations that are nonpartisan, providing equal access, compliant with state legal frameworks, and willing to share in a post-event survey. Interested in becoming an official partner for National Voter Registration Day on Sept. 28, 2021? Sign up now for #NationalVoterRegistrationDay and be #VoteReady!
Not Waiting for Good Things to Happen
While the adage “good things come to those who wait” may work in some instances, nonprofit advocates know that the time to promote investment of American Rescue Plan Act resources in the work of charitable organizations is now. There is no time to wait, or the funds will be gone. That’s why state associations of nonprofits are aggressively raising awareness of the availability of funds, providing training and insights on promoting good ideas to government officials, and building relationships for meaningful impact. Here are a few more recent examples (others can be seen here, here, and here).
Our colleagues at the Maine Association of Nonprofits (MANP) are encouraging nonprofits to participate in special ARPA Listening Sessions this week (September 7-10). The events are designed to generate feedback on potential business and nonprofit support programs directly from nonprofit executives, business owners, and community leaders. MANP is encouraging nonprofits “to attend, raise their voices, and amplify these guiding principles for investments!” Learn more.
Throughout the summer, the Nonprofit Association of the Midlands in Nebraska conducted a series of community roundtables on ARPA funds and have recently reported their findings. First they shared detailed notes from each session (1st Roundtable - July 26th; 2nd Roundtable - August 3rd; 3rd Roundtable - August 11th), which identify numerous challenges and solutions that are replicable around the country. They also created a Funding Principles Tool and produced Draft Recommendations in five focus areas: early childhood, food, health, housing, and workforce.
Finally, this past week the North Carolina Center for Nonprofits hosted a webinar presentation, "What NC Nonprofits Need to Know about Partnering with State and Local Governments." Panelists included a representative from the NC Pandemic Recovery Office, an official from a rural county who works closely with nonprofits, a child advocacy nonprofit, and the state association of nonprofits, who offered insights into trends in nonprofits’ needs. The overarching theme of the event was discerning ways that nonprofits can engage with their local governments to advocate for meaningful and equitable allocation of local ARP funds.
Readers are also invited to review the webinar recording, Investing ARPA Funds in the Work of Charitable Nonprofits | Promoting Nonprofit-Government Partnerships, to get answers to key questions from governments and nonprofits about effective uses of Coronavirus State and Local Fiscal Recovery Funds.
In addition to providing inspiring stories of advocacy in action, these examples offer insights and tips for generating community interest in APRA spending plans that benefit the people and communities nonprofits serve.
Read more examples of Advocacy in Action,
a regular feature of Nonprofit Advocacy Updates.
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Tax Year 2018 Study of Tax-Exempt Organizations
