Making Nonprofit Votes Count
Our communities benefit from the commitment of more than 14 million employees of charitable nonprofit organizations and the service of more than 20 million board members and 60 million individuals who volunteer their time each year. The Nonprofit Votes Count campaign is based on the belief that lawmakers are more likely to listen to our ideas and needs when
they know that nonprofits are not only engaged in their communities on the frontlines, but also at the voting booths.
- Shouldn't decisions that directly affect nonprofits be voted on by the people closest to the nonprofit -- the people who work and volunteer there?
- How much easier could your work be if lawmakers knew that you were voting on decisions that affect your organization's operations and on policies and programs that help the communities you support?
Let’s make our voices heard! Vote on or before November 8. And encourage all connected to the mission of your nonprofit – your coworkers, board members, volunteers, and the people you serve – to vote and show that Nonprofit Votes Count.
- IRS Work Plan for 2017: The Tax Exempt & Government Entities Division of the Internal Revenue Service will focus its regulatory and enforcement activities in five areas next year, according to the work plan released last month. The five strategic focus areas are: (1) Exemption, including issues of non-exempt purpose activity and private inurement; (2) Protection of Assets; (3) Closing the Tax Gap by addressing issues such as employment tax and Unrelated Business Income Tax liability; (4) International
Issues; and (5) Emerging Issues such as non-exempt charitable trusts.
- Regulating Donor Advised Funds: Regulations governing the operations of donor advised funds (DAFs) have been in the works for at least a decade since Congress enacted the Pension Protection Act of 2006. Earlier this month, the Council on Foundations delivered a letter to Treasury and IRS officials outlining the potential negative implications that such regulations could have on the sector's ability to strengthen communities through philanthropy. The letter provides input on instances when private foundations may convert into DAFs and whether recipients of grants from DAFs
may treat such grants as public support to qualify for public charity status. The timing of when the long-delayed regulations will be released remains uncertain.
- Toward a Non-Itemizer Deduction: The national debate about federal tax reform invariably raises interest in re-introducing a charitable giving tax incentive for all taxpayers, and not just those who itemized deductions using Schedule A in their annual federal tax filing. A tax incentive for all, known as a non-itemizer deduction, “could increase giving without decreasing Treasury revenues or adding to IRS burdens,” according to a recent report from the Urban Institute. The report authors propose a universal deduction for charitable giving, but pair it with a
controversial floor, that is, restricting the deduction to charitable giving above a dollar amount or percent of income.
It’s finally time for the main event; the elections of 2016. Because many of the following items are extremely relevant now, we set them out here for easy access and reference.
- Why It Matters, a series of 40 articles from the Associated Press on issues ranging from the IRS and money in politics, to veterans, LGBT issues, the role of government, and much more.
- Analysis of Statewide Races, Governing, providing in-depth coverage and predictions in the dozen races for Governor, the 10 Attorney General races, and the eight campaigns for Secretary of State, as well as coverage of State Legislative contests.
- State Ballot Measures 2016, National Council of Nonprofits, summary of more about 15 ballot measures in nine states and the District of Columbia that could affect the work of charitable nonprofits.
- Voting Around the World, Tracy Schorn, DC Bar, September 26, 2016, providing humorous facts about quirky voting laws and election activities in the Unites States and across the globe.
Even before ballots are counted next month, the minimum wage is at the center of public debate across the country. Last week, the Kentucky Supreme Court ruled that cities in the Commonwealth do not have the power to set higher minimum wage rates unless the Legislature grants them such authority. At issue was a Louisville minimum wage ordinance approved in December 2014 calling for a gradual increase to $9 per hour by 2017. The Kentucky court decision mirrors action taken in Missouri in 2015 to prohibit local municipalities from enacting higher rates within their jurisdictions, a law designed to overturn higher minimum wages adopted in Kansas City and St. Louis.
This year, numerous ballot measures seek to take the decision on raising the minimum wage out of the hands of elected officials. Arizona's Proposition 206, if adopted, would increase the state minimum wage to $12 per hour by 2020 and guarantee paid sick time. Colorado Amendment 70 would raise the state minimum wage rate to $12 per hour by 2020. Maine Question 4 asks voters whether to raise the state minimum wage to $12 per hour by 2020, and adjust the rate based on fluctuations in the consumer price index. Washington State voters are considering nine statewide ballot measures, including Initiative 1433, which would increase the state minimum wage to $13.50 by 2020. Going in the opposite direction, a South Dakota ballot measure,
known as Referred Law 20, would reduce the state minimum wage for workers under age 18 from $8.50 to $7.50 per hour.
Declining State Revenues Leading to Spending Cuts
Many states are reeling from depressed first-quarter results for their fiscal years that started July 1, and now service and contracting cuts are on the table for immediate action. Kansas tax revenues came in nearly $50 million short of expectations in the first quarter. Missouri tax receipts grew by 3.6 percent, which – because of previous revenue shortfalls – is not enough to trigger the release of $175 million in spending frozen since July. South Dakota tax collections are coming
in 1.8 percent below the same period last year. Net tax collections in Nebraska were about $25 million less than expected last month, causing the Governor to cut allotments to government agencies by one percent beginning in January.
New Mexico recently took action to close a $171 million deficit by making cuts to agency spending and by closing tax-incentive loopholes, among other things. A special legislative committee in West Virginia tasked with recommending budget cuts is reportedly considering $100 million in cuts in many areas of government spending, including for public assistance programs like Medicaid and food stamps. In neighboring Virginia, the Governor is preparing for an anticipated deficit of $1.5 billion by readying a plan to eliminate scheduled pay raises for state employees and teachers, and reportedly will ask the General Assembly to dip into the rainy-day fund to keep funding intact for education, public safety, and Medicaid. Likewise, Wyoming’s Governor is expected to tap the state’s rainy day or stabilization accounts due to revenues falling $156 below projections. The Wyoming municipal association is calling instead for increasing sales and property taxes to help local governments address an economic slump there.
Michigan Moves Toward Clarifying Property Tax Exemption Standards
A key Senate committee in Michigan has favorably reported a bill that seeks to clarify the law on nonprofit property tax exemption and reduce the risk that nonprofits will be forced to challenge adverse decisions by local tax assessors. The legislation became necessary as multiple, conflicting interpretations of existing statutory and case law deprived nonprofits across the state of the exemption from property taxes that had long been recognized. Donna Murray-Brown of the Michigan Nonprofit Association testified at an
October 18 hearing shortly before the committee approved the measure. Nearly 40 other nonprofits showed their support as well. The bill will likely be considered before the full Senate in the second week of November. It is unclear whether the House will take action on the bill before the end of the year-long legislative session.
Taxes, Fees, PILOTs
Tax Breaks Galore in New York
The New York Legislature has approved 175 different types of property tax exemptions; only one of them exempts real estate owned and used by charitable nonprofits. That is the state of play in the Empire State, according to a new series of articles published by USA Today Network newspapers. While many charitable nonprofits do benefit from the exemption, as do the communities in which the nonprofits operate, not all of the full and partial exemptions appear to represent a strong public purpose, such as “hosting an NBA and NHL team for at least 10 years in New York City — a tax break carved out specifically for
Madison Square Garden.” The analysis of 17 years of data also found that $227 billion in exempt property is owned by local governments and schools. The State of New York owns about $87 billion of tax-exempt property, while another $56 billion is owned by the federal government and foreign countries.
Government-Nonprofit Contracting Reform Update
South Dakota Developing Grants/Contracts Risk Assessment Tool
State government agencies in South Dakota are developing a risk assessment questionnaire to complement a process required under the federal Office of Management and Budget Uniform Guidance. Typically, governments that utilize federal funds to hire nonprofits to perform services are required to perform risk assessments prior to finalizing a grant or contract. The intent of the risk assessment under the federal rules is to determine a nonprofit’s capacity to properly manage government funds. The Uniform Guidance, however, does not apply to grantmaking and contracting that uses only state dollars. South Dakota has established
a state grant oversight board to develop a questionnaire for government agencies to use in gauging the trustworthiness of applicants for government grants and contracts. The questionnaire is likely to be used as a supplement to the federal risk assessment process when federal funds are involved, and as a stand-alone form in other instances.
Candidates are Showing R-E-S-P-E-C-T to Nonprofits!
If ever there was doubt that nonpartisan election-related activities by charitable nonprofits can shape public opinion in powerful and profound ways, then the responses of candidates to questionnaires crafted by state associations of nonprofits should serve as conclusive proof. Readers are encouraged to check out this sampling of answers (and feel the respect) from candidates to questionnaires solicited by state associations of nonprofits in Delaware, Maine, Nevada, North Carolina, and Pennsylvania:
- “No question that Delaware and Delaware's Government could not function without a vibrant and successful NonProfit Sector.” (Gubernatorial candidate answering how the candidate’s nonprofit experiences shape her/his policy positions.)
- “The rule of law is an important basis for cooperation. Contracts must be honored. Business must be conducted ethically.” (Gubernatorial candidate addressing challenges nonprofits face when contracting with governments to provide services.)
- “I would seek the help of the nonprofit community in identifying ways in which the government regulations are falling short of expectations. Together, we will look for ways to improve upon the U.S. OMB Uniform Guidance and issues at the state level.” (State Senate candidate responding to challenges nonprofits face when contracting with governments to provide services.)
- “The work of nonprofits bridge the gaps by providing services and assets that improve communities and the economy while reducing the share of this responsibility on taxpayers.” (State Representative candidate vowing to protect nonprofit tax exemptions.)
- “I would welcome the input from non-profits as to their policy goals. If legislation would advance these goals, I would be willing to serve as a sponsor or co-sponsor.” (State Senate candidate addressing question about partnering with nonprofits to advance policies that strengthen Maine.)
- “Over 20 years ago, I formed a community collaborative composed of representatives from state agencies, business leaders and community partners, many of whom came from the nonprofit sector. Together, we worked to look for creative solutions to address unmet needs of children with disabilities.” (State Representative candidate explaining her/his personal and professional experiences with nonprofits.)
- “The nonprofit sector offers most of the services that truly strengthen Maine. I would look for more funding for creative and sustaining nonprofit work.” (State Representative candidate addressing question about partnering with nonprofits to advance policies that strengthen Maine.)
- “It is important to understand that non-profits are motivated by service and not profit. However, money is still required in order to serve in the necessary capacity." (State Assembly candidate expressing strong support for property tax exemptions and opposition to payments in lieu of taxes from nonprofits.)
- “I oppose such intimidation to get voluntary payments.” (State Assembly candidate expressing opposition to demands for payments in lieu of taxes from nonprofits.)
- “All 501c-3 non-profits should be and remain exempt from state and local taxes on all activities directly related to their mission. Services that non-profits provide should not be taxed, nor should there be taxes on admission fees paid by people attending non-profit events.” (State Treasurer candidate addressing tax policies that affect nonprofits.)
- “My experiences with these organizations have made me aware of the fact that these agencies provide valuable and needed services that government does not and often cannot provide to many residents in our communities.” (Statement of a State Senate candidate after listing service on five nonprofit boards.)
- “As it relates to nonprofits: 1. Ensure that nonprofits maintain tax-exempt status. 2. Prevent unnecessary regulations on nonprofits. 3. Promote public-private partnerships with nonprofits where feasible.” (State Representative candidate explaining her/his top three policy priorities.)
- “I believe that non-profits are unique in that the vast majority of people involved in the organizations (both volunteers and paid staff) are passionate about the mission. Therefore, when there are social or cultural issues that need addressing, government should do its best to partner with non-profits rather than trying to create more programs.” (Commonwealth Representative candidate answering how her/his nonprofit experience shape policy positions.)
- “I see firsthand how the impasse effected services; stopped families from receiving paychecks and put some non-profits out of business.” (Commonwealth Representative candidate explaining how her/his experience with nonprofits shaped views of the 2015-2016 budget impasse.)