Reconnecting and Rebuilding Our Communities through Charitable Nonprofits
To every nonprofit that encouraged your staff, board, volunteers, and others to vote and have a say in their future, we salute and thank you. As Americans, we’ve just elected thousands of officials, from local school board members to the President of the United States, and collectively decided hundreds of ballot measures. While we may feel bruised by elections that were hard-fought and at times downright ugly, it is now time for nonprofits to bring people together.
Charitable nonprofits provide safe spaces where neighbors, familiar and unfamiliar, gather to improve lives and strengthen communities. There is a nonprofit ideally suited to the interests and passions of every person. Working through nonprofits, we reconnect with our communities and rediscover what binds us together. That’s when healing can happen. So nonprofits, let’s be inclusive and invite people in to join the noble work we do. Your positive actions can help model the way for our elected leaders to follow: Let’s all work together to unite, heal, and move our nation forward.
The Networks of the
National Council of Nonprofits
Making Sense of the 2016 Federal Elections
The election of Donald J. Trump as the 45th president can be cast as a repudiation of “the establishment” – including both the Democratic and Republican parties. For the first time in American history, the party taking control of the White House actually lost seats in the U.S. House and Senate, suggesting that past actions and conventional wisdom may be of little guide in predicting and planning for federal policies. Once in office, the new president will make his mark on the U.S. Supreme Court and take control of a new regulatory agenda quite different from his predecessor, likely revoking numerous executive orders that were the subject of much debate during the campaign. His legislative agenda
appears to be similar to Republican priorities in recent years: repeal and replace the Affordable Care Act (“Obamacare”), increase defense spending and make cuts elsewhere, and reform the tax code.
How these policy changes affect the ability of charitable nonprofits to advance their missions will depend on the two interlocked parts of the 501(c)(3) community. Charitable nonprofits must rally together to engage in advocacy at all levels and in all branches of government to ensure that elected officials understand the impact of policy proposals on the people and communities the politicians and their local nonprofits all serve. Also, the foundation community must make serious investments in charitable nonprofits to do that all-important advocacy work – especially at the state level that is the nexus to all policy action – to protect the work of foundations and nonprofits alike. Continue reading for a
detailed analysis of The 2016 Elections: Impact on the Work of Charitable Nonprofits.
Congress Returns for Lame Duck Session on Spending Measures
The House and Senate return to Washington, DC this week to complete action on spending and other pressing issues put off until after the elections. The election of President-Elect Trump creates an immediate dilemma for congressional leaders: do they complete work on spending bills for the current fiscal year (October 2016 – September 2017), or enact another stopgap spending measure that puts off final decisions until March 2017? Senate Majority Leader McConnell (R-KY) reportedly favors completing action on the 11 bills that fund the federal government through September 2017 so that the new Congress and Administration can start with a clean slate of legislative priorities. Some conservatives in the House, however,
appear to be insisting on passing only temporary measures now with the goal of protecting their longer-term spending decisions from vetoes by a then-retired President Obama. Once that scheduling challenge is resolved, the final days of the current 114th Congress are not expected to see as many showdowns on policy riders, i.e., substantive legislative provisions attached to spending bills, as has been seen in prior years.
The Overtime Final Rule in the New Political Environment
What impact, if any, do the results of the November 8 elections have for the implementation of the Labor Department’s Overtime Final Rule, scheduled to go into effect on December 1? That is the lead question on the minds of perhaps millions of hourly employees, managers, human resources professionals, chief financial officers, executives, and boards of nonprofit and for-profit organizations throughout the country. The clearest answer could come, if at all, after a federal court hearing on November 16 at which plaintiffs in two lawsuits are seeking to block the overtime rule from going into effect, arguing that the rule is
unconstitutional and was improperly promulgated by the Labor Department. Most legal analysts express doubts about the likelihood of success in the cases. A bill delaying the effective date until June 2017 passed the House in late September, but Senate passage is uncertain because Senate Democrats are likely to filibuster the bill and President Obama has vowed to veto it. Next year, President Trump could alter the overtime rule, but only after the full regulatory process dictated by the Administrative Procedures Act is exhausted. In the alternative, Congress could seek to revise the underlying Fair Labor Standards Act.
Given that implementation of the Overtime Final Rule on December 1 is likely, the National Council of Nonprofits encourages nonprofits to learn how wage and hour laws apply to their operations. It is important to recognize that the law applies differently in every state, so a nationally focused set of guidelines or instructions will likely leave nonprofits blind to key nuances of
state laws that apply in their states. To help organizations comply with these complicated laws, the Council of Nonprofits has compiled resources from across the state association network. See, State Overtime Final Rule Resources.
Mandating Pay to Play: Beginning in 2017, nonprofits wanting to participate in the federal employees’ Combined Federal Campaign (CFC) will be required to pay multiple fees to the federal Office of Personnel Management’s program processor. OPM, which announced the new fees on the night after the elections, plans to charge nonprofits new costs that range from upfront fees, listing fees, as well as distribution fees assessed against pledges received. United Way Worldwide has compiled information on the CFC pay to play requirements and is encouraging nonprofits to take action to express concerns.
State and Local Election Results
The repudiation of the establishment seen on Election Day in the presidential race and ballot measures (see next article below) did not play out with equal force at the state and local levels. Voters re-elected incumbents to state legislatures at potentially record levels. Six legislative chambers flipped control from one party to the other, three from Democratic to Republican control, and three switched from Republican to Democratic control. Legislative chambers in a few other states are in transition as some elected officials change party allegiances and special elections are made necessary by politicians taking other
positions in government.
The spread of trifecta government at the state level – as in one party controlling the governorship and majorities in both the state House and Senate – may escalate a trend among states to adopt austerity budgets and tax plans that undermine their long-term fiscal stability. Early pronouncements from incoming and re-elected office holders suggest that policy decisions will be not only top-down from the federal government, but also bottom-up from localities and spread horizontally from one state to others. The actions and reactions are equally dynamic among the three branches of government as judges, legislative bodies, and executives and administrative agencies exercise their separate authority and judgment. Continue
reading for a detailed analysis of The 2016 Elections: Impact on the Work of Charitable Nonprofits.
Voters Approve Ballot Measures on Minimum Wage, Campaign Finance
Voters across the country gave their support on Election Day to issues that have seen little action in the U.S. Congress, and the results were far more progressive than the candidates they elected. As a result of the voting, for instance, the minimum wage hourly rate is going up in four states: Arizona, Colorado, Maine, and Washington State, as well as in numerous communities. Arizona's Proposition 206, which passed with nearly 60 percent of the vote, begins phasing in a higher rate on January 1, 2017, and also guarantees 40 hours of annual paid sick leave to employees of businesses with 15 or more employees.
Voters also expressed support for campaign finance reforms. Four separate ballot measures asked the electorate to set the rules on campaign contribution limits and address whether to restrict the U.S. Supreme Court's Citizens United v. Federal Election Commission decision. In that case, the Court held that political contributions and spending must be treated as constitutionally protected free speech. California's Proposition 59 and
Washington State's Initiative 735, both of which passed, urge their respective state's congressional delegations or state's elected officials to use their authority to overturn or repudiate Citizens United, potentially through an amendment to the U.S. Constitution. Missouri, the only state without any limits on campaign donations, voted to re-impose limits on
campaign contributions that had been abolished in 2008. South Dakotans approved a ballot measure that extensively revised campaign finance laws by, among other things, lowering contribution amounts to political action committees, political parties, and candidates for statewide, legislative, or county office, and setting up a voluntary publicly financed campaign system.
Pennsylvania Legislator Seeks to Legislate Discredited “Overhead Ratio”
A Representative in the Pennsylvania General Assembly has come upon an old notion for supposedly ”protecting” donors to charitable nonprofits, an idea that runs counter to constitutional protections and modern research about nonprofit effectiveness. In October, Representative Anthony DeLuca of the Pittsburgh area introduced a bill that would disqualify a nonprofit from the sales tax exemption if it spends “too much” on “overhead” and not enough on program services. Specifically, the proposal targets nonprofits spending less than 60% (averaged over 3 years) of annual functional expenses on
program services. Proof of spending levels deemed appropriate under the bill would either be identified in the organization’s IRS Form 990 or by a separate reporting to the Pennsylvania Secretary of State. The U.S. Supreme Court has consistently ruled that it is unconstitutional for states to mandate how much nonprofits spend on program activities versus fundraising communications. Moreover, the bill’s focus on spending ratios runs counter to nationwide efforts to eradicate the “overhead myth,” the false notion that lower overhead costs somehow equate to greater efficiency by an organization. See “Why ‘Overhead’ is Not a Myth.”
Taxes, Fees, PILOTs
- Sales Taxes: The Louisiana Tax Review Commission held a hearing on November 2 to consider proposals to change sales tax exemptions for targeted nonprofits and specific transactions. The Commission reportedly is considering three changes: (1) purchases by nonprofits that sell donated goods; (2) sales tax collected by certain nonprofits; and (3) tangible personal property sold to food banks. The Commission is expected to make recommendations to the Legislature by the end of the year.
- PILOTs: The Mayor of Burlington, Vermont is asking the University of Vermont (UVM) and Champlain College to increase their payments in lieu of taxes (PILOTs) by a combined $1 million to help pay for his infrastructure agenda. The institutions paid a total of $1.8 million in fiscal year 2016. Additionally, the Mayor is informally working with the UVM Medical Center to make “philanthropic gifts” to support the infrastructure program.
November is Nonprofit Awareness Month in Idaho, and the many ways people there are celebrating the work of charitable nonprofits in communities can serve as inspiration for all of us.
The Idaho Nonprofit Center developed an Idaho Nonprofit Awareness Month Toolkit that encourages nonprofits to celebrate in ways that best reflect and recognize the diversity of communities. Nonprofits are reaching out to mayors, city council members, and other local elected officials to sign a
proclamation or attend a ceremony highlighting the work nonprofits are doing in engaging their communities. Still others are hosting events at nonprofit facilities to give public officials a chance to see community impact in action.
Social media postings (at #IdahoNPAwareness) demonstrate great creativity. Readers can find inspiration from dance and arts groups and a celebration of voting, among other activities.
Local sports teams have joined the celebration this year by showing nonprofit employees and their families how much they are appreciated. Through a partnership with Boise State University and the Idaho Steelheads hockey team, nonprofit employees and their families are invited to pack the stadiums and cheer on their teams throughout November, while enjoying discounted tickets and other perks. A portion of the ticket sales support the work of the Idaho Nonprofit Center.
While a whole month may not be enough time to raise awareness for all of the economic, cultural, and community impact of nonprofits, it’s clear that Idahoans benefit from that impact every day. The same is true for residents throughout the United States.