Alert for All Nonprofits Across the Country
Bill Threatens to Mandate Website, Fundraising Text
California legislation seeks to force every nonprofit in the country that solicits funds in California (which means every nonprofit with a “Donate Now” button) to put a link on its home page, and print a disclosure on all other solicitation materials, directing potential supporters to the California Attorney General’s website. The legislation gives vague instructions on what the
government website must provide, putting nonprofits at the mercy of an elected partisan’s changing views on what’s “appropriate” on such things as overhead, compensation, and advocacy – as well as which charitable causes are worthy. If enacted in California, other states are likely to pass copycat laws that would mandate space on nonprofit home pages and draw multiple Attorneys General into debates about the appropriateness of nonprofit data and missions. After initially failing to pass one committee, the bill has been revived and referred to another committee of the State Assembly and will likely be the subject of a hearing this month.
CalNonprofits issued a call to action today urging nonprofits in the state to contact members of the Assembly Appropriations Committee to alert them to the harmful impact of the misguided legislation. Since all nonprofits across the country could be adversely affected by the legislation, all are urged to spread the word to colleagues in California and to take other appropriate action. See the new CalNonprofits letter in opposition, a fact sheet, and the letter signed by hundreds of nonprofits that made the case for transparency and against needless and constitutionally flawed mandates.
Multiple Tax Ideas Are Floating in Congress Despite Low Expectations of Passage This Year
The conventional wisdom that Congress will not pass significant tax legislation this election year is not stopping Representatives and Senators from promoting ideas and action. A prominent House Democrat introduced a bill last month to return the maximum federal estate tax rate to 45 percent, as it was in 2009, and lower the threshold for exemption from the estate tax from the current $5.45 million to $3.5 million ($7 million, jointly). Last week, the House tax committee approved a bill (H.R.
5053) that would limit the donor information that most nonprofits would need to include on Schedule B of Form 990. Under the legislation, nonprofits would no longer be required to report on their 990s the name, address, or other identifying information for most contributors. The House has already passed anti-IRS bills to divert user fees paid to the IRS into the general fund under the control of appropriators (HR 4885) and to prevent hiring of any new IRS employees who have serious tax
delinquencies (HR 1206).
The Senate has not taken action, but several issues are under discussion. The chairman of the Senate tax committee reportedly is considering a package of administrative tax reforms, including extending the time period for filing a civil suit against a wrongful levy, holding taxpayers harmless for improper levies on retirement savings plans, and mandating retention of email records of senior IRS employees for 15 years. A rare bipartisan bill, the "Charities Helping Americans Regularly Throughout the Year Act" (CHARITY Act), S.2750, would, among other things, permit IRA rollovers into donor advised
funds, streamline the foundation excise tax by setting a fixed rate of one percent (previously proposed in the America Gives More Act), mandate electronic filing of Form 990s, and establish an adjustable Volunteer Mileage Rate pegged to the rate for medical/moving purposes (currently 19 cents).
Proposed Overtime Regulations: A Review of What is Known
Rumors are flying about when the Department of Labor will release its final overtime regulations and what the new rules will say. Little is known publicly but here are key details for consideration.
- Timing: Rumor has it that the overtime regulations will be finalized on or before May 16. This speculation is based on a memo from the Congressional Research Service estimating that a later publication date by the Department of Labor could subject the overtime rule to congressional review and disapproval in 2017, after a new president has been inaugurated. The draft regulations are currently under review by the Office of Management and Budget, the last step in the process before publication in the Federal Register, so the prediction of action before May 16 is possible. Once
published, it is anticipated that the regulations would go into effect 60 to 180 days later. The Society of Human Resource Management (SHRM) is speculating that the effective date of the rule will be in September.
- Blocking Actions: Two strategies are available to Congress for preventing the new regulations from going into effect: adopting a resolution of disapproval under the Congressional Review Act or enacting specific legislation, such as the Protecting Workplace Advancement and Opportunity Act (S. 2707 and H.R. 4773), which would nullify the proposed rule, among other things. Both actions require either the President’s approval (which is unlikely, given that the proposed rules are coming from his Administration) or sufficient votes (two-thirds of both the House and Senate)
to override his expected veto.
- Substance: No one outside of the federal government knows what the final regulations will mandate. DOL could raise the salary level threshold to $50,440, as proposed in the draft regulations made public last July, opt for a lower threshold, phase in the new level over a period of years, or adopt a new approach. It is not expected that the Labor Department will create a new exemption for nonprofits or other groups of employers.
- Nonprofit Coverage: Whether or not a specific nonprofit is covered by the final overtime rules, and by the underlying Fair Labor Standards Act (FLSA), can be a complicated question. See the discussion in the analysis of the proposed regulations by the National Council of Nonprofits. A former Labor Department lawyer issued an analysis making the case that many nonprofits would not be affected by the change in overtime rules because they are not covered by the
federal FLSA. That analysis did not acknowledge, however, that all states have their own wage and hour laws that may apply, or that several states, including Maryland, Missouri, Ohio, and North Carolina, incorporate the federal overtime
regulations into state law, thus automatically applying any new regulatory requirements to almost every employer in those states.
Index of Human Needs Rose in 2015
The level of American need rose in 2015 by 15 percent, reversing the trend in improvements seen from 2012 until 2014, according to an update of the Human Needs Index (HNI). The HNI, created by The Salvation Army in partnership with the Indiana University Lilly Family School of Philanthropy, is a measure of human needs based on objective monthly data on services often provided by charitable nonprofits: meals, groceries, clothing, housing, furniture, medical assistance, and help with energy bills. In the past decade, the HNI reached its highest level in 2012 (3.00) and began to trend downward in 2013 (2.57) and
2014 (1.97) before an increase of need in 2015 (2.28). North Dakota (3.80), Nevada (3.51), Pennsylvania (2.27), Massachusetts (2.25), and Colorado (2.13) topped the list of states with the highest Human Needs Index values in 2015. “The Index shows a reality that is different than what people might assume from seeing positive reports like increases in employment and minimum wage,” said Lt. Col. Ron Busroe, National Community Relations and Development Secretary with The Salvation Army. “While those are positive developments, we cannot forget that a significant part of the population can’t make ends
meet and is experiencing real need.”
State Activities Addressing the Student Loan Crisis
Other states are weighing in on addressing the student loan crisis, beyond the efforts by CalNonprofits' Nonprofit Student Loan Project, and Providers’ Council in Massachusetts to have the Legislature enact a fund to help low-paid employees pay back their student loans, both reported in the April 18 edition of Nonprofit Advocacy Matters.
- Maryland: Last week, Maryland’s Governor signed legislation approving a plan by Montgomery County to create a student debt refinance program. The Legislature authorized the County to use tax-free bonds to provide a system of financial assistance, consisting of affordable grants, loans, and other aids to enable County residents, graduates of the county public school system, individuals employed by the county government or public school system, and other individuals to attend secondary education. The program reportedly is modeled on the Minnesota SELF Refi Program, which offers interest rates as low as 3 percent for refinancing student loans of Minnesota residents.
- Minnesota: Legislation pending in Minnesota aims to promote awareness of the federal loan forgiveness program by requiring state government to prepare and send out informational materials including a one-page letter, fact sheet, and answers to frequently asked questions. The bill would also require public service employers, i.e., charitable nonprofits and governments, to notify employees annually of potential eligibility in the program and make an employment certification form available. The legislation has the support of the Minnesota Council of Nonprofits, teachers unions, and others.
Nationally, student loan debt is estimated by the Federal Reserve to exceed $1.3 trillion. Many nonprofits recognize that student debt is not only an important public policy issue, but also a personal and personnel matter that can cause individuals to abandon nonprofit work altogether.
States Consider Reforms to Charitable Registration Laws
With every legislative session, states across the country consider a range of reforms to existing charitable registration laws. This month, Wisconsin enacted changes to its charitable registration law that raise the charitable registration threshold from $5,000 to $25,000 in revenues and increase the audit threshold from 400,000 to $500,000. The law shifts recordkeeping responsibilities between nonprofits and professional fundraisers, and increases to 12 months the amount of time charitable organizations have to file their reviews and audited financial statements. Elsewhere, the Colorado Nonprofit Association is supporting a bill that clarifies the Charitable Solicitation Act registration process and strengthens the ability of the Secretary of State’s office to ensure compliance with the law. Called a “clean-up bill,” the measure deals with withdrawals of registrations, rights to administrative hearings, and the power of the Secretary of State to issue cease and desist orders. A separate Colorado bill would require disclosures and reporting by paid solicitors and increase to $10,000 the penalties for knowingly violating Colorado Charitable Solicitation Act. Significantly, legislators removed a provision in an earlier version of the legislation that would have required paid solicitors to secure surety bonds.
Ethics, Government Officials, and “Nonprofits”
Virtually all charitable nonprofits are independent of government, but the line often gets blurred when politicians set up 501(c)(4) social welfare nonprofits to advance their agendas. Last week, top aides and allies of New York City Mayor de Blasio were subpoenaed in relation to an investigation into fundraising for a non-charitable nonprofit to advance the mayor’s policy priorities. The Campaign for One New York, which has since closed, raised $5 million beginning in 2013 to
support policy proposals for universal pre-kindergarten and a rezoning plan that would aid in his effort to build more affordable housing. Such funds are not uncommon. Los Angeles Mayor Garcetti established a nonprofit organization last year, modeled on one created by New York City’s former Mayor Bloomberg. The Mayor’s Fund for Los Angeles raised over $14 million in one year to promote such policies as keeping parks in dangerous areas open after dark for civic programs, funding new domestic-violence response teams at police stations, and a water conservation program. Watchdog groups have expressed
concerns that the donors to the lobbying arms of politicians skirt campaign finance laws and provide opportunities for entities looking to curry influence with elected officials through the size of their checks.
Modeling the Way to Voter Engagement
Many people only pay attention to the electoral process in the year of a presidential election, even though primary and general elections take place every year in every state at the local, state, and congressional levels. Fortunately, there are several organizations where people make it their day jobs to help individuals register and vote, stay informed about the issues of the day, and what the laws say in various jurisdictions. The League of Women Voters and the Voting Information Project of the Pew Charitable Trusts come immediately to mind.
For many nonprofits, engaging voters in the electoral process is right in line with their missions of solving problems in their communities. The national organization Nonprofit VOTE does pioneering work in connecting nonprofits and their constituencies to the voting booth, providing monthly webinars, resources, answers to common questions, took kits, and, most importantly, clear instructions on staying nonpartisan. A special program, Nonprofit Votes Count,
is dedicated to promoting voter registration and voting by people connected to nonprofits – employees, board members, other volunteers, and constituents.
Those are all national organizations and national movements. It is fair to ask who is doing the work at the local level; who is modeling the way to voter engagement in my community?
On a recent webinar, several state associations of nonprofits and regional associations of grantmakers answered that question in their states, and provided examples of nonpartisan activities from which all can learn.
- The Association of Baltimore Area Grantmakers has held a mayoral candidate forum and is connecting affinity groups of Maryland foundations with public officials to identify opportunities for collaboration.
- Providers’ Council of Massachusetts has a long history of engaging human service workers and nonprofits in the election process, including its Care Vote initiative to demonstrate why voting is important (and providing a voter registration page on its website), and the Caring Force, a coalition of 20,000 individuals focused on advancing public
- Southern California Grantmakers, an association of foundations in and around Los Angeles, has a three-step plan to help organizations make the greatest impact on crucial issues in the region: educate, engage, and take action. Examples of past activities include a mayoral candidate forum as part of a public policy conference and partnering with others to focus on child welfare issues in a local race.
- The North Carolina Center for Nonprofits has conducted candidate forums and regularly asks candidates at the state level to complete candidate questionnaires. The state association is also active on a ballot initiative, which is treated under the tax laws as lobbying rather than a forbidden partisan election-related activity.
Election related activities are part of larger continuum of civic engagement for many in the nonprofit community. Through many of the activities described above, nonprofits are able to further their missions and impact in communities, build relationships with potential and current elected officials, and increase the general understanding of policy issues of importance to nonprofits and philanthropy.