The 28th Hawaii State Legislative session adjourned May 5. What started out as a flurry of proposals, all vying for legislative attention, became a distilled set of appropriations by session end. The bills successfully passed with relevance to the nonprofit sector and for strengthening communities were appropriations for homeless services, ACs in schools, alternative energy projects, and early childhood education. A whole host of Grant in Aids were also approved this session.

Kudos to those nonprofit advocates for their work to move the needle this session.

HANO looked out for the overarching issues that plague or enhance nonprofit operations - bills that impacted the nonprofit funding environment, regulatory matters, taxes and tax-exemptions. This session, we followed and weighed in on the following measures:

SB 2812 SD 2 HD2 CD 1 (click to view). Passed out successfully.

Amends Hawaii's charitable registration and solicitation law to require affirmative disclosures to donors by professional solicitors; clarify exemptions from registration; authorize the Department of the Attorney General to issue cease and desist orders and impose administrative fines; and make other technical amendments.

HANO supported this bill for several provisions:

  • Redefines “professional solicitor” to exclude those who plan, conduct, manage, advise, consult or prepare grant or subsidy applications for charitable organizations;
  • Clarifies disclosure requirements for professional solicitors;
  • Lowers the fees for organizations under $25,000 to $0;
  • Allows for electronic submittal of reports to the Attorney General;
  • Raises the audit requirement thresholds from $500,000 total revenue to $500,000 in just contributed revenue.

Thanks to the State Attorney General's office for clarifying this law to better reflect the fundraising environment for nonprofits, to provide more protection from fraudulent behavior, and add greater transparency to this process.

SB 2547 SD 1 HD 1 CD 1 (click to view)

Sets a schedule of periodic review of tax exemptions and tax credits, including certain nonprofit activities and functions. This bill passed out successfully. HANO will continue to monitor the review of these important exemptions.

SB 2928 SD2 HD1 (click to view)

Proposed requiring special event operators to provide reports to the State Department of Taxation on any vendors at their special events who engage in business . HANO opposed the idea of putting the onus on nonprofit special event operators to police and report on the business activity of for-profit vendors for tax purposes. Latter versions of the bill exempted nonprofit organizations from such reporting requirements. In the end, the bill did not make it out of conference and is dead this session.

SB 3024, SD 1 HD 2 (click to view)

Proposed funding for an online filing system for the State Ethics Commission for greater filing ease, as well as an appropriation for a task force to clarify state lobbying laws. This bill did not pass out of conference committee.

SB 3070, SD 1 HD 1 (click to view

This bill did not make it out of conference, but had attempted to establish legislative policies for Grants in Aid. The latest HD 1 version required an organization to negotiate a lump sum or installment repayment to the State of the grant used for the planning, design, construction, renovation, operations, or equipment of facilities when the organization discontinues the activities and disposes of the land by sale. HANO opposed the HD 1 language and provided suggested language highlighting the importance of funding project related overhead.

In this election season, we encourage nonprofits to engage with legislators in the interim between sessions to share information about your missions and to affect strong public policy in next year's new biennium that will serve your missions and strengthen your communities.

The Internal Revenue Service advises taxpayers on its website to only give out their Social Security Numbers (SSN) when "absolutely necessary." Yet the IRS has proposed a rule that would encourage nonprofits to ask donors to give out their SSNs and report them along with the amount of donations to the IRS. 

The proposed regulations would permit, but not require, charitable nonprofits to file a separate new information return with the IRS by February 28 every year (in addition to their Form 990 information return) to substantiate contributions of more than $250 in value. Nonprofits taking this option would also be required by that date to provide a copy to each donor listed (but only the portion that contains "information related to that donor").

HANO and the National Council of Nonprofits believe the proposed voluntary reporting system is inappropriate because the process could impose significant costs and burdens on nonprofit organizations, would create public confusion and disincentives for donors to support the work of nonprofits, and could lead fraudulent actors to increase targeting donors and reputable nonprofit organizations. A similar mandatory proposal was considered and rejected in the past based on numerous legal, policy, and confidentiality problems it raised.

TAKE ACTION NOW!

Send your comments to the IRS to express your concerns about the new proposed regulations. Comments must be received by December 16, 2015. To learn more, visit the National Council of Nonprofits website:

  • Click HERE for the National Council of Nonprofit's four-page analysis of this issue.
  • Click HERE for more details on what you can do to take action.
  • Click HERE for sample comments and information on how to submit your comments.

Congress returns after the Thanksgiving break with several must-pass bills – an omnibus spending bill to fund the government past December 11 and transportation legislation are at the top of the list – leaving little room or time for negotiation of a tax measure to renew numerous expired tax provisions. Caught up in the tax discussion are key charitable giving incentives: the IRA rollover and enhanced deductions for food inventories and land conservation easements. Although time is short, policymakers are negotiating on a deal to restore retroactively for 2015 and renew most of the 50+ expired tax provisions through 2016 or 2017, make some of them permanent, and add measures that are priorities for President Obama, including making permanent the expanded Earned Income Tax Credit that expires at the end of 2017. The good news for nonprofits is that the components of the House-passed America Gives More Act are considered likely to be included, but only if a deal is reached.

It appears likely that the charitable giving incentives will be included as part of the larger package restoring various tax provisions temporarily for 2015 through 2016 or 2017. Making the giving incentives permanent - which is a high priority of many in the nonprofit community - will require a significant grassroots push. Readers are encouraged to contact their Representatives and Senators and insist that the components of the America Gives More Act be included and made permanent in any tax bill passed this year.

Click here to learn more about how to take action.

From Hawaii Appleseed
 
Accessory dwelling units, secondary rental units built by homeowners on single-family properties, will be coming to Oahu soon. ADUs are one of Hawaii Appleseed’s top affordable housing priorities.

In April 2014, Appleseed released a report drawing attention to ADUs as an important part of the solution to Hawaii's affordable housing crisis and identifying the need to eliminate restrictions on ADU development. On Sept. 2, a year and a half of advocacy on ADUs culminated with Honolulu City Council's unanimously passing a bill allowing ADUs on Oahu.

According to Hawaii Appleseed, it is estimated that ADU development could result in the creation of at least 250 new housing units per year, all without any government subsidies.

To put that in perspective, Hawaii gives out around $27 million per year under the Low-Income Housing Tax Credit program — one of the few programs available to subsidize affordable housing development, which is estimated to create fewer than 300 affordable rental units annually.

"We commend the Council, Mayor, and community members for coming together to implement a sensible policy to help meet our rental housing needs," Appleseed said in its newsletter. "Upon Mayor Caldwell’s signature, ADUs will be permitted in residential areas throughout the island."

Appleseed said it will move forward with a new project to help homeowners to develop their own ADUs.

 

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