National and state public policy updates from NCNA
By the National Council of Nonprofit Associations
Pennsylvania nonprofits create state legislative caucus
This month Pennsylvania General Assembly Members launched the Charitable Nonprofit Caucus, a bipartisan, bicameral forum through which lawmakers can collaborate on legislative and regulatory issues impacting charity and philanthropy in their state. Developed by the Pennsylvania Association of Nonprofit Organizations (PANO) and the United Way of Pennsylvania, the goal is to enhance the ability of nonprofits to achieve their missions on behalf of the Commonwealth, using the Caucus infrastructure to serve as a resource for information, education, vision and advocacy on nonprofit issues.
Thirty charities and foundations representing arts and culture, education, religion, health care, human services, and other subsectors will advise the Caucus. “State government and charities share the common goal of promoting quality of life in our communities,” Joe Geiger, PANO’s executive director, said. David Ross, PANO’s public-policy officer added, “The caucus will help both nonprofits and lawmakers by preventing the unintended consequences of otherwise good legislation.” Charities would like to discuss legislation in areas like charitable tax exemptions, sales taxes on services, lobbying, volunteerism, and government money for human services and the arts.For more news on how nonprofits are finding their nexus in state government,see the Massachuseets state focus below.
Federal Nonprofit Policy Updates
IRA Charitable Rollover Extender Still Tied to AMT Relief – While lawmakers have been attempting to extend the IRA charitable rollover provision, its fate in the House-passed Renewable Energy and Job Creation Act of 2008 (HR 6049) continues to be tied to passage of Alternative Minimum Tax (AMT) relief. The House passed HR 6275, the AMT relief act June 25, with full offset of the $61.5 billion bill that would protect 25 million taxpayers from higher taxes. But Senate Republicans are adamant on preventing revenue-raising offsets. Action on these bills in the Senate will not resume until after the July 4th recess beginning today and ending July 7th.
Charitable Volunteer Mileage Deduction in Play – Two bills, HR 2020 and HR 1827, seeking to set the charitable mileage deduction at the same variable rate as business travel, are before the House Ways and Means Committee, while yet another has been introduced (HR 6283). Meanwhile, two others have been introduced in the Senate and referred to the Finance Committee (S3032 and S403). The charitable mileage deduction is set by statute while the business deduction can be adjusted by the IRS, as it just has done (IR-2008-82) increasing the standard mileage rate to 58.5 cents, more than four times as much as the statutory charitable deduction of 14 cents.
2009 Federal Budget Work Begins Mark-up Stage – House Appropriations subcommittees began marking up bills this past month that will eventually become the backbone of what the government spends in fiscal 2009. This work follows Congressional approval earlier in June, of the 2009 fiscal year budget resolution that OMB Watch calls “a human needs-oriented approach to spending”. While not binding, the resolution is a frame for the new administration’s spending bills. “This agreement, we believe, will strengthen the economy and create jobs,” Senate Budget Chairman Kent Conrad (D-N.D), said during the debate. “It will do that by investing in energy, in education and infrastructure. It will expand health coverage for our kids. It will provide tax cuts for the middle class.” But the committee’s ranking Republican, Judd Gregg, (R-NH) emphasized that “For the second year in a row, the Democratic majority has crafted and passed a tax-and-spend budget — one that most Americans can’t afford as they struggle with a slowing economy and rising food and fuel costs.”
Pending Medicare Cuts Not Yet Resolved – Efforts to reverse a 10.6 percent cut in physician payments under Medicare are stalled while Democrats and Republicans negotiate on how to pay for it. Doctors say the cut is unaffordable and that they might refuse new Medicare patients if it takes effect. A law enacted in December gave doctors a 0.5 percent increase in Medicare reimbursements for six months but that temporary “patch” expires July 1. Meanwhile, AARP’s “Keep Medicare Fair” advocacy campaign aims that any legislation to help the physicians not be funded by an increase in premiums for elderly Medicare beneficiaries. Prior efforts by the House to delay Medicaid cuts with the Protecting the Medicaid Safety Net Act of 2008 (HR 5613) have not been addressed yet in Senate action.
Federal Protection of Voting Rights Upheld – A challenge to a 25-year extension of the protections of the Voting Rights Reauthorization Act of 2006 was rejected by a federal three-judge panel in Northwest Austin Municipal Utility District Number One v. Mukasey (U.S.D.C., District of Columbia, May 30, 2008). In a unanimous opinion, the Court strongly disagreed with the claim that racial discrimination in voting was no longer a sufficient problem to justify federal protections: “...given the extensive legislative record documenting contemporary racial discrimination in voting in covered jurisdictions, Congress’s decision to extend section 5 for another twenty-five years was rational and therefore constitutional.” In a press release, Jon Greenbaum, director of the Voting Rights Project for the Lawyers’ Committee stated: “Today’s ruling caps years of tireless work across the civil rights community to ensure that the irreplaceable protections of the Voting Rights Act remain in place so long as the scourge of racial discrimination threatens our democratic process.”
Court Rules in Favor of Tougher Election Advocacy Rules – In Shays v. Federal Election Commission, (D.C.C.A.,June 13, 2008), the U.S. Court of Appeals for the District of Columbia struck down rules promulgated by the Federal Election Commission (FEC) to implement the Bipartisan Campaign Reform Act (BCRA). Under the FEC regulation, an organization and candidate could work together on a communication as long as the communication did not contain express advocacy or use material from a candidate's campaign, and the ad is run outside of the 90/120 day windows prior to election days. In its decision, the Court allowed the regulation of communications during the 90/120 day windows but held that communications outside the window must be further regulated. The Court stated that many other communications are intended to influence federal elections, and that the FEC's rule not only makes it very possible for soft money (contributions and expenditures that are not subject to federal restrictions) to be “used in connection with federal elections, but it also provides a clear roadmap for doing so, directly frustrating BCRA's purpose." The FEC must now either appeal the decision or rewrite the regulations defining "coordinated communications", "get-out-the-vote activity", "voter registration activity," and a regulation allowing federal candidates to solicit soft money at state party fundraisers.
CLPI Releases New Principles and Practices for Public Interest Lobbying – The Center for Lobbying in the Public Interest (CLPI) recently released Smart and Ethical Principles and Practices for Public Interest Lobbying, a benchmarking tool nonprofits can use to assess their current lobbying work and set aspirations for their future lobbying efforts. The result of a collaborative development process with a group of nonprofit leaders and funding by the Rockefeller Brothers Fund, the principles and practices are CLPI’s response to the need for nonprofits to claim public interest lobbying as an honorable and effective strategy for advancing their missions.
IRS Updates
IRS and governance – The IRS should proceed with caution in promoting nonprofit governance according to the Advisory Committee on Tax Exempt and Government Entities (ACT). ACT recently released its report and devoted substantial attention to the IRS relationship with “good governance” of nonprofits. The Report’s Executive Summary states that “it is not at all clear that requiring specific governance practices results in greater compliance with the tax laws. In fact, superior board governance may have much more to do with the values, active engagement, and accountability of those in charge than with the adoption of procedures and policies.” In advising the IRS to proceed with caution, ACT outlines ten concerns (“one size does not fit all”, nonprofits are “governed by Boards, not by the IRS”) and makes twelve recommendations with commentary. Just a few:
- specific governance practices should be mandated only in rare and limited circumstances;
- the IRS should explain the specific relationship between tax compliance and each governance practice about which it is inquiring; and
- education implemented thoughtfully, is more appropriate than pressuring change.
To read the full report, start at page 83.
IRS Election Year Rules for Nonprofits – The Service has provided a Powerpoint presentation and accompanying script for nonprofits on rules pertaining to lobbying and advocacy.
Which 990? – Wondering which 990 form your small or midsized nonprofit will be filing for its next tax years? Many nonprofits will have the opportunity to migrate to the 990-EZ.
Nonprofits may file the 990-EZ for: If gross receipts are: If assets are:
2008 tax year (filed in 2009) > $25,000 and < $1 million < $2.5 million
2009 tax year (filed in 2010) > $25,000 and < $500,000 < $1.25 million
2010 and later tax years > $50,000 and < $200,000 < $500,000
If you think your nonprofit will be filing the 990-EZ, an almost final draft is available for your review on the IRS website. Also, according to the IRS, instructions for the EZ will be forthcoming when the 990 instructions are finalized and released.
State Nonprofit Policy Updates
Controversial California Legislation Transforms Into Voluntary Foundation Commitments – Faced with legislation that would require them to disclose their ethnic composition and detail grants awarded to minority organizations, ten of California's largest foundations agreed to a multimillion-dollar, multiyear investment in minority communities. In return, a bill claimed to be an effort to impose racial diversity on charities was dropped. According to a 2006 study by the Greenlining Institute, which sponsored the legislation, only 3.6 percent of grant dollars from the nation's top 24 private foundations went to minority-led organizations.
The foundations said in a joint statement that, "By the end of 2008, we plan to announce a comprehensive set of grant-making activities, which we expect to be overall in the multimillion-dollar range and over several years." Foundations involved in the agreement include the William and Flora Hewlett Foundation, the Ahmanson Foundation, the California Endowment, the James Irvine Foundation, the UniHealth Foundation, Ralph M. Parsons Foundation, the California Wellness Foundation, the Annenberg Foundation and the David and Lucile Packard Foundation. Sacramento Bee, 6/24/08
State Government Nexus for Nonprofits Created in Massachusetts – Our federal and state governments typically relate to nonprofits through a regulatory framework. But perhaps there is a trend beginning to proactively support nonprofit arenas. We have seen it recently with California’s appointment of a cabinet level position for volunteer management, and Maryland’s enactment of capacity building support for nonprofits. Now the Massachusetts Governor has launched an initiative to expand so-called creative industries in the state, appointing a first-in-the-nation "creative economy" director whose role is to expand a diverse sector that includes cultural institutions and arts nonprofits. Beyond the direct employment provided by museums, art galleries, and design and other creative firms, the vitality of the local arts and cultural scene is increasingly viewed by development specialists as key to attracting knowledge workers expected to drive 21st century economies. "What's notable about this is it's statewide and at a high-priority level," said Anne L'Ecuyer, associate vice president of field services at Americans for the Arts, an advocacy and service group in Washington, D.C. "This is big news for our industry." Read more in the Boston Globe.
Legislative Activity
In June, state legislators introduced dozens of bills that impact all nonprofits in their respective states. Below is a partial list of these bills, listed alphabetically by state. Unless otherwise noted, the bills below have not become law.
CA | Capacity Building and Microenterprise Development
AB 816 would require the Business, Transportation and Housing Agency to implement a 36-month program using contracts with nonprofit intermediaries to provide grants to microenterprise development organizations specializing in capacity building. The bill would appropriate $5,000,000 from the General Fund to the agency for these purposes.
CA | State Appropriations and Funding Opportunities
SB 1067 would make appropriations for the support of the state government and public purposes by allowing for funding of nonprofit organizations whose missions support the following entities: the California Tahoe Conservancy; the Habitat Conservation Fund; the River and Coastal Protection Fund of 2006; the State Coastal Conservancy Fund; the Office of Emergency Service; the Department of Parks and Recreation; the Office of Statewide Health Planning and Development; the Department of Corrections and Rehabilitation; the Department of General Service; and the Board of Administration of the Public Employees' Retirement System.
CA | Raffle Receipts and Noncash Prize Provisions
AB 1588 would decrease the percentage of gross receipts from charitable raffles required to go to beneficial or charitable purposes from 90% to 50% for a 50/50 cash raffle, and from 90% to 60% for a dream home raffle. The bill would likewise place certain restrictions on any noncash prize purchased in connection with a dream home raffle.
DE | Disclosure of Nonprofit Affiliation
HB 435 would require elected public officers, including members of the General Assembly, to annually disclose to the Public Integrity Commission the name of every nonprofit organization, community association and trade group of which they are a board or council member.
FL | Governance Provisions
HB 205 would alter provisions related to the installation, powers and procedures of boards and executives of corporations not for profit, including allowing for the removal of a director without cause by a two-thirds vote (or greater, as stated in bylaws) of the board that elected that officer. As well, the bill would govern the rules related to mergers of these corporations not for profit and legal, administrative and operational protocols related to such restructurings.
HI | Charity Registration Requirements
Beginning in 2009, Hawaii charitable organizations will be required to register and file annual financial reports with the Department of the Attorney General. The new law, signed June 13th, also prohibits charitable organizations from using the services of an unregistered professional solicitor or fundraising counsel.
LA | Financial Disclosure Statements
HB 635 would require the state inspector general, the legislative auditor, the head of the governor's transition team, each member of the State Civil Service Commission, and each member of the Board of Commissioners of the Louisiana Stadium and Exposition District to file Tier II financial disclosure statements. Among other items related to finances and affiliations, the statements would include information on nonprofit organizations in which the individual or his/her spouse is a director or officer. For additional information, visit the public policy and advocacy webpage of the Louisiana Association of Nonprofit Organizations.
NC | Public Solicitation
S 2123 would exempt the city of Durham from certain provisions of the general statutes regarding solicitations in, on, and near a public street or roadway. For more information, visit the public policy and advocacy webpage of the NC Center for Nonprofits.
NC | Funding and Program Opportunities
H 2436 finally sets forth state appropriations for 2007 and authorizes nonprofit eligibility for funding and participation related to the following initiatives: the Support Our Students program; the Sexual Assault and Rape Crisis Center Fund; and the Home Protection Program.
NH | Real Estate Provisions for Nonprofits
HB 1270 would limit the creation of possibilities of reverter, rights of re-entry, and executory interests to real estate conveyances with a public or charitable purpose.
NJ | Gift Regulations
S 1936 would revise restrictions on the acceptance of items of value by members, employees and/or officers of the legislative and executive branches. The bill would allow an officer, employee or member to accept a gift that he or she reasonably and in good faith believes to have a value of less than $50, provided that the cumulative value of gifts from one source does not exceed $100 in each calendar year. (A gift valued at less than $10 does not count toward the $100 limit.) The new restrictions set forth in the bill would not pertain to any service, advice, assistance, appearance, speech or other matter related to the officer, employee, or member's official duties; of particular note, the bill’s provisions would not apply to the cost of attendance at a charitable event.
NJ | New Jersey Borough Enterprise Zone Program
A 2999 would permit the establishment of enterprise zones by qualified municipalities in order to encourage business development in small municipalities which are substantially developed yet have limited growth potential due to a lack of available land. The bill requires the formulation and adoption of a zone development plan as well as a zone development corporation, which shall include on its board of directors representatives of the municipal government, the business community, and community organizations, including nonprofit organizations. For more information, refer to the advocacy information provided by the Center for Non-Profit Corporations.
NY | Property Tax Exemption
AB 1573 would grant a real property tax exemption, at the option of the local taxing authority, to nonprofit organizations that purchase real property after the particular municipality`s levy of taxes or taxable status date. To qualify, the organization would be required to file an application for exemption with the assessor.
OK | Disclosure Labels Requirement
SB 2891, which becomes law on November 1, 2008, declares the following acts “unfair business practices” unless receptacles bear appropriate disclosure labels: the solicitation of used goods or clothing by a for-profit entity; the solicitation of used goods or clothing by a for-profit entity in order to sell the items and donate a percentage of the profit to a charitable organization; the solicitation of used goods or clothing by a for-profit entity in order to sell the items and donate a flat amount to a charitable organization.
PA | Impact Assessment of Tax-Exempt Properties on Municipalities
HR 459 would direct the Legislative Budget and Finance Committee to study the fiscal impact of tax-exempt properties on the finances of municipalities. The resolution would also call for the committee to review alternatives to address the burden of limited tax bases created by tax-exempt properties and to make recommendations on ways to assist tax authorities with a high concentration of tax-exempt properties. More information on nonprofit advocacy can be found at a resource page provided by the Pennsylvania Association of Nonprofit Organizations.
SC | Government Reorganization
H 4538 would transfer responsibilities outlined under the Solicitation of Charitable Funds Act from the jurisdiction of the Secretary of State to the jurisdiction of the Department of Commerce. As part of a larger initiative designed to reorganize government responsibilities, the bill, titled the “Government Accountability Act of 2008,” would essentially change the agency of contact for nonprofits but would not require that nonprofits modify their reporting and registration functions. Visit the South Carolina Association of Nonprofit Organizations’ policy page for further study.
Lobby Day 2008
On June 1-4, hundreds of nonprofit professionals convened in our nation’s capital, connected with peers across the country, and committed to creating positive change at 2008 Nonprofit Congress · Convene · Connect · Commit. The final event of the National Meeting was Lobby Day, with over 100 nonprofit leaders visiting the offices of their state senators and representatives. We let them know about the impact nonprofits are having in the communities they represent and advocated for the Nonprofit Capacity Building Initiative. If you were part of this landmark effort and would like additional copies of the packets, or were unable to attend but would like more information, visit the Lobby Day web page for more information, including follow-up materials for keeping in touch with your elected officials' offices.
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This monthly e-newsletter contains updates on federal and state policy issues that impact all 501(c)(3) organizations, including budget concerns, advocacy rights, and oversight and accountability. Nonprofits have the right and responsibility to engage in the policy process. Please use this information to advocate for the nonprofit sector and the communities we serve. For more information on how to engage in public policy, click here.
