Tuesday, February 11, 2014

Nonprofit Advocacy Matters | February 10, 2014

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Low Drama, Expectations on Effort to Extend Federal Debt Limit
The federal government reached its maximum borrowing authority (debt limit) on February 7, with neither chamber of Congress in session to address it and none of the urgency and rancor that policymakers have expressed during past fiscal showdowns. One reason is that recent experience demonstrates that the U.S. Treasury Department can exercise extraordinary measures, like delaying pension payments, to postpone the need to borrow more cash than permitted by law (although this time that tactic will last only a few weeks). Another reason is that lawmakers tend to agree that the federal government shutdown in October eroded public support for high-stakes, and high-drama, negotiating tactics designed to bend political will in favor of greater fiscal restraint. As a result, politicians across the spectrum appear in agreement that legislation to extend federal borrowing authority will be enacted during February.

Nonprofit Input Requested
Government Seeks Help in Clarifying New OMB Guidance on Federal Grantmaking
The federal government wants to know what you want to know. Specifically, federal officials are asking nonprofits and others affected by the new OMB Guidance on uniform grant reform to tell them what is unclear and what needs extra explanations. As part of its public awareness efforts, the Council on Financial Assistance Reform (COFAR) is conducting webinars and developing responses to frequently asked questions (FAQs). Ultimately, they want to make certain that interpretations of the Guidance are consistent across the many levels of government and the grantee/contractor community. The more clarification that can be provided prior to implementation in late 2014, the fewer differences there will be and therefore the fewer problems as everyone gets acclimated to the new Guidance. Nonprofits are encouraged to submit questions at cofar@omb.eop.gov so that COFAR can publicly clarify areas that are not fully understood. 

States Consider New Charity and Solicitation Regulations, Fees
Multiple state legislatures are looking at either imposing or increasing filing requirements, filing fees, and regulatory burdens on charitable nonprofits wanting to fundraise in their states. Here is a recap of recently filed bills:
  • new bill in Colorado would amend the state’s Charitable Solicitations Act to clarify rulemaking authority, prohibit solicitation by unregistered persons on behalf of charities, require appointment of registered agents, and clarify existing fines for failing to file required notices on time.
  • Delaware, a state currently without charitable solicitation requirements, is considering legislation that would require most nonprofits to annually submit their IRS Form 990s. Some larger organizations would be required to undergo financial audits. This blog post by the Delaware Alliance for Nonprofit Advancement (DANA) reports how it and many other nonprofit groups have been working with the Attorney General to improve the bill.
  • New legislation in Florida would require all nonprofits, including those reporting less than $25,000 in donations, to register with the state to solicit funds. The bill would empower the state’s charity regulators to revoke the sales tax exemptions of nonprofits that spend less than 25 percent on program costs for three consecutive years. It also would create new audit requirements for nonprofits receiving higher amounts of donations, and create a new annual financial reporting requirement.
  • Maryland legislators are considering a measure granting to the Attorney General the same powers enjoyed by the Secretary of State to investigate and enforce compliance with charity regulations. The bill also would create a Charitable Enforcement Fund and assess application fees from fund-raising counsel ($250) and professional solicitors ($350).
  • Legislation in Oregon would increase the Attorney General’s power to enforce nonprofit regulations and raise penalties and fees for nonprofits that fail to comply with requirements. Concerned about the unintended consequences that could result for smaller organizations, the Nonprofit Association of Oregon (NAO) recommended changes to limit burdensome reporting requirements and ensure noncompliant nonprofits are allowed to correct their mistakes. NAO’s suggestions were incorporated in anamendment legislators adopted last week. “We are going after sharks, not minnows,” the bill sponsor said in agreement.
  • Pennsylvania lawmakers are considering a bill that would require nonprofits to electronically file, and the Commonwealth to post, all charitable solicitation documents on a searchable database. The measure would also set up a Solicitation of Funds for Charitable Purposes Account, funded through registration fees and dedicated to paying for regulatory oversight.
  • Finally, as of January 1Nevada nonprofits are now required to register with the Secretary of State to solicit donations. “Nobody likes new regulations, but the sector has agreed that additional transparency is important,” Phil Johncock of the Alliance for Nevada Nonprofits (ANN) said. ANN has created a toolkit to help smaller nonprofitscomply with the new rules.
Taxes, Fees, PILOTs
  • Stormwater Fees: Local policymakers in Maryland and Illinois are considering options for lowering the burden that new stormwater fees impose on nonprofits. Baltimore County officials announced last month that they are setting aside $3 million in funding for nonprofit remediation projectsto help lower the costs incurred by the organizations. "These faith-based organizations and nonprofits are experts in serving the community — not in stormwater remediation and engineering," said County Executive Kevin Kamenetz in a statement. "By sharing the County's technical resources and targeted funding, these organizations can reduce their impact on the environment while still fulfilling their service mission." Similarly, council members in Winnetka Village, Illinois are considering an ordinance that would offer nonprofits exemptions to the new stormwater fees that will go into effect this summer if nonprofits allow for stormwater improvement projects on their property.
  • PILOTs: Connecticut’s Speaker of the House plans to propose legislation that would require the state’s nonprofits, namely hospitals and colleges, to pay local property taxes. Nonprofits would be able to avoid the taxes by instead reaching “voluntary” payment in lieu of taxes (PILOT) agreements with municipalities. Taking another approach, Connecticut’s Governor is proposing an $8 million increase in state payments to municipalities for nonprofit hospitals and colleges.
  • PILOTs: In a curious twist in the usual PILOT story,legislation in Wisconsin would require municipalities that successfully negotiate PILOT payments from nonprofits to share the revenues with overlying taxing bodies, such as school districts and state and county governments. If enacted, these taxing bodies would be able to access a portion of the PILOT payments in relation to the amounts they would collect from nonprofits were they not tax-exempt.

Advocating with the State of the Union Address
Susan DreyfusTo Susan Dreyfus, President and CEO of the Alliance for Children and Families, the annual gathering in the U.S. Capitol for the State of the Union Address is not just a listening experience but also a participatory event. Which explains her 5½ -minute video response to the President’s speech, combining praise for positive actions by the Administration with a call for greater attention to the economic impact of nonprofits.

In the video, Dreyfus urges the President, Members of Congress, and state and local policymakers to include nonprofits in their efforts to protect and grow the small business community: “We [nonprofits] are businesses, we too are job creators, and we are part of the economic vitality of our communities.” She gave as an example her organization, the Alliance of Children and Families, which as a network represents 500 human serving organizations across the United States with a combined budget of $6.8 billion and 130,791 employees that pay taxes on $4.1 billion in wages and compensation. 

Dreyfus also effectively makes the case that regulatory challenges affect all small businesses, for-profit and nonprofit alike. She specifically thanked the Administration for the new OMB Guidance that, among other things, is “requiring reasonable overhead and administrative rates” in federal contracts and grants, and identifying “outdated, duplicative, and redundant processes and regulatory rules and doing away with them so that we can do what businesses are always wanting to do: have the environment you need to thrive, to innovate, and succeed.”

She concludes with a heads-up for America: “It is important for America to realize that without the nonprofits in your communities being able to do what they do every day, but also the fact that we are job creators, we are economic contributors, and we are part of a vibrant America.”

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