July 3, 2020
Note: The North Carolina Center for Nonprofits typically provides Nonprofit Policy Matters each week as a benefit to its nonprofit members . However, to help all North Carolina nonprofits respond to the COVID-19 crisis, we're temporarily providing this newsletter to non-member nonprofits.
In this issue...
Governor Cooper signs COVID-19 appropriations into law
New law limits nonprofits' liability for COVID-19 claims
Governor approves legislation to start Medicaid Transformation in a year
U.S. Senate unanimously approves bill to improve UI process for self-insured nonprofits
Congressional bills would expand universal charitable deduction
Congress approves extension of PPP through August 6
Take 12 minutes to let funders and state government know what your nonprofit needs
Governor Cooper extends executive order on nonprofit membership meetings
NC House resolution would create study committee on combatting systemic racism
Governor approves non-controversial provisions from vetoed state budget
Census tip of the week: Funding available for nonprofit get-out-the-count programs
Governor Cooper vetoes bill to limit his emergency powers
Join a free webinar on working with local election officials
Governor Cooper signs law with limits on state tax benefits for enhanced charitable giving incentives
General Assembly declines to offer sales tax relief to nonprofit CCRCs
Governor Cooper Signs COVID-19 Appropriations into Law
On Wednesday, Governor Roy Cooper signed into law a bill ( H.B. 1023 ) that spends about $600 million of North Carolina’s CARES Act funding on a variety of appropriations and programs. Several parts of the bill will help nonprofits including:
  1. Creating a $15 million grant program for businesses or nonprofits that maintained at least 90% of their employees from March 1, 2020 through May 31, 2020 if they have not received financial assistance through the Paycheck Protection Program (PPP) or the Main Street Lending Program. The Center worked to get nonprofits added to this grant program, and we will alert nonprofits of details once grants are available.
  2. Appropriating more CARES Act funding to some nonprofits, including an additional $2.425 million for free and charitable clinics, an additional $2.425 million to community health centers, $3.5 million for domestic violence prevention programs, $7 million to hospitals, and $4.3 million to children’s advocacy centers.
  3. Providing an additional $150 million in support for counties and municipalities. This funding could help minimize local governments’ cuts to grants and contracts with nonprofits.
  4. Waiving a 15% matching funding requirement for nonprofits receiving state funding through the NC Department of Health and Human Services (DHHS) competitive grants program for FY2020-21. This change is important, since it should help prevent reductions in nonprofits’ other revenue sources from jeopardizing their state funding as well. The Center had asked legislators to waive matching fund requirements for state grant programs for the upcoming year. Most other state matching fund requirements are established by the state agencies through which grants are made (rather than by statute or a provision in the state budget).
Governor Cooper also signed into law a bill ( S.816 ) allocating $645.4 million of the state’s CARES Act funding to be used to fund certain parts of state government operations during the FY2020-21 fiscal year. This should help cover some of the estimated $4.2 billion revenue shortfall for the current fiscal year, which began on July 1, 2020. A smaller revenue shortfall is good news (or at least less bad news) for nonprofits; during past recessions, state legislators have made steep cuts to nonprofit funding to help fill budget shortfalls.
Even with the General Assembly finishing the main part of its 2020 session, North Carolinas has not spent all of its CARES Act funding. Legislators will return to Raleigh on September 2 to pass additional COVID-19 relief legislation. If Congress provides state and local governments more flexibility in using CARES Act funding, legislators can use the remainder of this money to reduce the state’s budget hole even more. Legislators also expect that Congress will provide state and local governments with additional federal support to fill budget holes later this summer.
New Law Limits Nonprofits’ Liability for COVID-19 Claims
Yesterday, Governor Cooper signed into law a bill ( H.B. 118 ) providing immunity for nonprofits, businesses, and individuals from liability for alleged transmission of COVID-19. By extending the immunity to individuals, nonprofit board members and volunteers also are protected from liability under this new law. The limited immunity does not apply if alleged contraction of COVID-19 is due to the gross negligence, willful or wanton conduct, or intentional wrongdoing of the nonprofit, business, or individual. The bill does not limit the ability of workers to file workers’ compensation claims if they contracted COVID-19 in the course of their employment. The limitation on liability would be applicable for claims up to 180 days after the end of the COVID-19 state of emergency in North Carolina ( Executive Order No. 116 ).
The bill also requires nonprofits, businesses, and governmental agencies to provide reasonable notice to people entering their facilities of actions they are taking to reduce the risk of COVID-19 transmission. Many nonprofits are already doing this by posting signs about their policies for social distancing, mask wearing, and sanitizing.
Governor Approves Legislation to Start Medicaid Transformation in a Year
Yesterday, Governor Cooper signed into law a bill ( S.808 ) that will delay Medicaid transformation – the state's planned transition of Medicaid to a managed care network – until July 1, 2021. Last fall, the NC Department of Health and Human Services (DHHS) indefinitely suspended its Medicaid transformation plans after the General Assembly and Governor Cooper were unable to agree on a state budget that included necessary funding for this transition. The bill also:
  • Provides funding for Medicaid transformation;
  • Provides preliminary funding for moving DHHS’s headquarters from Dorothea Dix Park to another location in Wake County;
  • Appropriates $50 million from CARES Act funding for behavioral health and crisis services related to the COVID-19 pandemic;
  • Appropriates $100 million from CARES Act funding for additional COVID-19 testing, contact tracing, and tracking;
  • Appropriates $20 million from CARES Act funding for child care and other early childhood initiatives; and
  • Appropriates funds for the child welfare case management component of DHHS’s NC FAST system.
Many of the provisions in the bill are (at least partial) good news for nonprofits. Specifically:
  1. The bill should finally bring closure to the multi-year effort to restructure the state’s Medicaid system in a way that emphasizes value-based care. This should ultimately provide greater certainty for many nonprofit service providers about Medicaid payments and should help continue the trend of heath care organizations working more closely with nonprofits that are focused on the social determinants of health.  
  2. The decision to keep DHHS headquarters in Wake County should ensure continuity of DHHS staffing. Many nonprofits that provide services through grants and contracts with DHHS were concerned that agency staff with whom they work would leave if DHHS moved its offices outside of the Triangle, as legislators had previously proposed.
  3. The use of CARES Act funding for behavioral health, childcare, and COVID-19 testing, tracing, and tracking will be helpful to a wide variety of nonprofits, although nonprofit advocates have been clear that far more funding is needed to fill gaps in these areas, particularly in childcare services.
U.S. Senate Unanimously Approves Bill to Improve UI Process for Self-Insured Nonprofits
Yesterday, the U.S. Senate unanimously approved the Protecting Nonprofits from Catastrophic Cash Flow Strain Act (S. 4209), which would partially fix the unemployment payments challenge for reimbursing nonprofits. Specifically, the bill clarifies that self-insured nonprofits would not have to pay 100% of their unemployment bill upfront and wait for repayment from the state. This would fix problematic guidance from the U.S. Department of Labor requiring nonprofits to fully reimburse states for the costs of their COVID-19 related UI claims and then seek reimbursement of the money they just paid. Nonprofit advocates hope that the U.S. House of Representatives will quickly approve the bill when it returns to Washington in two weeks.
Congressional Bills Would Expand Universal Charitable Deduction
Last week, identical bipartisan bills were filed in both the U.S. Senate ( S.4032 ) and the U.S. House of Representatives ( H.R. 7324 ) to expand the temporary universal charitable deduction that was established in the CARES Act. Congressman Mark Walker (R-NC) is the primary sponsor of the House bill. The Universal Giving Pandemic Response Act would significantly increase the limit on the deduction (currently set at $300 in contributions per year for all taxpayers) to one-third of the amount of the standard deduction ($4,133 for individuals and $8,266 for married couples filing jointly). It also would encourage immediate donations to nonprofits by allowing taxpayers to take the deduction for 2019 for contributions made before July 15, 2020 and to file amended tax returns to claim this deduction.
An enhanced universal charitable deduction is particularly important in light of two recent reports that show declines in charitable contributions. The recent Giving USA report found that, when adjusted for inflation, overall charitable giving was lower in 2019 than in 2017. A quarterly report from the Fundraising Effectiveness Project showed that donations to nonprofits declined by 6% during the first quarter of 2020 as many donors faced financial uncertainty due to the COVID-19 pandemic.
Your advocacy made a difference in getting these bills introduced. In April, the Center and a group of 461 North Carolina nonprofits sent a letter to Congressman Walker and the rest of our state’s congressional delegation asking for them to expand the universal charitable deduction and provide three other types of relief to help nonprofits deal with the COVID-19 pandemic. The bills to bolster charitable giving are a direct response to nonprofits’ unified message. Look for an additional call to action on this issue in the coming weeks.
Congress Approves Extension of PPP through August 6
This week, the U.S. Senate and U.S. House of Representatives both unanimously approved legislation to extend the Paycheck Protection Program (PPP) through August 6. The original deadline for nonprofits and businesses to seek PPP loans was June 30. Once this bill is signed into law, eligible nonprofits that have not yet received PPP loans can submit applications through their financial institutions. Of the funding that Congress appropriated for PPP loans, about $130 billion is still available.
Take 12 Minutes to Let Funders and State Government Know What Your Nonprofit Needs
In late May, the Center and our state government partners launched a new survey on the impact of COVID-19 on North Carolina nonprofits. Nearly 1,600 nonprofits have already completed the survey, and we are hoping to have thousands more organizations reply in the coming days and weeks. Please take 12 minutes to complete the survey , which asks about your organization's operations and needs during the COVID-19 crisis and in the coming months. Your response to the survey will inform government, philanthropy, and others about what COVID-19 related needs are most pressing in North Carolina. To maximize the benefits and value of this survey, responses will be publicly available, beginning next month.
The survey, which is available in both English and Spanish , is a joint effort of the Center, the Office of the NC Secretary of State, and the Strategic Partnerships office at the NC Office of State Budget and Management. The Center encourages nonprofits to complete the survey even if you responded to our original COVID-19 survey in March. Thank you if your organization has already completed the survey!
Governor Cooper Extends Executive Order on Nonprofit Membership Meetings
Yesterday, Governor Cooper issued Executive Order No. 149 , which extends by 60 days a previous executive order ( Executive Order No. 136 ) allowing nonprofits with members to hold membership meetings remotely during the COVID-19 crisis.  The order gives boards the flexibility to allow membership meetings to take place by remote communication and through remote voting, even if these types of remote meetings are not expressly authorized in the nonprofit’s articles of incorporation or bylaws. The Center advocated for Governor Cooper to issue to original executive order and to extend it for an additional 60 days. We are appreciative that Governor Cooper has provided this relief to nonprofits, since it will help some organizations continue to take actions that require membership approval during the COVID-19 crisis. The Center is continuing to work with legislators on a temporary provision to allow boards more flexibility in taking remote action.
NC House Resolution Would Create Study Committee on Combatting Systemic Racism
This summer, the problem of systemic racism has come into sharper focus in light of recent police killings of Black Americans and because communities of color have experienced much higher rates of COVID-19 diagnoses and deaths than the overall population of North Carolina.  Last week, several members of the NC House of Representatives filed a resolution ( H.R. 1233 ) to create a House Select Committee on Combatting Systemic Racism. The committee would study issues related to combating systemic racism in the areas of criminal justice, state government operations, economic opportunities, education, health, and housing. The House has not yet voted on whether to establish the study committee.
Many nonprofits, particularly those that are frontline service providers, have direct experiences addressing issues related to systemic racism that affect every community in our country. If this House study committee is established, it will be important for nonprofits to provide input into this ongoing policy conversation.
Governor Approves of Non-controversial Provisions from Vetoed State Budget
On Wednesday, Governor Cooper signed into law a bill ( S.681 ) that would enact a variety of non-controversial provisions from the state budget for FY2019-21, which he vetoed last year. Among other things, the bill creates a new arts education graduation requirement, for which many arts and cultural nonprofits have been advocating. It also adds new reporting requirements for nonprofits receiving appropriations (but not grant funding) through the NC Department of Commerce, and establishes new criteria for conservation grants.
Census Tip of the Week: Funding Available for Nonprofit Get-Out-the-Count Programs
A complete and accurate count in the 2020 U.S. Census is important for nonprofits since it will help ensure that North Carolina has full representation in Congress and access to federal funding that supports the work of many nonprofits . Because nonprofits are trusted messengers that often serve hard-to-count communities, it is important for all nonprofit organizations to spread the word about the importance of completing the 2020 Census. Nonprofit’s engagement in Census outreach is particularly critical since North Carolina continues to lag behind other states in our Census response rate. As of Wednesday, North Carolina’s response rate was 58.1%, well below the national average of 61.9% (see the U.S. Census Bureau’s map of response rates for more details).
Census Tip of the Week: The NC Counts Coalition   invites North Carolina nonprofits committed to ensuring a fair and accurate Census to apply for grants in the range of $7,000-$20,000. NC Counts will consider collaborative proposals for larger amounts. Funds will support plans in North Carolina communities at risk of being undercounted, also known as hard-to-count (HTC) communities. Proposals are due on July 24, and NC Counts is hosting an informational webinar on July 7 at 2 p.m. The grant application is available online.
Because of the COVID-19 pandemic, the 2020 Census enumeration has been extended through October 31. Census Bureau canvassers will begin visiting households that have not responded to the Census on August 11.
Governor Cooper Vetoes Bill to Limit His Emergency Powers
Yesterday, Governor Cooper vetoed a bill ( S.105 ) that would require him to receive consent of the 10-member Council of State before issuing many types of executive orders during a state of emergency like the COVID-19 pandemic.  The Center and other nonprofits have been working with the Governor’s Office for months on a variety of potential executive orders to that could help nonprofits and the communities they serve respond to the pandemic. If enacted, this legislation could make it harder for Governor Cooper to take action by executive order. It will be difficult for legislators to override his veto, since the bill passed along party lines.
Join a Free Webinar on Working with Local Election Officials
With COVID-19 creating unprecedented challenges for voter registration and voting this year, accessing the expertise of America’s local election officials has never been more important for nonprofits trying to encourage people in their communities to get-out-the-vote. Nonprofit VOTE is offering a free webinar on Thursday, July 16 at 3 p.m. as a primer on how to work with local election officials for a successful voter registration event on National Voter Registration Day (September 22) and beyond. Your nonprofit also can sign up today to become a National Voter Registration Day partner. As a partner organization, your nonprofit will receive a free voter registration kit and access to other opportunities to support your nonpartisan voter registration work.
Governor Cooper Signs Bill with Limits on State Tax Benefits for Enhanced Charitable Giving Incentives
On Wednesday, Governor Cooper signed into law a bill ( H.B. 1080 ) that decouples the state tax code from the Internal Revenue Code on most of the new tax provisions from the CARES Act. Notably for nonprofits, this would mean that:
  1. North Carolinians who use the standard deduction and make $300 in charitable contributions this year would need to pay state taxes on these donations, even though they are eligible for an above-the-line federal tax deduction under the CARES Act.
  2. High-income North Carolinians who make significant contributions to nonprofits in 2020 might have to pay state income tax on a portion of these contributions. This would be a result of North Carolina maintaining the limitation that only charitable contributions up to 60% of a taxpayer’s adjusted gross income are deductible. The CARES Act waived this limitation on deductibility for 2020.
While these provisions are not ideal, the Center’s analysis is that their impact on charitable giving should be negligible. A separate provision of the bill makes a technical change to ensure that nonprofits are able to receive refunds of the sales tax they pay on digital property.
General Assembly Declines to Offer Sales Tax Relief to Nonprofit CCRCs
Last week, the NC House of Representatives did not take up a bill that would have provided sales tax relief to nonprofit continuing care retirement facilities (CCRCs). Recently, the NC Department of Revenue (DOR) determined that most of the fees that CCRCs charge for services they provide to their residents are “bundled transactions” that are subject to sales tax. Without legislative intervention, this would mean that CCRCs would need to start charging sales tax to their residents, which could ultimately mean less revenue for nonprofit CCRCs. This type of decision by DOR could set a bad precedent of applying sales tax to services offered by other types of nonprofits, even if legislators do not change the state sales tax laws.
Nonprofit Policy Matters is a service for current Members of the North Carolina Center for Nonprofits. We track state and federal policy issues that affect all 501(c)(3) nonprofits. Learn about the Center's public policy priorities . For more information, contact David Heinen , Vice President for Public Policy and Advocacy.

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