May 29, 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...
Take 15 minutes to let funders and state government know your nonprofit needs
Legislators begin state budget process with $4.2 billion estimated revenue shortfall
Let us know: Is your nonprofit facing county or city funding cuts?
NC House approves bill to simplify absentee voting requirements in 2020
Join six U.S. Senators to discuss expanding universal charitable deduction
SBA releases PPP loan forgiveness application and instructions
U.S. House approves bill to extend and improve on PPP 
Take 5 minutes to provide confidential information to help advocate for nonprofit UI relief
NC Senate approves sales tax exemption for online educational events and services 
IRS releases guidance on refundable payroll tax credits for emergency leave
It’s not too early to become a National Voter Registration Day partner
IRS ends donor disclosure requirements for non-501(c)(3) nonprofits
Take 15 Minutes to Let Funders and State Government Know Your Nonprofit Needs
Last week, the Center and our state government partners launched a new survey on the impact of COVID-19 on North Carolina nonprofits. Please take 15 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. 
 
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.
Legislators Begin State Budget Process with $4.2 Billion Estimated Revenue Shortfall
Last week, state legislative staff published an updated revenue estimate for the upcoming fiscal year (beginning on June 30, 2020). Between revenue shortfalls for the current fiscal year and expected declines in tax revenue for next year, the overall shortfall is about $4.2 billion, which is roughly 15% of the state budget. As the NC General Assembly begins its process of developing a state budget for FY2020-21, legislators will need to fill this large budget shortfall with a combination of spending cuts and new revenue. During past recessions, state legislators have made steep cuts to nonprofit funding to help fill budget shortfalls. If your nonprofit provides services that are funded through state grants or contracts, now is the time to make the case about the importance of your work to state legislators so they don’t cut or eliminate your funding.

The federal government can help minimize this budget shortfall in North Carolina (and virtually every other state) by providing additional funding to state and local governments to help alleviate the fiscal impacts of the COVID-19 crisis. Two ways that Congress can help are:
  1. Allowing state and local governments flexibility to use funds from the CARES Act to fill budget gaps. A bill (S. 3608) introduced in the U.S. Senate last week would provide this flexibility to state and local governments. North Carolina still has not spent nearly $2 billion of its $3.5 billion in CARES Act appropriations, and it could potentially use much of this funding to cover a significant portion of its anticipated budget shortfall for next year.
  2. Appropriating additional support for state and local governments. The HEROES Act, which passed the U.S. House of Representatives two weeks ago, would provide nearly $1.1 trillion in flexible funding to state and local governments. The bipartisan SMART Act, which was introduced in the U.S. Senate last week, would provide $500 billion in support for state and local governments. 

The Center encourages our members of Congress to provide additional support to our state and local governments. Otherwise, the unmet needs will continue to grow in communities throughout North Carolina.
Let Us Know: Is Your Nonprofit Facing County or City Funding Cuts?
Like the state legislature, North Carolina’s local government leaders are in the process of planning their budgets for the upcoming year. Most counties, cities, and towns are also facing significant funding shortfalls and could look to fill their budget gaps by cutting or eliminating nonprofit grants or imposing new taxes, fees, or payments in lieu of taxes (PILOTs) on charitable nonprofits. For example, Wake County is proposing eliminating most of its grant funding for nonprofits in its recommended budget for the next fiscal year

Let us know if your nonprofit is facing funding cuts from your local governments. Also, let us know if your county, city, or town is proposing any new taxes, fees, or PILOTs on local nonprofits. As the Center learns about budget proposals in different parts of the state that could be harmful to nonprofits, we are available to help local organizations advocate for preservation of their government funding or in opposition to unreasonable new taxes, fees, or PILOTs. 
NC House Approves Bill to Simplify Absentee Voting Requirements in 2020
Yesterday, the NC House of Representatives approved a bipartisan bill ( H.B. 1169) that would make several changes to North Carolina’s absentee voting process to make it easier for North Carolinians to vote by mail in 2020. These changes would include:
  1. Allowing North Carolinians to request absentee ballots online rather than by mail; and
  2. Simplifying the requirements to request an absentee ballot this year by only requiring one witness (current law requires most North Carolinians to have either two witnesses or a notary attest to their signature when submitting an absentee ballot request).

North Carolina’s current absentee ballot requirements, which are stricter than most other states, make it challenging for many North Carolinians – particularly homebound seniors and individuals with disabilities – to request absentee ballots. The Center supports the House absentee ballot bill since it would help many North Carolinians who receive nonprofits’ services vote by mail this fall if COVID-19 remains a problem. It is unclear when or if the Senate will consider the bill.
Join Six U.S. Senators to Discuss Expanding the Universal Charitable Deduction
During the COVID-19 pandemic, charitable nonprofits of all types and missions are stepping up even more in their communities as they struggle simultaneously with rapidly declining revenues. Organizations are experiencing increased costs from skyrocketing demands for their services, while their revenues have plummeted because they have had to cancel fundraising events, their usual fees, ticket sales, and membership dues have vanished, and the capacity of donors to give has plummeted. 

Charitable organizations need resources as soon as possible. Six United States Senators have crossed the partisan divide to find common ground in support of a critically needed solution: the Universal Charitable Deduction. These six Senators are: Senator Chris Coons (D-Delaware); Senator Amy Klobuchar (D-Minnesota); Senator James Lankford (R-Oklahoma); Senator Mike Lee (R-Utah); Senator Tim Scott (R-South Carolina); and Senator Jeanne Shaheen (D-New Hampshire).

You are invited to join these Senators for an hour-long presentation next Tuesday, June 2 at 5 p.m. to discuss the prospects for Congress expanding the above-the-line universal charitable deduction this year. Register now.
SBA Releases PPP Loan Forgiveness Application and Instructions
Last Friday, the U.S. Department of Treasury and the Small Business Administration (SBA) released an interim final rule on Paycheck Protection Program (PPP) loan forgiveness. They also released an interim final rule to help determine whether borrowers were eligible for PPP loans (better late than never!).

The SBA also recently released the application and instructions for loan forgiveness under the Paycheck Protection Program (PPP). The SBA document includes step-by-step instructions for nonprofits and other PPP borrowers to perform the calculations required for loan forgiveness. 
U.S. House Approves Bill to Extend and Improve on PPP
Yesterday, the U.S. House of Representatives approved a bipartisan bill ( H.R. 7010) to strengthen the PPP. Among other things, the bill would:
  1. Extend the PPP through December 31;
  2. Extend the deadline for borrowers seeking loan forgiveness to rehire employees until December 31, 2020;
  3. Expand the covered period for loan use from eight weeks to 24 weeks; and
  4. Replace the SBA’s rule that at least 75% of the funds from PPP loans must go to payroll expenses with one that allows up to 40% of funds to be used for non-payroll expenses.

The bill addresses some, but not all, of the issues the Center identified in its public comments to the SBA on the PPP two weeks ago. Senator Thom Tillis (R-NC) is one of the sponsors of a similar Senate bill.
Take 5 Minutes to Provide Confidential Information to Help Advocate for Nonprofit UI Relief
Does your nonprofit self-insure for your unemployment insurance (UI) claims? Is your organization now facing burdensome payments to the state unemployment trust fund due to coronavirus-related layoffs and furloughs? If so, please take five minutes to complete a confidential survey from the National Council of Nonprofits. The information from this survey will help the Center and our partner organizations advocate for Congress and state policy makers to provide relief to nonprofits for their COVID-19 related UI claims. 

To keep the survey as simple as possible, here are a few tips for North Carolina nonprofits: 
  1. North Carolina is the only state where the state unemployment agency bills nonprofits annually instead of monthly or quarterly (this is a good thing!), so you can answer “Other” to that question.
  2. North Carolina is providing additional relief to reimbursing nonprofits (again, that is a good thing!), so you can answer “Yes” to that question.
  3. Since North Carolina nonprofits should not yet have received a bill from the Division of Employment Security for their COVID-19 related UI claims, you just need to fill in the box with the estimate of the cost of your claims.
NC Senate Approves Sales Tax Exemption for Online Educational Events and Services
On Tuesday, the NC Senate approved a bill ( H.B. 1079) that would exempt many types of remote services provided by nonprofits from the sales tax on digital property that took effect on October 1, 2019. Under current law, nonprofits and businesses must collect and remit sales tax on any sale of digital property, which includes online learning like classes, webinars, and conferences. The Center has advocated for legislators to amend this law so that nonprofits would not need to charge sales tax on their educational offerings if the same types of learning would not be taxable if offered as in-person events. Nonprofits’ concern over this issue has become much more significant over the past two months, as almost all in-person educational events have had to be conducted as webinars or other types of online events.

The bill addresses most of nonprofits’ concern by providing an exemption from sales tax for any digital audio or audiovisual work that consists of the contemporaneous electronic transmission of a nontaxable service. To translate that from legalese: If this legislation is enacted, nonprofits won’t need to charge sales tax on fees for attending online conferences, webinars, or workshops or for providing real-time online services like exercise or wellness classes or telemedicine. Note that nonprofits or businesses would still need to charge sales tax if they sell the recordings of events. This exemption would be retroactive to October 1, 2019. 

The Senate amended the bill to essentially provide a temporary exemption for the online sale of continuing professional education courses required by occupational licensing boards through August 1, 2020. The House unanimously approved of this amendment yesterday, so the bill now goes to Governor Roy Cooper for his consideration.
IRS Releases Guidance on Refundable Payroll Tax Credits for Emergency Leave
Last week, the Internal Revenue Service released a new fact sheet on the refundable tax credits that nonprofits and other employers can claim when paying for sick leave or family and medical leave pursuant to the Families First Coronavirus Response Act. The fact sheet address questions about covered employees, sick leave requirements and the credit, how to claim the credits, and recordkeeping.
It’s Not Too Early to Become a National Voter Registration Day Partner
Sign up to be a 2020 partner for National Voter Registration Day (September 22)! National Voter Registration Day is a great opportunity for nonprofits to ensure that their staff, volunteers, and community members are registered to vote. Sign up today to join the nationwide effort to register hundreds of thousands of voters on September 22. As an official partner, your nonprofit will receive a free voter registration kit and access to other opportunities to support your nonpartisan voter registration work.
IRS Ends Donor Disclosure Requirements for Non-501(c)(3) Nonprofits
On Tuesday, the IRS released final regulations eliminating donor disclosure requirements for non-charitable tax-exempt organizations. The final regulations remove the longstanding requirement that non-charitable tax-exempt organizations, such as 501(c)(4) social welfare organizations, disclose – on a confidential basis – the names of their donors and amounts given. Charitable nonprofits continue to submit the Form 990 Schedule B Schedule of Contributors, as required by the Internal Revenue Code. The Center strongly supports the public comments of the National Council of Nonprofits opposing this rule change.
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.

Your Center membership allows each staff member, board member, and key volunteer in your organization to set up their own online account to access member resources, benefits and services. Encourage everyone to create an account .