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In this Issue...
Since state legislators didn’t do anything during their quick two-day session this week, we are leading off with the latest on federal regulations affecting nonprofits…Read the Center’s public comments on proposed rules on donor advised funds, and an important reminder about a new rule that could change whether your nonprofit’s workers are classified as employees or independent contractors, starting next month…Register for the Center’s upcoming Nonprofit Policy Conversations…Read (and share) our latest tip on nonpartisan engagement in the election, highlighting a potential advantage of registering as an unaffiliated voter for the primary election (and including a bad pun in the header)…And find out what state legislators might do when they return to Raleigh (for real!?) in April.
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Center Submits Comments on Proposed Donor Advised Fund Regulations
On Wednesday, the Center submitted public comments on the proposed regulations from the U.S. Treasury Department and Internal Revenue Service that provide clarity on donor advised funds (DAFs). The proposed regulations would establish definitions of donor advised funds, donors, and donor-advisors. They also would provide clarity on exemptions from the definition of a DAF and on taxable distributions from DAFs. The proposals could impact the way that nonprofits administer their DAFs, and the broad definitions could mean that some other types of nonprofit arrangements – including fiscal sponsorships, giving circles, certain scholarships, and other types of restricted funds – could be treated as DAFs and be subject to more stringent rules. Chapel Hill law firm Schell Bray has an excellent analysis of the proposed regulations, explaining why they could create challenges for nonprofits that sponsor DAFs.
The Center’s public comments reference the excellent public comments that the National Council of Nonprofits submitted on Monday. Ultimately, the Center is concerned that some provisions in the proposed regulations could have the unintended consequence of reducing contributions from DAFs to support the work of charitable nonprofits. Among other things, the Center recommends:
- Exempting fiscal sponsorship arrangements from DAF requirements;
- Providing clearer guidance on whether other funding arrangements like giving circles would be treated as DAFs;
- Removing language from the regulations that could discourage DAFs from supporting legal (and important) advocacy work of charitable nonprofits, like lobbying and nonpartisan voter registration and voter education work;
- Providing greater flexibility in allowing DAF sponsors to provide investment advice to DAF donors; and
- Listening to the input of DAF sponsors (including community foundations and other entities), DAF donors, fiscally-sponsored programs, and giving circles in deciding the effective date of final regulations.
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New DOL Worker Classification Rule Takes Effect on March 11
Last month, the U.S. Department of Labor (DOL) announced a new final rule for determining whether workers are employees or independent contractors under the Fair Labor Standards Act (FLSA). Under FLSA, nonprofits and other employers are required to pay a minimum wage and offer overtime pay for certain workers who are classified as employees. Independent contractors aren’t entitled to these or other benefits of employees.
The new rule, which takes effect on March 11, replaces a rule from early 2021 that made it easier for employers to classify workers as independent contractors. The 2021 rule focuses on two criteria – opportunity for profit or loss and control over work – in determining whether workers are employees or independent contractors. The new rule returns to a more traditional six-factor “economic realities” test that would consider:
- Opportunity for profit or loss depending on managerial skill;
- Investments by the worker and the employer;
- Degree of permanence of the work relationship;
- Nature and degree of control by the employer;
- Extent to which the work performed is an integral part of the employer’s business; and
- The worker’s skill and initiative.
The new rule means that more nonprofit workers will soon need to be classified as employees rather than independent contractors and receive employee benefits.
Separately, DOL is still in the process of developing a final rule on the salary threshold for overtime pay under FLSA. The Center submitted comments on that proposed rule in November noting that it will likely have a disproportionate impact on North Carolina nonprofits. The Center also has prepared an analysis of the proposed regulations and their potential impact on nonprofit organizations, concluding with 15 compliance options and eight next steps for nonprofits to consider while we wait for a final rule from DOL later this year.
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Registration Open for Nonprofit Policy Conversations
This spring, the Center is hosting a series of Nonprofit Policy Conversations around the state to bring together nonprofit leaders and local elected officials to discuss public policy issues that are important to charitable nonprofits and the people and communities they serve. At each Conversation, the Center will provide a briefing on nonprofit sector trends and potential public policy solutions and challenges for nonprofits in 2024 and beyond. To date, Nonprofit Policy Conversations are scheduled for:
- Thursday, March 14 from 1:00-3:00 p.m. at the Holiday Inn Biltmore West in Asheville in partnership with WNC Nonprofit Pathways
- Friday, March 22 from 9:30-11:30 a.m. at the Factory at Congdon Yards in High Point in partnership with Guilford Nonprofit Consortium, HandsOn NWNC, and Business High Point
- Monday, April 15 from 10:00 a.m.-12:00 noon at Cumberland Community Foundation in Fayetteville in partnership with Cumberland Community Foundation
- Friday, April 19 from 1:00-3:00 p.m. at Truist Hall at UNCW in Wilmington in partnership with QENO
- Monday, May 20 from 10:00 a.m.-12:00 noon at Foundation For The Carolinas in Charlotte in partnership with Foundation For The Carolinas
We will announce other dates and locations as details are finalized. Registration is open for the events in Asheville, High Point, Fayetteville, Wilmington, and Charlotte.
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2024 Election Tip of the Week: Should You Be a U?
Leading up to the 2024 primary election this winter and the general election this fall, the Center will offer a variety of tips for nonprofits about nonpartisan voter registration and voter education. Share these tips with your staff, board, and the people you serve.
This week’s tip: It may be advantageous to be registered as an unaffiliated voter in the primary election.
When North Carolinians register to vote, they have the option of choosing to be affiliated with one of five recognized political parties (Democratic, Green, Libertarian, No Labels, or Republican) or being an unaffiliated voter. Your partisan affiliation affects which ballot you receive in the primary election. If you are registered with a partisan affiliation, you can only receive that party’s ballot in the primary election – and you probably won’t get to vote in the primary at all if you are registered with the Green, Libertarian, or No Labels parties since these parties don’t have contested primaries in most parts of the state. However, if you are registered as an unaffiliated voter, you can choose any party’s ballot in the primary election, so you have the opportunity to be strategic about choosing the ballot with the most options in the races that matter most to you.
In some counties, only one party has competitive primary elections – and the primary election is often the de facto election in places without competitive general elections – so it may be advantageous for some voters to be registered as unaffiliated so they have a chance to vote in an election with a meaningful choice of candidates. Note that you can only receive one ballot during the primary election, so if you are registered as unaffiliated you have to choose which party’s ballot you would like to receive.
Being unaffiliated isn’t for everyone. If you are considering running for office (other than nonpartisan offices like municipal officials and school board members in certain parts of the state) or having a leadership role in a political party, you will need to be affiliated with the appropriate party.
If this election-year tip convinced you to change your registration to “unaffiliated” and you are reading this before March 2, it's not too late to change your partisan affiliation. You can still make that change for the primary election by updating your voter registration during Early Voting, which opened yesterday and continues through Saturday, March 2. It’s too late to change your partisan affiliation (or your address) if you plan to vote on Tuesday, March 5, so make a plan to vote early if you need to update your voter registration.
Note: If you missed the previous 2024 Election Tips of the Week or want a refresher, (re)read them now: check your voter registration, request an absentee ballot, get great (free) resources from You Can Vote, and make a plan to vote early.
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Bonus 2024 Election Tip of the Week (Actually 35 of Them!)
Have you been wondering what types of election-related activities your nonprofit can and cannot do between now and the primary election? Or perhaps you are already thinking ahead to this fall’s general election. You are not alone. The Center has been fielding questions about what types of election-related activities are legal and advisable for charitable nonprofits, and we have posted answers to 35 of the most common questions we are hearing. We have included information on several new state election laws that could affect your nonprofit and the people you serve, including the new requirement to show a photo ID when voting. Let us know of other questions you have about your nonprofit’s engagement in the 2024 election.
Also, last week, the Center hosted a webinar to highlight (almost) everything your nonprofit needs to know about the 2024 primary election. We covered the basics about what 501(c)(3) nonprofits can and can’t do in an election year; ways nonprofit staff, board, and volunteers can (legally) engage in campaigns; common questions about tricky election-year situations for nonprofits; new election laws and changes to the election process in North Carolina that might affect nonprofits and the people they serve; and ways 501(c)(3) nonprofits can protect their reputations and avoid legal trouble when partnering with other organizations in an election year. If you missed the webinar, check out the recording.
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2024 Short Session is Just Over Two Months Away
The NC Senate and NC House of Representatives held brief, non-voting sessions this Wednesday and Thursday. While the NC General Assembly has two more two-day (likely non-voting) sessions scheduled for mid-March and early April, the real legislative action for the year will start when lawmakers return to Raleigh on Wednesday, April 24 for the 2024 short session.
Legislators’ main priority for the short session will be to make adjustments to the state budget for FY2024-25. However, during the short session, legislators also can take action on a variety of other bills that passed either the House or Senate in 2023 or that affect state taxes or spending. Among the bills eligible for consideration during the short session are legislation to exempt nonprofits from paying sales tax on their purchases and to modernize the NC Nonprofit Corporation Act. Legislative leaders also suggested this week that they may make additional changes to election laws in advance of the 2024 general election, possibly including proposals to tighten voter ID requirements and to shorten the Early Voting period from 17 days to nine days (H.B. 303).
Between now and mid-April, a variety of legislative study and oversight committees will continue to meet to review the impact of new laws and the state budget and to make recommendations for legislation to be considered during the 2024 short session. The Center will keep you posted on any developments affecting nonprofits in these committee meetings.
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Reminder: DHHS Offers Resources to Help Nonprofits Provide Outreach on Medicaid Expansion
Medicaid expansion began in North Carolina in December. According to the NC Department of Health and Human Services (DHHS), nearly 349,000 North Carolinians have enrolled in health care through Medicaid expansion in the first two months it's been available, with about 1,000 more people enrolling every day. DHHS estimates that more than 250,000 additional North Carolinians may be eligible for coverage. Almost all potential Medicaid expansion enrollees receive services from nonprofits, so it is important for nonprofit organizations to spread the word about Medicaid expansion eligibility and the application process.
The DHHS website includes basic information on eligibility for Medicaid coverage, details of costs and coverage, and free materials to help nonprofits provide clear and accurate information about Medicaid and Medicaid expansion to their clients and communities. Please share this information widely, especially with clients who may now be eligible to apply.
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