The Nonprofit Finance Fund’s State of the Nonprofit Sector Survey is open and will run through February 28. This national survey provides essential information about the financial health of nonprofits. In the past, policymakers and the media have found data from the survey on North Carolina nonprofits compelling, particularly information on the nonprofit sector’s finances, demand for services, and capacity to meet community needs. This is the first time that the Nonprofit Finance Fund has conducted the survey since the start of the pandemic, so this year’s survey will be particularly important in assessing the current health of North Carolina’s nonprofit sector.

The Center strongly encourages you to take the time to complete this survey sometime in the next four weeks. The more North Carolina nonprofits that complete the survey, the clearer picture we will have of the finances, capacity, and needs of nonprofit organizations throughout the state. Your responses to the survey will be important tools in the Center’s work to advocate with your nonprofit for policy solutions that will strengthen our organizations and communities.

On Wednesday, the North Carolina State Treasurer released a report on charity care at nonprofit hospitals in North Carolina. The report notes that some nonprofit hospitals spent less on charity care in 2020 than the value of their tax exemptions and mentions the possibility of limiting or eliminating tax exemptions for nonprofit hospitals and imposing payments-in-lieu-of-taxes (PILOTs) on nonprofit hospitals and other large 501(c)(3) entities. 

While the report’s findings about medical bills for low-income North Carolinians are troubling, the Center is concerned that the report misrepresents the community benefits provided by nonprofit hospitals and the challenges facing charitable nonprofits across North Carolina after nearly two years of the COVID-19 pandemic. Specifically:

The Center is particularly concerned that the report could encourage policymakers to consider limiting or eliminating nonprofit sales tax refunds and/or property tax exemption. The Center has long held the position that all 501(c)(3) nonprofits should be exempt from state and local taxes. As we noted in a 2019 post highlighting potential threats to nonprofit tax exemption, “it is essential for all 501(c)(3) nonprofits to work together as a sector to preserve – and improve upon – nonprofit tax exemption. New taxes and fees on nonprofits – even if they initially only apply to a few organizations – ultimately harm our communities by taking resources away from the work of charitable nonprofits throughout North Carolina.”

While there is no need for nonprofits to act today, the Center will keep you posted if there are future threats to your nonprofit’s tax exemption.

Some nonprofits are eligible to apply for financial support through the new Business Recovery Grant program. The program provides economic recovery grants to businesses in the entertainment and hospitality industries and to other businesses that have not previously received federal or state relief for economic harm from the COVID-19 pandemic. While the program is designed to provide support for businesses (and not to nonprofits), 501(c)(3) nonprofits that pay state unrelated business income tax (UBIT) are eligible for grants if they meet one of the following criteria:

The NC Department of Revenue (DOR) is accepting applications from eligible businesses and nonprofits through January 31. Grants will be awarded for up to 10% of lost revenue for organizations that have previously received federal or state COVID-19 support and 20% for organizations that have not received government COVID-19 aid. The maximum grant award is $500,000. Additional information and applications are available at the DOR Business Recovery Grant program website.

On Tuesday, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) formally withdrew its Emergency Temporary Standard (ETS) on COVID-19 vaccinations for employers with 100 or more employees. The move comes less than two weeks after the U.S. Supreme Court issued a stay on the ETS (NFIB v. OSHA), temporarily blocking OSHA’s implementation of the rule. OSHA now plans to move forward with a permanent rule on vaccination requirements for large employers. OSHA could release the permanent rule, which may cover some nonprofit employers, later this year.

Meanwhile, the Centers for Medicare & Medicaid Services (CMS) is moving forward with enforcement of its Emergency Temporary Standard that requires health facilities that receive Medicaid or Medicare reimbursements to require their workers to be vaccinated against COVID-19.

Although vaccination policies are not currently mandatory for most nonprofits, individual nonprofit organizations can still require their employees to be vaccinated against COVID-19. To help your nonprofit answer questions about vaccination policies, check out the Center’s analysis of vaccination considerations for nonprofits, including tips to help your organization develop a COVID-19 vaccination policy for your employees.

The Center’s weekly Nonprofit Policy Update (i.e. the email you are reading right now!) provides updates on new and proposed legislation and regulations that might affect your nonprofit’s operations and mission. The Center also recognizes that it’s helpful for nonprofits to review the many federal and state laws (some new, some longstanding) that are necessary for your nonprofit to remain compliant. With this in mind, the Center has published its annual Legal Compliance Checklist for North Carolina Nonprofits, a comprehensive summary of laws affecting NC nonprofits’ tax exemption, governance, finances, advocacy, human resources, and fundraising – and how to comply.

This year’s edition includes details on legal issues related to COVID-19, new state tax and employee health insurance laws, changes to employment laws and state grant reporting requirements, and more.

The Legal Compliance Checklist is included as a benefit for members of the Center. If your nonprofit is a Center member, all of your staff and board members have access (download it here). The Legal Compliance Checklist is also available for purchase for nonprofits that are not yet members of the Center and others (purchase it here). Any 501(c)(3) nonprofit can become a Center member to get access to the Legal Compliance Checklist and a wide range of other resources and services.

Hundreds of nonprofits received one-time appropriations (officially known as “directed grants”) in the state budget for FY2021-23 (S.105). Based on the Center’s analysis, state legislators included an unprecedented $849 million in new funding for nonprofits in the budget. Many nonprofits are receiving state funding for the first time, so they may be unfamiliar with the requirements that accompany these directed grants.

The state could begin paying nonprofits that received directed grants in the next two months. Last week, the NC Office of State Budget and Management (OSBM) published a website that includes a searchable database of directed grants and answers to frequently asked questions. If you think your nonprofit received a directed grant, check the database to ensure that your organization is listed correctly. You also can begin the process of being paid by completing and submitting several required forms:

Most nonprofits receiving directed grants should have already been contacted by their administering agency. If your nonprofit hasn’t heard from your administering agency, you may want to reach out to the agency directly.

OSBM also has developed a helpful flowchart showing the circuitous process for grant administration. This helps illustrate why the receipt of state funding can be a long and arduous process for many North Carolina nonprofits.

The Center provides Nonprofit Policy Update each week as a benefit to its nonprofit members. However, to help all North Carolina nonprofits respond to the COVID-19 pandemic, we're temporarily providing this newsletter to non-member nonprofits. Don’t miss out – become a member to ensure you continue receiving these updates along with many other valuable benefits.