July 16, 2021
In this issue...
Status update on 11 state legislative proposals affecting nonprofits
Local governments can provide pandemic relief through (and to) nonprofits
NC House of Representatives likely to vote on state budget next month
Make your voice heard on state spending priorities 
NC Senate bill could amend state constitution to limit race equity in government contracting
Governor Cooper vetoes bill to withdraw North Carolina from federal unemployment benefits
SBA eliminates PPP loan necessity requirement for loans of $2 million or more
North Carolina congressman introduces bill to bolster national service programs 
Second quarter lobbying reports due next Wednesday
Status Update on 11 State Legislative Proposals Affecting Nonprofits
Over the past six months, these weekly policy updates have mentioned a variety of state bills that could affect the operations of nonprofits. We know that many nonprofits are interested in some or all of these bills, so we are starting this week’s message with a quick update on the status of legislation affecting nonprofits.

  • Charitable solicitation modernization. The House has unanimously passed a bill (S.695) that would modernize the North Carolina charitable solicitation statute by: (a) raising the threshold for exemption from charitable solicitation licensure (from $25,000 in contributions to $50,000 in contributions per year); (b) aligning charitable solicitation filing extensions with automatic extensions for 990 filings; and (c) eliminating the requirement that nonprofits have their charitable solicitation forms notarized. The Center recommended this bill and is advocating for the Senate to vote on it this summer. Let us know if this bill would help your nonprofit. If it does, we may ask you to reach out to your state senator (we’ll provide tips on how to reach them and what to say).

  • Local government funding of nonprofits. Two NC House committees have approved a bill (S.473) that would require a local government elected official who serves on a nonprofit board to recuse themself from the decision to provide government funding to that organization. The Senate approved the bill last month after adopting a Center-recommended amendment to remove a problematic provision in the original version that could have prevented county and municipal governments from engaging in grants and contracts with many nonprofits. The Center is working with legislators, state agencies, and local governments on another clarifying amendment to provide necessary protections for local elected officials who serve on nonprofit boards. The bill still needs approval of one more committee before consideration by the full House. The House could pass the bill as soon as next week.

  • Health insurance options for nonprofits. This spring, the NC Senate unanimously approved a bill (S.228) that would allow North Carolina nonprofits and small businesses to offer exclusive provider benefit (EPO benefit) plans for their employees. EPO benefit plans are typically 15-20% less expensive than other health insurance plans and allow participants to use a limited network of local health care providers while paying the full cost for any out-of-network health services other than emergency care. Potentially, this legislation could provide a meaningful and affordable health coverage option for some nonprofits. The House hasn’t yet considered the bill, but the Senate included the EPO language in its version of the state budget, and there is a good chance it could pass this year. 

  • Donor privacy. The NC Senate has approved a bill (S.636) that would: (1) prohibit nonprofits from disclosing “the identity of any person donating monies or other tangible goods to the nonprofit corporation” if a donor notifies the nonprofit that they would like their identity kept confidential; and (2) prohibit state officials from providing Schedule B of nonprofits’ Forms 990 or 990-EZ (the attachment that includes donor information) in public records requests. The Center worked with the bill's sponsor on an amendment (which passed) that addressed nonprofits’ concern about a provision in the original version that could have created new fundraising burdens – and potentially legal liability – for many 501(c)(3) nonprofits. The House could take up this bill later this summer.

  • Remote meetings and electronic voting. This spring, both the NC House (H.B. 320) and NC Senate (S.410) unanimously passed bills that would make it easier for nonprofits with members to conduct meetings remotely and for nonprofit board members to use email to take action by unanimous written consent. Although legislators in the House and Senate agree on the substance of the bills, neither chamber has been willing to take up the version passed by the other chamber. The Center continues to work with legislators to ensure that one of these bills becomes law this year.

  • Improving nonprofit corporation laws. Bills in both the NC House (H.B. 696) and NC Senate (S.540) would modernize the North Carolina Nonprofit Corporation Act to bring the state’s nonprofit statute into better alignment with best practices for nonprofit organizations. One House committee has already unanimously approved the bill, and it still needs approval of two more committees before the full House votes on it. The Center recommended this bill and is working with legislators to get it passed this session.

  • Student debt. A NC House bill (H.B. 707) that would establish a Student Borrowers' Bill of Rights was approved by a House committee last month. This proposal would create several new protections for student borrowers and add new regulation for student lenders. This could help more North Carolinians – including many nonprofit workers – access the Public Service Loan Forgiveness (PSLF) Program, which helps make nonprofit careers sustainable for many workers with college debt. The bill has its next committee hearing Tuesday, and the full House could take it up later this summer.

  • Sales tax exemption. A Senate proposal (S.441) would exempt most 501(c)(3) nonprofits from paying sales and use tax when they purchase goods and services. Under current law, charitable nonprofits pay sales tax and can apply for refunds from the NC Department of Revenue. Sales tax exemption would save nonprofits time and money. This proposal wasn’t included in the Senate budget (which included all of the Senate’s proposed tax law changes), so it’s unlikely to pass this year. However, the Center is working with legislators on getting it passed in 2022.

  • Retirement options for nonprofit employees. A NC House bill (H.B. 899) would create a new state-run retirement program for workers at small businesses and nonprofits that do not offer employer-provided retirement benefits. The NC Work and Save Program would allow workers to use payroll deduction to contribute to their individual retirement accounts (IRAs), making it easier for many nonprofit employees to plan for retirement savings and to make regular contributions to their IRAs. The Center supports this bill since it could help many small nonprofits offer retirement benefits to their staff for the first time. One House committee has already approved the bill, and it would need to get through two more committees before the full House considers it.

  • Tax credit for charitable contributions. A NC Senate bill (S.504) would create a new state tax credit for charitable contributions by individuals who use the standard deduction. This could help encourage North Carolinians to give more generously to support the work of nonprofits serving communities throughout the state. While this bill would help nonprofits raise more money to support their programs and services, it is unlikely to pass because legislative leaders are opposed to creating new state tax credits.

The Center will continue to keep you posted on the status of these bills in upcoming policy updates. If you have questions about the status of these or other bills – or about advocacy strategies on legislation that your nonprofit supports or opposes – feel free to reach out to us for additional information or assistance.
Local Governments Can Provide Pandemic Relief Through (and to) Nonprofits
Cities and counties throughout North Carolina are receiving (or in some cases, have recently received) American Rescue Plan (ARP) funding to help respond to the COVID-19 pandemic. Under the ARP, local governments can use this funding to provide relief to nonprofits that have suffered economic harm during the pandemic and can work in partnership with nonprofits to provide help to their communities.

Now is a great time for your nonprofit to reach out to your local elected officials (i.e., city council and county board of commissioners) with suggestions on how to best use their ARP funds. This could include creation of a local nonprofit relief fund (see the Center’s suggested criteria for a statewide fund as an example) or through investment in particular types of programs and services (or specific organizations) in your community.

To help you make your case to local officials, a new report from the National Council of Nonprofits provides insights into ways that local governments can use ARP funds to support communities in partnership with nonprofits. The report includes examples of successful models of nonprofit COVID-19 relief from around the country.
NC House of Representatives Likely to Vote on State Budget Next Month
The NC House of Representatives is unlikely to begin the formal process of developing its version of the state budget for FY2021-23 until early August, more than a month after the beginning of the state’s fiscal year. Because the new state budget hasn’t been finalized, current state spending levels remain in effect for the beginning of the new fiscal year, meaning that state funding won’t be increased or revised to adapt to changing needs in the state.
Last month, the NC Senate approved its version of the state budget (S.105). Some nonprofit highlights in the Senate budget include:
  • About $262 million in new funding for nonprofits, most of which is earmarked for specific organizations in key senators’ districts. 
  • Automatic grants to nonprofits that received Paycheck Protection Program (PPP) loans or other federal or state COVID-19 relief. The grants would be for 7.5% of the amount of their federal or state relief, with maximum grant awards of $18,750 per entity.
  • Appropriations of most of the state’s $5.7 billion in ARP funds – but without creating a nonprofit relief fund to help organizations that have experienced economic hardship due to the COVID-19 pandemic. The Center continues to advocate for the House to provide economic relief to a significant number of nonprofits, either by creating a $75 million nonprofit relief fund or by making nonprofits eligible for business relief grants.
  • Individual and corporate income tax cuts that would reduce state revenue by about $13.9 billion over the next five years. Depending on the overall economy, this could lead to state spending cuts in future years, including less investment in the work of nonprofits providing services in North Carolina communities. 

Once the House approves its version of the budget, the House and Senate will negotiate with each other and with Governor Roy Cooper on a final version of the state budget. These negotiations could continue through the summer and into the fall. The Center has prepared a chart highlighting the appropriations and provisions in the Senate budget that affect nonprofits. The Center will update this chart once the House approves its version of the budget and once legislators agree on a final version of the budget to send to Governor Cooper.
Make Your Voice Heard on State Spending Priorities
With the House budget still a blank slate, the next two weeks are a great time to find your state House member and write to let them know what types of state funding would help your organization and your community. With billions of dollars available in unspent state revenue and ARP funding, the NC House of Representatives has the resources to address many important needs in this year’s state budget. Before you get started writing to your NC House member, take a few minutes to read these tips on how to write an effective letter to your elected officials – complete with an easy-to-use worksheet and samples of effective letters.
NC Senate Bill Could Amend State Constitution to Limit Race Equity in Government Contracting
A bill (S.729) introduced in the NC Senate on Wednesday would place a constitutional amendment on the ballot during the March 2022 primary election to prohibit discrimination or preferential treatment in public employment, education, and contracting “on the basis of race, sex, color ethnicity, or national origin.” Potentially, this provision could prevent the state of North Carolina and local governments in the state from giving preferential treatment to nonprofits led by people of color or serving communities of color when awarding grants or contracts to organizations providing services to the public. The bill would need to pass with support of at least 60% of the members of the NC Senate and NC House of Representatives to be placed on the ballot next spring. Constitutional amendments don’t require gubernatorial approval, so Governor Cooper can’t veto the bill if it passes. Instead, it would be added to the North Carolina Constitution if a majority of voters approve it.
Governor Cooper Vetoes Bill to Withdraw North Carolina from Federal Unemployment Benefits
On July 2, Governor Cooper vetoed a bill (S.116) that would have withdrawn North Carolina from the Federal Pandemic Unemployment Compensation (FPUC) program that provides $300 weekly supplemental payments to unemployed workers. The bill also would have withdrawn North Carolina from the Mixed Earner Unemployment Compensation (MEUC) program.

The American Rescue Plan Act extended the FPUC and MEUC programs through September 6, 2021. Governors in 26 other states have announced plans to withdraw from federal unemployment benefit programs. Technically, the House and Senate could try to override Governor Cooper’s veto (it would require 60% of the members of each chamber to vote for an override). Practically, however, the veto means that North Carolina won’t withdraw early from these programs since the bill wouldn’t take effect until 30 days after it is enacted.
SBA Eliminates PPP Loan Necessity Requirement for Loans of $2 Million or More
The U.S. Small Business Administration (SBA) has begun informing lenders that it is eliminating the loan necessity review for Paycheck Protection Program loans of $2 million or more. Last year, in response to revelations that publicly traded companies were accessing PPP funds intended for small businesses and nonprofits, the SBA began requiring entities seeking larger loans to submit a questionnaire (SBA Form 3510 for nonprofits) providing extensive financial details sufficient to demonstrate to SBA’s satisfaction “that economic uncertainty made the loan request necessary.” The National Council of Nonprofits and other national organizations objected to the form when it was first announced and urged the SBA to either withdraw or substantially revise SBA Form 3510.
North Carolina Congressman Introduces Bill to Bolster National Service Programs
Last month, Congressman David Price (D-NC) introduced the bipartisan Cultivating Opportunity and Recovery from the Pandemic through Service (CORPS) Act (H.R. 4100) in the U.S. House of Representatives. The bill would expand national service programs to provide meaningful service opportunities for individuals while supporting the needs of local communities and economies. Specifically, the bill would provide funding for more service positions through the Corporation for National and Community Service through 2024, increase stipends, provide flexibility in programs, and prioritize funding for communities disproportionately impacted by COVID-19 and using culturally competent and multilingual strategies. An identical bipartisan bill (S.1165) has been introduced in the U.S. Senate.
Second Quarter Lobbying Reports Due Wednesday
Second quarter lobbying expense reports are due to the NC Secretary of State by next Wednesday, July 21. Nonprofits that are registered as lobbyist principals and nonprofit staff and contractors registered as lobbyists must submit their expense reports each quarter. For more information on lobbying registration and reporting requirements, check out the Center's summary of NC lobbying laws for nonprofits.
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Nonprofit Policy Update is a weekly newsletter 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.