The NC House of Representatives will begin the formal process of developing its version of the state budget for FY2021-23 later this month. Last week, the NC Senate approved its version of the state budget (S.105). Some nonprofit highlights in the Senate budget include:

The NC General Assembly will not be in session next week, but the House should start working through the details of its budget when legislators return to Raleigh in two weeks. 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.

The new state budget was set to take effect yesterday. Because the 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.

Next week is 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 this post with tips on how to write an effective letter to your elected officials – complete with an easy-to-use worksheet and samples of effective letters.

Cities and counties throughout North Carolina are receiving (or in some cases, have just received) 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 make the best use of 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.

Yesterday, the U.S. Supreme Court issued a decision invalidating a California law that requires nonprofits soliciting in the state to disclose on a confidential basis the un-redacted Schedule B of their 990s (the schedule with donor information). Tax-exempt nonprofits already submit the same information to the IRS each year. In the 6-3 decision, the Court found California’s requirement that nonprofits confidentially disclose Schedule B of their 990s “imposes a widespread burden on donors’ associational rights.” The National Council of Nonprofits had filed an amicus curiae brief in support of the California law noting that state charity officials’ oversight – including its confidential access to donor information – is necessary to protect the public and to ensure the credibility of the nonprofit sector. As Justice Sonia Sotomayor noted in her dissenting opinion yesterday: “In the United States, responsibility for overseeing charities has historically been vested in States’ attorneys general, who are tasked with prosecuting charitable fraud, self-dealing, and misappropriation of charitable funds. Effective policing is critical to maintaining public confidence in, and continued giving to, charitable organizations...[T]he evidence shows that California’s confidential reporting requirement imposes trivial burdens on petitioners’ associational rights and plays a meaningful role in [the attorney general’s] ability to identify and prosecute charities engaged in malfeasance.”

The National Council of Nonprofits released a statement expressing concerns about the implications of the court’s decision for state oversight of nonprofits, noting that: ”The Court, splitting 6-3 on ideological grounds, took away a law-enforcement tool that will now make it harder for state charities officials to discourage, identify, and prosecute fraud in the charitable sector.”

On Wednesday, the NC House State Government Committee 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 Center supports this bill since it would protect the public’s trust in the work of nonprofits by helping to prevent conflicts of interest between local elected officials and nonprofits with which they are affiliated. 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 on a clarifying amendment that will ensure that nonprofits with local elected officials on their governing bodies won’t experience delays in funding if they receive contracts, grants, or appropriations as part of city or county budgets. The bill still needs approval of one more committee before consideration by the full House.

On Monday, a new law (S.722) was enacted that will postpone some municipal elections scheduled for this fall until March 2022 to allow time for redistricting. Earlier this year, the U.S. Census Bureau announced that Census data used for redistricting will not be available until September 30, 2021. Overall, 62 municipalities throughout North Carolina are scheduled to have elections this fall. Cities and towns where officials are elected to represent districts will need to redraw those districts before the election. The bill postpones those elections until later next spring and require affected municipalities to review and revise their districts once Census data is available this fall. However, municipalities can still have separate elections for some positions – like mayor or at-large city council seats – this fall, potentially creating some confusion for voters. The bill also permanently shifts Raleigh city council and mayoral elections to even-numbered years. The bill became law after Governor Cooper chose not to sign it or veto it within 10 days of receiving it.

Once local election boards provide more information about the new dates of municipal elections, it will be important for nonprofits to provide clear information to their staffs, volunteers, and the people they serve about delayed elections in their communities.

Second quarter lobbying expense reports are due to the NC Secretary of State by 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.

Note: With the NC General Assembly and Congress out of session next week, we will not publish a Nonprofit Policy Update next Friday.