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In this week's issue...
With state legislators set to return to Raleigh for the 2024 short session next month, this week’s Nonprofit Policy Update provides a preview of some of the nonprofit sector issues that could be in play. We also seek your input (again) on the timing of payments from the state, charitable solicitation filings, and nonprofit sales tax exemption. And we share the latest on the federal budget for both this year and next year.
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2024 Short Session Starts Next Month
The NC Senate and NC House of Representatives held brief, non-voting sessions this Wednesday and Thursday. The real legislative action for the year will start next month 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. If the state has a revenue surplus, the budget could potentially include new or increased state funding for some nonprofits.
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. In a NC Health News story last week, two influential legislators suggested that they are considering changes to laws related to hospitals’ property tax exemption and sales tax refunds. Legislation affecting nonprofit hospitals could ultimately have implications for all 501(c)(3) nonprofits. And legislators could revisit other legislation affecting nonprofits this spring, such as a 2022 bill (that was ultimately vetoed) that would have created a controversial donor privacy law in North Carolina.
The Center will continue to advocate on nonprofits’ behalf on these and other issues, and we will keep you posted with any developments and/or opportunities for your nonprofit to take action. The next three items include short surveys on three nonprofit policy issues that could be in consideration during the short session; your input will help guide the Center’s advocacy on these issues this spring and summer.
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Has Your Nonprofit Received Your Payments from State Budget Appropriations?
Last year’s state budget included direct appropriations for more than 600 nonprofits. Other organizations are receiving funds through grants and contracts with state agencies that received funding in the budget. In recent weeks, the Center has heard from a few nonprofits that have not yet begun receiving payments on their state appropriations, grants, and contracts. To help us assess whether these are isolated or more widespread issues, if your nonprofit received state funding for FY 2023-24, please take three minutes to complete a brief survey about the timeliness of your payments from the state. Thank you if you already shared your input last week.
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How is the New Charitable Solicitation Licensing Law Working?
A new state law that took effect last September was implemented to help nonprofits stay in compliance with charitable solicitation licensing requirements. Under the new law, if a nonprofit receives a six-month extension of its filing deadline for its IRS Form 990, it can also receive the same extension for its charitable solicitation filings with the NC Secretary of State. To receive this extension, nonprofits must send a copy of their IRS notice of extension to the Secretary of State’s Charitable Solicitation Licensing Division within seven days of filing for the extension with the IRS.
In advance of the 2024 legislative short session, the Center is interested in hearing from nonprofits about how well this new law is working. If your nonprofit has received an extension of your 990 filing deadline in the last six months and has needed a similar extension of your charitable solicitation renewal, please take two minutes to complete a quick survey. Your input will help the Center assess whether there is a need to seek further changes to the law or to work with the Secretary of State to help ensure that nonprofits are able to take advantage of their filing extensions. Thank you if you already shared your input last week.
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Is the Nonprofit Sales Tax Refund Process Challenging for Your Nonprofit?
Under current North Carolina law, charitable nonprofits pay sales tax on their purchases, and most 501(c)(3) nonprofits are eligible to have their sales taxes refunded to them twice a year. The Center has long advocated for legislators to replace this sales tax refund process with nonprofit sales tax exemption. To help guide our advocacy on this issue, we are seeking your input on any challenges your nonprofit has experienced with the current system and how interested your organization would be in nonprofit sales tax exemption. The brief survey should only take 1-3 minutes to complete. Thank you if you already shared your input last week.
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Register 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 (mostly state legislators) to discuss public policy issues that are important to charitable nonprofits and the people and communities they serve. At each of these Nonprofit Policy Conversations, the Center will provide a briefing on trends in the nonprofit sector and potential public policy solutions and challenges for nonprofits in 2024 and beyond. Nonprofit Policy Conversations are scheduled for:
- 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 for nonprofits in Guilford County, Forsyth County, and surrounding areas.
- Monday, April 15 from 10:00 a.m. – 12:00 noon at Cumberland Community Foundation in Fayetteville in partnership with Cumberland Community Foundation for nonprofits in Cumberland County and surrounding areas.
- Friday, April 19 from 1:00-3:00 p.m. at Truist Hall in Wilmington in partnership with QENO for nonprofits in southeastern North Carolina.
- 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 for nonprofits in the Charlotte area.
We will announce other dates and locations in the Triangle and eastern North Carolina once details are finalized. Registration is now open for the events in High Point, Fayetteville, Wilmington, and Charlotte.
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(Another) Partial Shutdown of Federal Government Looming Next Friday
Last Friday, the U.S. Senate approved a large appropriations bill that provides funding for the federal departments of Agriculture, Justice, Commerce, Energy, Interior, Transportation, and Housing and Urban Development for the remainder of the fiscal year (through September 30). The U.S. House of Representatives had approved the bill earlier last week among other things, the bill includes thousands of earmarks that provide funding for nonprofits and local governments around the country, including some from North Carolina. The bill passed the Senate by a 75-22 margin. Senator Thom Tillis (R-NC) voted for the bill, and Senator Ted Budd (R-NC) voted against it.
The rest of the federal government, including the departments of Labor, Health and Human Services, Defense, and Homeland Security, is only funded through March 22 by a short-term continuing resolution. Because many of those federal agencies house a wide variety of politically-contentious programs and policies, it could be challenging for Congress to reach agreements on the details of these bills by the March 22 deadline. That means that another partial government shutdown could be looming next Friday, and this one would threaten continued funding for many federal programs that provide grants and contracts for nonprofits.
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President Biden Releases FY2025 Federal Budget Proposal
Even though Congress hasn’t finished the budget process for the current fiscal year, President Joe Biden began the process of developing next year’s federal budget when he released his budget proposal for FY2025 (which begins on October 1, 2024) on Monday. Congress is likely to ignore the President’s proposal, which reflects the Biden Administration’s current policy priorities. The President’s budget blueprint includes several proposals on access to homeownership and affordable rent, lowering health care costs, and student loan relief, plus renewing two proposals from prior years affecting private foundation spending. It also purports to reduce the federal deficit by $3 billion over the next decade by raising taxes on high income taxpayers and corporations.
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Reminder: New DOL Worker Classification Rule is Now in Effect
On Monday, a new U.S. Department of Labor rule on worker classification took effect. The rule helps nonprofit determine whether their workers are employees or independent contractors under 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 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.
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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 was 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 under Medicaid expansion. 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.
DHHS has launched a website to help nonprofits and others with community outreach on Medicaid expansion. 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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