March 19, 2021
Note: The North Carolina Center for Nonprofits typically 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.
In this issue...
NC House legislation would modernize nonprofit remote meeting laws
Register for policy briefing for latest on state legislation affecting nonprofits
American Rescue Plan includes significant funding that could assist nonprofits
U.S. House approves bill to extend PPP loan applications through May 31
Many nonprofits now eligible for Employee Retention Tax Credit 
Take action: Help eligible community members get vaccinated 
Legislators and Governor Cooper make improvements to unemployment laws
State legislation would expand UI benefits
Remind your community: Don’t miss out on federal stimulus payments 
NC Senate bill would increase state tax benefits for charitable contributions in 2021
NC House Legislation Would Modernize Nonprofit Remote Meeting Laws
A bill (H.B 320) introduced in the NC House of Representatives on Tuesday would make several changes to the NC Nonprofit Corporation Act to 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. Under current law, nonprofits with members must conduct meetings in person (although this requirement has been temporarily suspended during the COVID-19 pandemic, as described below), and nonprofits need board approval (typically in a provision in the nonprofit’s bylaws) to use email or other means of electronic communication for unanimous written consent votes of boards. The House Judiciary I Committee is likely to vote on the bill next Tuesday, and the House could vote on it as soon as next week.

The proposed changes are based on recommendations from the Center, thanks to input we have received from nonprofits during the COVID-19 pandemic. The Center is appreciative of Representative Destin Hall (R-Caldwell) for introducing this bill and for working with the Center and other nonprofits on legislative language that will be helpful for a wide range of nonprofit organizations.

Throughout the past year, Governor Roy Cooper has issued a series of executive orders giving nonprofit boards the flexibility to allow membership meetings to take place by remote communication and through remote voting during the pandemic, even if these types of remote meetings are not expressly authorized in the nonprofit’s articles of incorporation or bylaws. Governor Cooper’s most recent action – Executive Order No. 198 – extends this temporary authorization through May 10, 2021.
Register for Policy Briefing for Latest on Legislation Affecting Nonprofits
To help your nonprofit’s staff and board better understand how recent and upcoming public policy changes may affect your organization’s operations, the Center is offering two online nonprofit policy briefings this month. You can purchase the recording of the first policy briefing from earlier this week, which included an overview of the latest federal and state COVID-19 relief plans and the potential policy solutions that could help nonprofits during the 2021 NC legislative session. The second policy briefing, next Friday, March 26 from 9:30-11:00 a.m., will feature a bipartisan panel of state legislators sharing insights on state policy priorities in 2021, the budget process, and how nonprofits can effectively engage with elected officials as the pandemic continues. Register now.
American Rescue Plan Includes Significant Funding that Could Assist Nonprofits
The American Rescue Plan Act, which President Joe Biden signed into law last Thursday, includes $350 billion in federal aid for state and local governments. This includes about $5.2 billion in support for the state of North Carolina and $3.8 billion for local governments throughout the state. State and local governments must spend this money; they can’t use it for tax cuts or put it in reserve funds. Notably, the American Rescue Plan Act allows state and local governments to use some of this money to provide financial assistance to nonprofits that have suffered economic harm due to COVID-19.

State legislators are likely to come up with a plan to spend North Carolina’s share of this federal aid later this spring or summer. The Center is developing plans to advocate for legislators to use some of this money to invest in jobs in the nonprofit sector. A recent report from the Center for Civil Society Studies at Johns Hopkins University found that nonprofit employment has declined by 7.4% since February 2020 and estimates that it will take nearly two years for nonprofit employment to return to pre-pandemic levels. Look for more information and calls to action in the coming weeks.

For more information on key nonprofit provisions in the American Rescue Plan Act, check out the Center’s new blog post.
U.S. House Approves Bill to Extend PPP Loan Applications through May 31
The deadline for nonprofits and businesses to apply for PPP loans is currently set for March 31. On Tuesday, the U.S. House of Representatives approved a bill (H.R. 1799) to extend this deadline through May 31 and to allow the Small Business Administration (SBA) to continue to process loan applications through June 30. Five North Carolina representatives – Ted Budd (R), Richard Hudson (R), Greg Murphy (R), David Price (D), and Deborah Ross (D) – were co-sponsors of the bill. The Senate is likely to vote on the bill next week.
Many Nonprofits Now Eligible for Employee Retention Tax Credit
One of the significant changes in the COVID-19 relief bill that Congress approved in December was the extension and expansion of the Employee Retention Tax Credit (ERTC). The ERTC is a refundable tax credit (translation: nonprofits are eligible for it) that organizations can take if they partially or fully shut down operations when pandemic restrictions went into place and had a decline in revenue. For 2020, nonprofits must have had a 50% drop in revenue for any quarter compared to the same quarter in the previous year. But for 2021, nonprofits can access the ERTC if they had a 20% drop in revenue.

One significant change is that organizations that receive a Paycheck Protection Program loan can now also claim ERTC as long as the credits are applied to payroll and operating expenses different from those covered by the PPP loan. Organizations can claim both through the extended December 31, 2021 deadline. Also, the ERTC is now a much larger tax credit, covering up to $7,000 per employee per quarter. The National Council of Nonprofits has provided an excellent analysis of the ways the ERTC could help nonprofits.
Take Action: Help Eligible Community Members Get Vaccinated
Nonprofits are trusted messengers, and many North Carolinians are more likely to take important public health actions if the message comes from a familiar nonprofit organization rather than a government official. Your nonprofit can make a big difference in fighting the COVID-19 pandemic by sharing information about the availability, safety, and importance of vaccines and about the continuing importance of wearing masks and social distancing when in public. 

This week, Governor Cooper expressed optimism that COVID-19 vaccines would be available to all North Carolina adults by May 1. As of this Wednesday, North Carolinians with high-risk medical conditions (includes a list of the many eligible conditions) are eligible to receive vaccinations. North Carolina is also currently vaccinating:
  • Individuals living in group settings (including people experiencing homelessness and people living in correctional facilities);
  • Frontline essential workers (including social workers, public health workers, clergy, homeless shelter staff, veterinarians, college and university instructors and support staff, and workers in stores that sell groceries and medicine), 
  • Educators, school personnel, and child care workers;
  • Health care workers;
  • Long-term care staff and residents; and
  • People 65 and older.

Here are four things your nonprofit can do to help ensure that people you serve get vaccinated once they are eligible:
  • Share the NC Department of Health and Human Services’ (DHHS’s) online Find My Group tool to help North Carolinians know when they will be eligible to get their vaccine. 
  • Share the DHHS Find My Spot search tool to help North Carolinians locate vaccine providers near where they live and work. 
  • Help the people you serve and others in your community get appointments for vaccinations. Many North Carolinians are struggling with the technology required to get an appointment to receive a vaccine. Nonprofit staff and volunteers can help people navigate the online appointment systems to ensure that technology is not a barrier to vaccinations.
  • Share highlights of the new Centers for Disease Control and Prevention (CDC) guidelines for fully vaccinated individuals as incentive for people to get a vaccine when they are eligible. Notably, the CDC recommends that it is safe for fully vaccinated people to get together with other fully vaccinated people indoors without masks or social distancing.
Legislators and Governor Cooper Make Improvements to Unemployment Laws
Yesterday, the NC House Finance Committee approved a bill (S.114) that would prevent increases in unemployment insurance (UI) costs for nonprofits and businesses that pay state unemployment tax (SUTA). The bill would keep the base rate for SUTA at 1.9% for 2021. Without this change, the tax rate would increase to 2.4% this year. Businesses and many nonprofits pay SUTA quarterly. Their tax rate is a combination of the base rate and their experience rating, which is based on the history of UI claims by their employees.

Unlike the version of the bill passed by the Senate last week, the House version does not extend the period when employers’ accounts (including those of nonprofits that elect to reimburse the state for UI claims rather than pay SUTA) will not be charged for COVID-related UI claims. Legislators realized that this extension was unnecessary since Governor Cooper has already authorized it by executive order. The bill is likely to pass the full House next week and then get final approval from the Senate.

Also, last week, Governor Cooper issued Executive Order No. 200 to reinstate the work search requirement for individuals receiving UI benefits. Starting this week, individuals making new UI claims must demonstrate that they are actively seeking work and must make contact with at least three prospective employers per week to remain eligible for UI benefits. Governor Cooper had waived these work search requirements for the first year of the COVID-19 pandemic.
State Legislation Would Expand UI Benefits
On Wednesday, legislators introduced identical bills in the NC House of Representatives (H.B. 331) and NC Senate (S.320) to make major changes to state UI benefits. The bills would:
  1. Increase maximum weekly benefits to $500 per week (they are currently at $350) and provide automatic increases in this amount for inflation;
  2. Increase the duration of UI benefits to up to 26 weeks (currently they are limited to 12 weeks);
  3. Allow workers to receive benefits if they leave their jobs due to spousal relocation, health reasons, or undue family hardship (e.g. inability to find child care or senior care); and
  4. Create a new short-term compensation program that would provide an alternative to layoffs for employers who need to reduce their employees’ hours but want to ensure that they don’t see significant wage losses.

The proposals would significantly increase UI benefits for North Carolinians who are out of work – including many people who work for or receive services from nonprofits. However, some parts of the bill also could increase UI costs for nonprofits that elect to reimburse the state for UI claims instead of paying SUTA. It is unclear whether the bills – or some parts of them – will be considered by either the House or Senate this year.
Remind Your Community: Don’t Miss Out on Federal Stimulus Payments
As part of the COVID relief package that was approved in December, most Americans were eligible for Economic Impact Payments – or stimulus payments – in the amount of $600 for each person in their household. The IRS has made direct deposits or issued checks for these stimulus payments, but many North Carolinians – particularly those with low incomes who don't typically file federal income tax returns and those with children – may not have received these payments or may not have received the full amount they are due. The IRS has a tool for individuals to check the status of their stimulus payments.

Individuals and families that did not receive their stimulus payments are eligible for a Recovery Rebate Credit, which they can claim by filing IRS Form 1040 and using line 30. This week, the IRS extended the filing deadline for individual income taxes through May 17. The Center strongly encourages nonprofits – particularly those serving North Carolinians with low incomes and those serving children – to help spread the word to ensure that those who did not receive their full Economic Impact Payments file a Form 1040 and use line 30 to request their stimulus payments.
NC Senate Bill Would Increase State Tax Benefits for Charitable Contributions in 2021
A bill (S.322) filed in the NC Senate yesterday would make a variety of changes to state tax laws. Most notably for nonprofits, the proposal would allow North Carolinians who use the universal charitable deduction – and those who itemize their deductions and contribute more than 60% of their adjusted gross income to charitable nonprofits – to get the full benefit of these tax deductions on their state taxes in 2021. Last year, North Carolina “decoupled” from these two federal tax incentives for charitable giving, meaning that North Carolinians who gave generously didn’t get breaks on their state tax liability. An identical bill (H.B. 279) was introduced in the NC House of Representatives last week.
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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.