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In this week's issue...
Looking for information about Tuesday’s primary elections? Then you are reading the wrong email! With the primary election in the rear-view mirror, the Election Tip of the Week feature from this email is taking a well-deserved vacation. Instead, we’re seeking your feedback on nonprofit sales tax refunds, charitable solicitation filing, and the timing of payments from the state. We also share details about the federal appropriations bill moving through Congress and the latest on federal employment regulations that will affect many North Carolina nonprofits in the coming months.
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Congress Poised to Pass Approve Funding for Parts of the Federal Government
On Wednesday, the U.S. House of Representatives approved a large appropriations bill to provide 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). 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 House by a 339-85 margin. Eleven of the 14 U.S. Representatives from North Carolina voted for the appropriations bill, with Congressman Greg Murphy (R-NC) voting against it, and Congressmen Dan Bishop (R-NC) and Jeff Jackson (D-NC) missing the vote. The U.S. Senate is expected to vote on the bill today.
Last week, Congress approved a continuing resolution that provides temporary funding for the rest of the federal government, including the departments of Labor, Health and Human Services, Defense, and Homeland Security, through March 22. 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 in two weeks, and this one would threaten continued funding for many federal programs that provide grants and contracts for nonprofits.
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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.
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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.
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 month 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 Secretary of State to help ensure that nonprofits are able to take advantage of their filing extensions.
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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 in advance for sharing your input.
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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 to discuss public policy issues that are important to charitable nonprofits and the people and communities they serve. At each Conversation, the Center will provide a briefing on nonprofit sector trends and potential public policy solutions and challenges for nonprofits in 2024 and beyond. To date, Nonprofit Policy Conversations are scheduled for:
- Thursday, March 14 from 1:00-3:00 p.m. at the Holiday Inn Biltmore West in Asheville in partnership with WNC Nonprofit Pathways
- 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
- Monday, April 15 from 10:00 a.m.-12:00 noon at Cumberland Community Foundation in Fayetteville in partnership with Cumberland Community Foundation
- Friday, April 19 from 1:00-3:00 p.m. at Truist Hall at UNCW in Wilmington in partnership with QENO
- 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
We will announce additional dates and locations as details are finalized. Registration is open for the events in Asheville, High Point, Fayetteville, Wilmington, and Charlotte.
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Final DOL Overtime Rule Could Be Published This Spring
Last week, the U.S. Department of Labor (DOL) sent the draft text of its final rule on the salary threshold for overtime pay under the Fair Labor Standards Act (FLSA) to the White House Office of Management and Budget (OMB) for review. The OMB review is typically the final step before a new federal rule is published to the Federal Register. That means that the final rule could be published as soon as this spring and could take effect this summer, although its implementation may (or may not) be delayed by expected court challenges.
Under FLSA, employers, including nonprofits, must pay employees one-and-one-half times their regular rate of pay for all time worked in excess of 40 hours in any work week. However, workers are exempt from this overtime pay requirement if they:
- Are paid at least the minimum salary level under DOL regulations (currently set at $684 per week or $35,568 per year);
- Are paid on a salary basis; and
- Exercise job duties that are classified as exempt under FLSA (which means administrative, executive, or professional job duties for most nonprofit positions).
Last fall, DOL issued a proposed rule that would raise the salary threshold for exempt employees to $1,059 per week or $55,068 per year. A footnote in the proposed rules suggested that the final rule could set the salary threshold above $60,000 per year. The Center submitted comments on DOL’s proposed overtime rule in November noting that it will likely have a disproportionate impact on North Carolina nonprofits. The Center also has prepared an analysis of the proposed regulations and their potential impact on nonprofit organizations, concluding with 15 compliance options and eight next steps for nonprofits to consider while we wait for a final rule from DOL.
Once the final rule is published, the Center plans to share additional analysis, including compliance options for nonprofits. We’ll also offer a webinar to help answer nonprofits’ questions about the rule.
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Reminder: New DOL Worker Classification Rule Takes Effect Next Week
In January, the U.S. Department of Labor (DOL) announced a new final rule for determining whether workers are employees or independent contractors under the Fair Labor Standards Act (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, which takes effect on March 11, 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.
Separately, DOL is still in the process of developing a final rule on the salary threshold for overtime pay under FLSA. The Center submitted comments on that proposed rule in November noting that it will likely have a disproportionate impact on North Carolina nonprofits. The Center also prepared an analysis of the proposed regulations and their potential impact on nonprofit organizations, concluding with 15 compliance options and eight next steps for nonprofits to consider while we wait for a final rule from DOL later this year.
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2024 Short Session Could Include Legislation on Nonprofit Issues
The NC General Assembly will begin its 2024 short session on Wednesday, April 24. 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.
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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 385,000 North Carolinians have enrolled in health care through Medicaid expansion in the first two months it's been 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. 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.
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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