May 13, 2022
In this issue...
Legislators could consider several nonprofit priorities during 2022 short session
Let us know: What state agencies are models of strong partnerships with nonprofits?
Governor Cooper makes recommendations for state budget
Find out where candidates on your ballot stand on nonprofit issues
Make a voting plan for primary election and help others make their voting plans
Make sure your nonprofit’s staff vote
Do you have questions about nonprofits and the 2022 election? We have answers!
NC Budget & Tax Center releases data and dashboards on living income standard in each county
It's not too late to claim Employee Retention Tax Credit for 2020 or 2021
NC Department of Revenue opens Phase 2 of Business Recovery Grants
Legislators Could Consider Several Nonprofit Priorities During 2022 Short Session
The NC General Assembly is scheduled to begin its 2022 short session next Wednesday, May 18. During the short session, legislators will consider changes to the state budget for FY 2022-23. Lawmakers may also consider other bills that passed one chamber during the 2021 session, that were recommended by legislative study committees, or that make changes to the state constitution or election laws. 

The NC Senate and NC House of Representatives aren’t expected to schedule committee meetings or votes until the week of May 24. Legislative leaders have said that they hope that this year’s short session will conclude by the first week of July. Unlike most other states, the North Carolina’s state constitution doesn’t limit the number of days the state legislature can be in session each year, so it’s possible that the short session could continue later into the summer.

This year, the Center is advocating for the General Assembly to enact three major policy solutions that would help nonprofits:
  1. Fixing a new state law that is causing some local elected officials to resign from nonprofit boards. Last year, the General Assembly passed a law (which took effect on January 1, 2022) that requires local elected officials to recuse themselves from discussions or votes on grants, appropriations, or contracts with nonprofits on whose boards they serve. Although the law doesn’t actually prohibit local elected officials from serving on nonprofit boards, the Center has heard from dozens of nonprofits that have had city council members and/or county commissioners resign from their boards as a result of the law. Many NC counties and municipalities include nonprofit funding in their budgets. In these jurisdictions, the new law means that local elected officials who serve on nonprofit boards will not be allowed to vote on local government budgets that include funding for these nonprofits. The Center is working with legislators and local government advocates on a technical change to the law that would replace the recusal requirement with a public notice requirement. This would provide better assurance to local elected officials that it is safe for them to serve on nonprofit boards.
  2. Modernizing state charitable solicitation laws. For several years, nonprofits have told the Center about several concerns they have had with the charitable solicitation licensing process. These include: (a) a lack of alignment between the automatic extension period for charitable solicitation renewals and Form 990 extensions, which causes some nonprofits to appear to have expired charitable solicitation licenses for a couple of months each year; (b) an unnecessary notarization requirement that makes it harder for nonprofits to complete their renewal forms; and (c) a requirement that many nonprofits that file Form 990-N with the IRS complete a much more complicated financial form for purposes of state charitable solicitation licensure. Last year, Representative Brandon Lofton (D-Mecklenburg) introduced legislation to fix these issues (H.B. 695), and the NC House of Representatives passed the bill unanimously. The Center has been working with legislators from both chambers to help get the Senate to also pass this bill.
  3. Addressing several challenges that nonprofits face when they provide public services through state grants and contracts. For years, nonprofits have told the Center about a variety of issues they have had with state grants and contracts, including late contracts, late payments, underpayment for indirect costs, and overly complex application and reporting requirements. Thanks to nonprofits input – and particularly your responses to last week’s action alert – the Center is working with legislators and executive branch officials on possible solutions to these issues. Some of these solutions could be included in this year’s state budget.

We will keep you posted on the progress of these three issues – and of any opportunities for you to make your voice heard on them – in these weekly policy updates. We’ll also let you know if other legislative issues of interest to nonprofits arise during the short session.
Let Us Know: What State Agencies Are Models of Strong Partnerships with Nonprofits?
Last week, the Center asked you about challenges your nonprofit is experiencing with state agencies with which your organization has grants or contracts. More than 40 nonprofits responded with examples of challenges they have experienced, including late contracts, late payments, underpayment for indirect costs, burdensome application and reporting requirements, midstream changes to contract outcomes and deliverables, and lack of clear communication. Even though we didn’t ask about positive experiences, a few responses also noted state agencies that are particularly good partners with nonprofits.

State agencies partner with nonprofits in many important ways, sometimes through contractual relationships and often through other types of collaborations that benefit communities throughout the state. As we work to strengthen nonprofit partnerships with state government to help in our shared goals of serving communities, it is helpful to learn more about state agencies that work well with nonprofits. These positive examples can serve as models for effective nonprofit-government partnerships.

Please share with us examples of state agencies that have been strong partners with your nonprofit. This could include agencies that generally delivery contracts on time, make timely payments to nonprofits, strive to pay nonprofits for the actual cost of providing services, have clear communication with nonprofits, set appropriate and consistent expectations for contract deliverables and outcomes, and/or collaborate with nonprofits in other ways to ensure that they provide the best possible services for communities. It would be helpful if you can let us know the state agency/division with which your nonprofit has a contract.
Governor Cooper Makes Recommendations for State Budget
On Wednesday, Governor Roy Cooper released his recommendations for the FY2022-23 state budget. Governor Cooper recommends increasing state spending next year by $2.3 billion more than the total amount appropriated in the budget that was enacted last year. Earlier this week, OSBM and the General Assembly’s Fiscal Research Division released a revised revenue forecast, which found that state revenue are expected to increase by about $6.2 billion (10.8%) above previous projections for the FY 2021-23 biennium. This projected revenue increase allows Governor Cooper and legislators some flexibility to consider increasing state spending in the next fiscal year.

Some highlights of Governor Cooper’s $29.3 billion budget proposal include:
  • Expanding Medicaid, which would provide health coverage for about 600,000 additional North Carolinians. The Center supports Medicaid expansion for two reasons. First, it would complement the work of many nonprofits that provide services to North Carolinians who don’t currently have adequate health coverage. Second, it would provide health coverage for some employees of nonprofits that don’t offer group health plans and whose salaries are too much to qualify for Medicaid currently but not enough to receive health care subsidies in the Affordable Care Act health marketplace. Legislators are unlikely to consider Medicaid expansion as part of the revised state budget, but there is a good chance that they will vote on Medicaid expansion and other health care policy changes during a special legislative session this fall.
  • Ensuring that state contractors pay workers at least $15 per hour through the creation of a Living Wage for Contracts Reserve fund with an initial balance of $25 million. The Center supports this proposal, which would require state agencies to increase payments to some nonprofits in their next contracts to ensure that these organizations can pay their workers at least $15 per hour. The Center appreciates that Governor Cooper has coupled his living wage proposal with a recommendation for funding to enable state contractors to pay these wages to their staff.
  • Improving access to affordable, high quality child care through an increase in the child care subsidy rate floor and the establishment of the NC Child Care WAGE$ Program to increase salaries for early childhood educators. The Center supports these proposals since they would help address nonprofit workforce issues. The recent National Council of Nonprofits report on the nonprofit workforce shortages found that inadequate access to high quality, affordable, and accessible child care is one of the biggest reasons that nonprofits are unable to hire and retain sufficient staff.
  • Funding for grants management staff in the NC Office of State Budget and Management (OSBM). Having staff dedicated to grants management may help improve collaboration between the state and nonprofits that provide public services through state grants and contracts.
  • $10 million in additional funding for Smart Starts.
  • $15 million in funding for nonprofit private colleges and universities (plus $15 million each for the UNC system and community colleges) to expand training capacity for healthcare jobs. The intent of this funding is to help address challenges in the healthcare workforce, which includes a wide variety of nonprofit health care providers.
  • $189 million in additional funding to address housing affordability needs across the state.

Legislators aren’t required to follow Governor Cooper’s budget recommendations but some of his priorities will likely be considered as legislative leaders negotiate on details of the state budget over the next couple of months.
Find Out Where Candidates on Your Ballot Stand on Nonprofit Issues
Before you vote in the primary election, take a few minutes to find out where the candidates on your ballot stand on issues of importance to nonprofits. The Center sent a questionnaire on nonprofit issues to all North Carolina candidates for Congress and the NC General Assembly and is posting candidates’ responses. We encourage you to share these candidate responses with your staff, board, volunteers, donors, and clients.
Make a Voting Plan for the Primary Election and Help Others Make Their Voting Plans
The Center's David Heinen taking his kids to the polls to show the importance of (early) voting.
We all have busy lives; even if we’re aware of the 2022 primary election and have researched the candidates on our ballot, it’s easy to forget to actually vote! People are more likely to participate in an election if they have a plan for when and where they will be voting. Friend of the Center Lisa Hazirjian has written a blog post with tips to help you make your plan for voting, including easy-to-use printable voting planners to share with your nonprofit’s staff, board, volunteers, and clients to help them make their own voting plans.
Make Sure Your Nonprofit’s Staff Vote
One of the easiest ways nonprofits can help promote the 2022 primary election is by giving your staff time off to vote during Early Voting or on Election Day. The Center is sharing its policy (below) allowing staff to take time off to vote or to volunteer as nonpartisan poll workers. Feel free to borrow this language and adapt it to fit into your organization’s personnel policies.

“Voting and Election Day. The Center encourages all employees who are eligible to vote to participate fully in the electoral process. Any Center employee may take paid time off work on Election Day or during the Early Voting period to vote in any primary, general, or run-off election. Employees should notify their supervisors of the time they plan to take off for voting.

“Center employees also may take up to one day per year of paid time off to volunteer in a nonpartisan role as a poll worker on Election Day or during the Early Voting period. Employees must get prior written approval of their supervisors (which shall not unreasonably be denied) before taking this paid time off. Employees volunteering for political parties or campaigns on Election Day or during the Early Voting period may not be paid for their time engaging in partisan political activities, but they may take annual leave for any time spent volunteering for candidates or political parties.”
Do You Have Questions about Nonprofits and the 2022 Election? We Have Answers!
Have you been wondering what types of election-related activities your nonprofit can and can’t do between now and the May 17 election? You’re not alone. The Center has been fielding many questions about what’s legal and what’s advisable, and posted answers to some of the most common questions we’re hearingLet us know of other questions you have about your nonprofit’s engagement in the 2022 election.
NC Budget & Tax Center Releases Data and Dashboards on Living Income Standard in Each County
Last week, the NC Budget & Tax Center released its Living Income Standard (LIS), a measurement developed to show what it takes in 2022 for families in every North Carolina county to pay for their basic needs. LIS gives a more accurate and comprehensive picture than more traditional measures like the Federal Poverty Level. In addition to the tables of data for every county that BTC normally releases, there is now a county dashboard to make it easy to see what it takes to make ends meet in your county at glance.

The goal of the LIS is to help working families document the story of what they face on a daily basis and set a benchmark for what a basic income needs to be. Even in the most affordable counties in NC, it now takes at least 140 hours a week working at the minimum wage to make ends meet for a family of four. The LIS can be helpful for nonprofits in identifying the needs of families in their county – and can also be helpful for nonprofits in ensuring that they are providing living wages and benefits for their own staffs.
It's Not Too Late to Claim Employee Retention Tax Credit for 2020 or 2021
Although the Employee Retention Tax Credit (ERTC) expired at the end of September 2021, there is still time for eligible nonprofits to claim this refundable payroll tax credit (translation: it’s essentially a grant for nonprofits) if their operations were shut down because of government closure orders or they suffered revenue losses in 2020 or 2021. Steven Woolf of the National Council of Nonprofits explains the basics of how nonprofits can still claim the ERTC retroactively for 2020 and 2021. The blog post also provides real-life examples of nonprofits that have used the ERTC to maintain employees and hire new staff, and answers common questions nonprofits are asking about the ERTC.
NC Department of Revenue Opens Phase 2 of Business Recovery Grants
Last week, the NC Department of Revenue (DOR) opened Phase 2 of the Business Recovery Grant program. Some nonprofits are eligible to apply for financial support through this program. The Business Recovery Grant program provides economic recovery grants to businesses in the entertainment and hospitality industries and to other businesses that have not previously received federal or state relief for economic harm from the COVID-19 pandemic. While the program is designed to provide support for businesses (and not to nonprofits), 501(c)(3) nonprofits that pay state unrelated business income tax (UBIT) are eligible for grants if they meet one of the following criteria:
  1. They are in the arts, entertainment, recreation, accommodations, or food services industries and had declines in revenue of at least 20% during the first year of the pandemic (compared to the previous 12 months); or
  2. They are in any other industry, had declines in revenue of at least 20% during the first year of the pandemic (compared to the previous 12 months), and did not receive funding from other relief programs including Paycheck Protection Program, COVID-19 Job Retention Grant, and EIDL Advance. 

DOR is accepting applications from eligible businesses and nonprofits through June 1. Grants will be awarded for up to 10% of lost revenue for organizations that have previously received federal or state COVID-19 support and 20% for organizations that have not received government COVID-19 aid. The maximum grant award is $500,000. Some nonprofits that received less than $500,000 in Phase 1 Business Recovery Grants may be eligible for an additional grant in Phase 2 (although the total amount of their grants can’t exceed $500,000). Additional information and applications are available at the DOR Business Recovery Grant program website.
The Center 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. Don’t miss out – become a member to ensure you continue receiving these updates along with many other valuable benefits.
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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.