May 7, 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 Senate approves amendment to protect local grants to nonprofits
NC Senate passes bill to begin process of allocating American Rescue Plan funds
What type of COVID recovery fund would help your nonprofit?
NC Senate committee approves donor privacy bill that could be burdensome for nonprofits
NC Senate approves bill to allow employers to offer exclusive provider benefit plans
Ask your members of Congress to support WORK NOW Act
NC House bill would prohibit employers from requiring COVID-19 vaccinations
U.S. Department of Labor withdraws employer-friendly worker classification rule
New state legislation would allow employers to classify more workers as independent contractors
New grant program helps nonprofits ensure equitable access to vaccines
NC House bill would increase minimum wage to $15 per hour
Take 5 minutes to help the Center advocate for policies that will benefit your nonprofit
NC Senate Approves Amendment to Protect Local Grants to Nonprofits
Yesterday, the NC Senate unanimously approved an amendment that helps ensure nonprofits with board members who serve on local governing bodies (i.e. county boards of commissioners, city councils, and town councils) can still receive grants, contracts, or appropriations from these local governments. Under the amendment, any elected officials serving on a nonprofit’s board would need to recuse themselves from the decision to provide funding to that organization. The original version of the bill (S.473) would have prohibited local governing bodies from awarding contracts, grants, or appropriations to nonprofits if any member of the local governing body served on the nonprofits’ board of directors. 

Many nonprofits told us that this provision could have jeopardized their funding from local governments, so the Center advocated for the Senate to make this change. The Center strongly supports the new version of the 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.

Thanks to Senator Julie Mayfield (D-Buncombe) for offering the amendment to fix this bill and for clearly explaining the issue during the debate in the Senate. After the amendment was approved, the Senate approved the underlying bill. The House could take up the bill later this year.
NC Senate Passes Bill to Begin Process of Allocating American Rescue Plan Funds
On Tuesday, the NC Senate unanimously approved a bill (S.172) that would formally create a State Fiscal Recovery Fund to spend the state’s $5.3 billion in aid from the American Rescue Plan Act (ARP), as well as create a Local Fiscal Recovery Fund for $3.8 billion in ARP funding for local governments in North Carolina. The bill’s sponsor noted that aid for nonprofits would be an appropriate way for the state to spend some of its ARP funding. The House could take up the bill as soon as next week.
What Type of COVID Recovery Fund Would Help Your Nonprofit?
The Center is advocating for legislators to include a nonprofit recovery fund in the next state COVID-19 response package. Your input is essential in coming up with a plan to provide meaningful relief for nonprofits. Specifically, it would be helpful to know what type of economic hardships your nonprofit has experienced due to COVID-19 so we can advocate for a grant program with appropriate eligibility criteria. Examples of possible criteria could include:
  • Revenue losses during some period of the pandemic;
  • Shut-downs of operations due to COVID limitations;
  • Loss of volunteers during the pandemic;
  • Costs incurred by changing the way programs and services are provided as a result of social distancing; or
  • Increase in services to meet community needs during the pandemic.

Let us know what type of eligibility criteria for a nonprofit relief fund would make the most sense for your nonprofit and other organizations in your community. Thank you if your nonprofit has already provided input. The Center has included input we have received in the information sheet on the need for a nonprofit recovery fund that we have shared with legislators.
NC Senate Committee Approves Donor Privacy Bill That Could Be Burdensome for Nonprofits
Yesterday, the NC Senate Judiciary Committee approved a bill (S.636) designed to create limits on the disclosure of donors to nonprofits. The current version of the bill, as amended by the committee, would essentially do two things:
  1. Prohibit nonprofits from disclosing “the identity of any person donating monies or other tangible goods to the nonprofit corporation” without the donor’s consent. There is an exception for disclosures required by law, court order, or criminal investigations.
  2. Prohibit state officials from providing Schedule B of nonprofits’ Forms 990 or 990-EZ (that is the attachment that includes donor information) in public records requests. This is consistent with federal tax law, which makes Schedule B donor information confidential.

The Center is concerned that the first part of the bill will create new fundraising burdens – and potentially legal liability – for many 501(c)(3) nonprofits. As currently drafted, this provision would mean that nonprofits would not be allowed to acknowledge their individual or corporate donors on their websites, in their publications, in annual reports, at fundraising events, or at meetings and conferences without first getting the permission of each donor. Nonprofits that didn’t get donor approval could be subject to civil legal action. The Center is working with the bill’s sponsor and with organizations that are promoting the bill on alternative language that would ensure the bill doesn’t add burdensome new requirements for nonprofits. We are optimistic that the language will be improved as the bill moves forward. 

The full Senate is likely to vote on the bill next week.
NC Senate Committees Approve Bill to Allow Employers to Offer Exclusive Provider Benefit Plans
On Wednesday, the NC Senate unanimously approved a bill (S.228) that would allow North Carolina nonprofits and small businesses to offer exclusive provider benefit (EPO benefit) plans for their employees. EPO benefit plans are typically 15%-20% less expensive than other health insurance plans and allow participants to use a limited network of local health care providers while paying the full cost for any out-of-network health services other than emergency care. Potentially, this legislation could provide a meaningful and affordable health coverage option for some nonprofits. The House could consider the bill later this month.
Ask Your Members of Congress to Support WORK NOW Act
As congressional leaders consider federal infrastructure legislation later this year, it is important for North Carolina’s members of Congress to understand the importance of including funding to help create new jobs in the nonprofit sector. The Work Opportunities and Resources to Keep Nonprofit Organizations Well Act (WORK NOW Act)(S. 740 and H.R. 1987) would provide $50 billion to support nonprofits providing direct services during the pandemic to enable them to pay the wages, salaries, and benefits of either existing employees or new employees. The National Council of Nonprofits has prepared a helpful synopsis of the WORK NOW Act.

You can help make a difference in getting the WORK NOW Act included in the congressional infrastructure plan by contacting our U.S. Senators and your U.S. Representative to encourage them to cosponsor the WORK NOW Act (S. 740 and H.R. 1987) and to work to ensure that it is included in infrastructure legislation in 2021. Need help getting started in writing to them? The Center has tips on how to write effective letters to elected officials (complete with sample letters).
NC House Bill Would Prohibit Employers from Requiring COVID-19 Vaccinations
A bill (H.B. 876) filed in the NC House of Representatives on Wednesday would prohibit North Carolina employers from:
  1. Asking employees whether they have received any emergency use vaccination (including the COVID-19 vaccine);
  2. Requiring employees to receive an emergency use vaccination; or
  3. Discharging, disciplining, retaliating against, failing to promote, or otherwise discriminating against employees or prospective employees who object to workplace programs to administer emergency use vaccinations.  

Currently, nonprofits (and other employers) are allowed to ask whether their employees have received COVID-19 vaccines – or even to require vaccinations – before they return to in-person work as long as they provide exceptions for employees who aren’t vaccinated for religious or health-related reasons.

It is unclear whether the House will take up this bill this year.
U.S. Department of Labor Withdraws Employer-Friendly Worker Classification Rule
On Wednesday, the U.S. Department of Labor (DOL) formally withdrew its final regulations that had established a new “economic realities” test that employers could use to determine whether their workers are employees or independent contractors. The now-rescinded rule, which took effect on March 8, created a two-prong test focusing on the employee’s exercise of control over their work and their opportunity for profit or loss. This “economic realities” test allowed more employers – including some nonprofits – to classify their workers as contractors to avoid paying benefits and payroll taxes. 

The withdrawal of the Trump-era rule was expected since the DOL has new priorities under the Biden administration. With this change, the DOL will once again use a multi-factor “totality of circumstances” test to determine whether workers are properly classified as employees or independent contractors for purposes of federal employment laws.
New State Legislation Would Allow Employers to Classify More Workers as Independent Contractors
Separate from this week’s DOL action, a new bill (H.B. 867) was filed in the NC House of Representatives that would allow North Carolina employers to more easily classify their workers as independent contractors for state employment laws. Under the bill, workers would be classified as independent contractors if they meet any of five criteria:
  1. The worker signs a contract that makes clear the intent to have an independent contractor relationship;
  2. The worker files federal tax returns that indicate self-employment;
  3. The worker provides services through a business entity;
  4. The worker has control over how the work is performed; or
  5. The worker meets at least three factors in a multi-factor test similar to the DOL “totality of circumstances” test.

It is unclear whether the General Assembly will consider this bill this year. If it were enacted, it could create confusion for some nonprofits since it would set different criteria than the revised DOL rules for worker classification.
New Grant Program Helps Nonprofits Ensure Equitable Access to Vaccines
Healthier Together, a partnership between the NC Department of Health and Human Services (DHHS) and the NC Counts Coalition, opened a new grant program that provides resources to community-based nonprofits supporting North Carolina communities that experience health inequities to ensure that individuals from Black, Indigenous, and People of Color (BIPOC) and other historically marginalized populations are able to access COVID-19 vaccines. Grants will fund activities to conduct vaccine outreach and education efforts, help people schedule appointments and arrange transportation, coordinate local vaccine events at trusted and accessible locations, provide on-site interpretation services, and help ensure people get to second dose appointments. The application period runs through Friday, May 14 . For more information and to submit applications, see the RFP webpage.
NC House Bill Would Increase Minimum Wage to $15 Per Hour
A bill (H.B. 891) filed in the NC House of Representatives on Wednesday would increase the state’s minimum wage from $7.25 per hour to $15 per hour over a two-year period (making it $15 per hour by 2023). The bill would use the consumer price index to automatically increase the minimum wage in the future and would eliminate exceptions to the minimum wage for workers with disabilities, tipped workers, and domestic workers. An identical bill (S.673) was filed in the NC Senate last month, along with another proposal (S.447) to provide for a gradual increase in the minimum wage between 2022 and 2026. It is unlikely that any of these bills will be considered this year.
Take 5 Minutes to Help the Center Advocate for Policies that Will Benefit Your Nonprofit
This year, the Center has been working with state lawmakers on seven legislative proposals to help strengthen nonprofits’ operations.
  1. Exempting most North Carolina nonprofits from paying sales and use tax when they purchase goods and services.
  2. Creating a new state tax credit for charitable contributions by individuals who use the standard deduction.
  3. Exempting nonprofits from collecting and remitting sales tax on the ticket price or admission fees from most fundraising events.
  4. Making 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.
  5. Modernizing the North Carolina Nonprofit Corporation Act to bring the state’s nonprofit statute into better alignment with best practices for nonprofit organizations.
  6. Modernizing the North Carolina charitable solicitation statute by raising the threshold for exemption from charitable solicitation licensure (from $25,000 in contributions to $50,000 in contributions per year), aligning charitable solicitation filing extensions with automatic extensions for 990 filings, and eliminating the requirement that nonprofits have their charitable solicitation forms notarized.
  7. Creating a nonprofit relief fund for nonprofit organizations that have been affected by the COVID-19 pandemic.

The Center recommended these ideas to legislators based on input we have received from nonprofits, and we will continue to work with lawmakers to encourage them to pass each of these proposals this session.

To help us understand which of these proposals would be most helpful to your nonprofit – and to help us make it easy for you to take meaningful action on these bills – take 5 minutes to complete a short survey about these policy solutions and your ability to speak with legislators about nonprofit sector policy issues. Thank you if you have already completed the survey.
Not a Center Member? Join now.

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.