With Republicans winning a narrow majority in the U.S. House of Representatives and Democrats maintaining their slim majority in the U.S. Senate, Congress will have divided leadership next year, making it more challenging for federal lawmakers to pass legislation. That means that congressional Democrats have greater incentive to pass laws during the “lame duck” session of Congress that began this week. Between now and mid-December, Congress will likely consider several major bills, including appropriations legislation and tax law changes. Congress could include several provisions of importance to nonprofits in its appropriation and tax legislation during the “lame duck” session, including:

• Appropriations. The federal government is currently funded through a temporary appropriations bill that expires on December 16. Congress will likely try to pass legislation to fund the federal government through September 30, 2023. An appropriations bill could be a vehicle for additional spending in a variety of federal programs of importance to nonprofits ranging from child care to affordable housing to health care to the arts. Members of Congress could also include earmarks to a variety of nonprofits in a spending bill.
• Incentives for Charitable Giving. This week, more than 550 nonprofits, including the Center and 17 other North Carolina organizations, sent a letter to congressional leaders urging them to renew the universal charitable deduction, a temporary tax incentive for charitable giving that expired at the end of 2021. The letter also encourages Congress to increase the cap on charitable deductions for non-itemizer from $300 for individuals and $600 for married couples (the 2001 levels for the universal charitable deduction) to about $4,000 for individuals and $8,000 for married couples to encourage taxpayers to give more generously to support their communities. A recent Fundraising Effectiveness Project report highlights the critical importance of Congress passing new tax incentives for charitable giving. The report found that the number of donors to nonprofits in the first half of 2022 dropped by 7% from the same period in 2021 and that overall growth in the dollar amount of donations to nonprofits hasn’t kept up with inflation this year.
• Child Tax Credit. Last year, child poverty dropped to record lows, in large part because the American Rescue Plan Act (ARPA) expanded and improved the child tax credit in three important ways in 2021:
• It increased the amount of the tax credit from $2,000 per child to $3,600 for children under the age of six and $3,000 for children ages 6-17.
• It made the credit fully refundable, providing financial assistance to many low-income families who don’t normally pay income taxes.
• It provided advance payments of the credit for the final six months of 2021, providing immediate cash assistance to millions of families in the form of monthly checks.

The expanded and prepaid child tax credit complemented the work of many nonprofits by helping families pay for child care, food, home and car repairs, and medical expenses last year. Congress allowed these improvements to the child tax credit to expire at the end of last year, and many nonprofits are urging Congress to restore these improvements in tax legislation during the ”lame duck” session. 

• Employee Retention Tax Credit. During the first three quarters of 2021, many nonprofits benefitted from the Employee Retention Tax Credit (ERTC), which provided economic relief to organizations that suffered financial losses during the COVID-19 pandemic. Congress abruptly ended the ERTC on September 30, 2021, and many nonprofits are advocating for congressional leaders to retroactively restore it for the fourth quarter of 2021 and for 2022 as part of tax legislation during the “lame duck” session.

The Center will let you know when there are opportunities for your nonprofit to take action on any of these issues in the coming weeks.

As a regular reader of our Nonprofit Policy Update, you are likely aware that the Center advocates on a wide range of state and federal public policy issues that affect all or most 501(c)(3) nonprofits operating in North Carolina. Many of the issues on the Center’s 2022 public policy agenda are included because of the input from your organization and other nonprofits around the state. Right now, the Center is in the process of developing its policy agenda for 2023. Let us know if there are any nonprofit sector issues that are important for your organization that we should consider adding to (or keeping in) our policy agenda for 2023. 

The NC Senate and NC House of Representatives held brief, non-voting sessions this week. The NC General Assembly will reconvene for the final time this session the week of December 13. Legislative leaders indicated last week that they do not plan to hold voting sessions next month. That means that the NC General Assembly won’t pass any new legislation – including approving Medicaid expansion for North Carolina – until the 2023 legislative session begins in January. Many nonprofit advocates had hoped that legislators would vote next month to approve Medicaid expansion, which would provide health coverage for adults with incomes up to 133% of the federal poverty level. 

Both the House and Senate overwhelmingly approved of legislation to enact Medicaid expansion earlier this year, but they have not been able to come to agreement on details about other health care provisions that could be included in the bill. Most notably, Senate leaders want any major health care legislation to include changes to the state’s Certificate of Need (CON) laws that limit the ability of health care providers to offer a variety of health-related services. Hospitals and health systems – many of which are 501(c)(3) nonprofits – have been concerned about the CON changes since these could significantly reduce their revenue, potentially causing some hospitals to close. 

As we explained in a Care4Carolina blog post this summer, the Center strongly supports Medicaid expansion because it would support the work of charitable nonprofits by:

1. Complementing the work of many nonprofits that provide services to North Carolinians who don’t currently have adequate health coverage;
2. Providing health coverage for some employees of nonprofits that don’t offer group health plans and whose salaries leave them in the health care coverage gap; and 
3. Providing payment for some types of Medicaid-eligible services that nonprofits currently provide to clients for free.

The Center continues to work with our partners to advocate for legislators to come to an agreement and pass Medicaid expansion as soon as possible. We will let you know when there is a need for your nonprofit to take action.

A new law that took effect on December 1, 2017 changed the way that businesses and nonprofits register their assumed business names (sometimes known as “doing business as” or “DBA” names) in North Carolina. As a result of this law, any assumed business names that were registered prior to December 1, 2017 will automatically expire on December 1, 2022.

If your nonprofit operates under a name other than the name listed in your articles of incorporation AND you haven’t updated your assumed business name registration with your county register of deeds, you need to re-file before December 1 to avoid losing your assumed business name. Nonprofits that operate with assumed business names in multiple counties only need to file with the register of deeds in one county. For more information, including assumed business name filing forms and a searchable statewide database of assumed business names (in case you aren’t sure whether your nonprofit has filed for an assumed business name certificate), check out the NC Secretary of State’s resource page.

Earlier this month, the U.S. Department of Education released final regulations on debt relief programs, including the Public Service Loan Forgiveness (PSLF) program, that will go into effect July 1, 2023. As a result of the revisions, nonprofit employees and other public service workers will be able to count additional previous payments toward loan forgiveness, request reconsideration for denied applications or previous payments that were not counted, and be deemed eligible for the program when they work at least 30 hours per workweek even if it’s at multiple public service jobs. To help nonprofit employees better understand the impact of the final regulations, the National Council of Nonprofits has prepared an updated fact sheet on the nonprofit perspective on student loan relief and an updated comparison chart of key provisions in final regulations.

Last week, a federal judge in Texas struck down a new federal government program that would cancel up to $10,000 of federal student loan debt for millions of Americans. In light of the court ruling, the U.S. Department of Education has stopped accepting applications for the program while the case makes its way through federal appeals courts. As of last week, the Department had approved more than 16 million applications for debt cancellation. The court ruling on the debt cancellation program does not affect the PSLF program, so nonprofit employees can continue to apply for loan forgiveness under PSLF.

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. Become a member to ensure you continue receiving these updates along with many other valuable benefits.