December 23, 2021
In this issue...
Center and IRS remind North Carolinians about heightened incentives for charitable giving
NC Business Recovery grants open for many nonprofits that pay UBIT
Federal courts reverse course and allow OSHA vaccination requirement to move forward
Build Back Better legislation stalls in U.S. Senate
State leaders urge pre-holiday testing, vaccinations, booster shots against COVID-19
IRS increases standard business mileage rate for 2022
Does your nonprofit have local elected officials on its board
NC Supreme Court rules nonprofit charter schools can’t claim sovereign immunity
Center and IRS Remind North Carolinians about Heightened Incentives for Charitable Giving
This week, the Center and the Internal Revenue Service issued a joint press statement to encourage North Carolina media outlets to promote temporary charitable giving incentives during the holiday season. Notably, for 2021, taxpayers who use the standard deduction (which includes the vast majority of North Carolinians) can get a special tax deduction for their charitable contributions. Individual taxpayers can deduct the first $300 of their charitable contributions, and married couples can deduct the first $600 of their donations. While many North Carolinians give generously to nonprofits regardless of whether they receive a tax benefit, this temporary universal charitable deduction may help encourage more people to give a bit more to nonprofits this year.
NC Business Recovery Grants Open for Many Nonprofits that Pay UBIT
The NC Department of Revenue (DOR) has opened applications for the Business Recovery Grant program, which was established in the recently-enacted state budget. The 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. 

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. Additional information and applications are available at the DOR Business Recovery Grant program website. The application deadline is January 31, 2022.

The Business Recovery Grant program is one of many sources of support for nonprofits in the recently-enacted state budget for FY2021-23 (S.105). Overall, state legislators included an unprecedented $849 million in new funding for nonprofits in the budget To help you digest the more than 1,400 pages of budget documents, the Center has developed an 11-page synopsis of nonprofit provisions and appropriations in the budget.
Federal Courts Reverse Course and Allow OSHA Vaccination Requirement to Move Forward
Last Friday, a federal appeals court lifted its temporary injunction that had halted the implementation and enforcement of the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) Emergency Temporary Standard on COVID-19 vaccinations. The rule requires employers with 100 or more employees – including many large nonprofits – to require their employees to be vaccinated for COVID-19 or to be tested at least once a week. With this recent development, here is a quick synopsis of the status of the three major federal rules requiring certain workers – including many nonprofit employees – to be vaccinated against COVID-19:
  1. Nonprofits with 100 or more employees. OSHA is now moving forward with the implementation of its Emergency Temporary Standard. Nonprofits with 100 or more employees (including both full-time and part-time employees) must have policies in place requiring their workers to be vaccinated against COVID-19 by January 10, 2022. OSHA won’t begin issuing citations for non-compliance until February 9, 2022. It’s still possible that the U.S. Supreme Court could stop the rule’s implementation, but nonprofits with 100 or more employees should be working to ensure that they have COVID-19 vaccination policies in place by early next month.
  2. Nonprofit health facilities that receive Medicaid or Medicare reimbursements. The Centers for Medicare & Medicaid Services (CMS) Emergency Temporary Standard is still in effect in North Carolina, meaning these nonprofit health facilities must have policies requiring their workers to be vaccinated against COVID-19. A federal injunction that stopped the implementation of the rule only applies in 26 states (North Carolina isn’t one of those states). As with the OSHA rule, it is possible that the U.S. Supreme Court could block the implementation of the CMS rule in North Carolina and the other 23 states where it is still in effect. 
  3. Nonprofits with federal contracts. A federal judge has blocked the implementation of President Joe Biden’s September executive order requiring all federal contractors and subcontractors – including nonprofits that contract with the federal government – to be vaccinated against COVID-19. Note that the executive order would only apply to nonprofits that are federal contractors or subcontractors, not those that receive federal grants. It remains possible that the U.S. Supreme Court could reinstate the executive order.

Regardless of the ultimate fate of the OSHA and CMS rules and the federal contractor executive order, individual nonprofits can still require their employees to be vaccinated against COVID-19. To help your nonprofit answer questions about vaccination policies, the Center has published an analysis of vaccination considerations for nonprofits, including tips to help your organization develop a COVID-19 vaccination policy for your employees.
Build Back Better Legislation Stalls in U.S. Senate
The U.S. Senate is unlikely to vote on the $1.75 trillion spending plan to implement President Joe Biden’s “Build Back Better” agenda after Senator Joe Manchin (D-West Virginia) announced his opposition to the bill. The Build Back Better plan, which was approved by the U.S. House of Representatives last month, would include a wide variety of investments in federal programs, including:
  • Continuing the expanded Child Tax Credit ($3,600 per child under age 6 and $3,000 per child aged 6-18) for one year, along with permanent refundability of the tax credit. 
  • Funding for universal pre-K for young children for the next six years.
  • Establishing four weeks of paid family and medical leave, which would be subsidized by the federal government, beginning in 2024.
  • Funding for Medicaid expansion in North Carolina and the other 10 states that have opted out of this provision of the Affordable Care Act. This would provide health coverage for more than half a million North Carolinians in the health care coverage gap (who make too much to qualify for Medicaid but not enough to receive health care subsidies).
  • Limiting childcare costs for many families for the next six years.
  • Extending by one year the expanded earned income tax credit for childless workers. 
  • Providing $3.2 billion in additional funding for national service programs, as well as $600 million for AmeriCorps.
  • Expanding Medicaid home care services for seniors and people with disabilities. 
  • Providing $150 billion toward public housing, rental assistance, down payment support, and "building more than 1 million new affordable rental and single-family homes." 
  • Investing $555 billion for climate programs, including $320 billion expanded tax credits for clean energy. 

The National Council of Nonprofits has prepared a useful synopsis of key provisions in the legislation for nonprofits. Because Congress planned to use the budget reconciliation process to pass the legislation, it would only need a simple majority vote in both the U.S. Senate and the U.S. House of Representatives. To pass, it would need all 50 Democratic Senators to vote for it, so Senator Manchin’s opposition prevents it from being enacted. It remains uncertain whether the White House and congressional leaders will try to work on an alternative proposal in 2022.
State Leaders Urge Pre-Holiday Testing, Vaccinations, and Booster Shots Against COVID-19
On Monday, Governor Roy Cooper and outgoing NC Department of Health and Human Services Secretary Mandy Cohen held a press conference recommending measures the public should take to prevent the spread of COVID-19 as people gather to celebrate the winter holidays. Noting that the Omicron variant is four to six times as contagious as the original COVID-19 virus, they issued a Secretarial Advisory outlining the steps people should take to protect themselves, family, and friends. These include:
  • Vaccinate and Boost: "Get vaccinated now, including a COVID-19 booster as soon as you are eligible. This is particularly critical for those over age 65, those with underlying medical conditions, and healthcare workers. The Moderna and Pfizer COVID-19 vaccines are the best choice for most people. Layer protection by getting a flu shot."
  • Test: "Get a COVID-19 test before joining indoor gatherings with others who are not in your household and before and after traveling, regardless of your vaccine status. Get tested if you have any symptoms of COVID-19 or have been exposed to someone with COVID-19."
  • Mask: "Wear a face covering indoors in public, even if you are vaccinated. If possible, wear a medical grade mask for more protection (e.g., surgical mask, procedural mask, KN95, N95)."

Information on testing locations, free tests, and home tests is available at North Carolinians can learn more about the state’s vaccine distribution at (English) or (Spanish). Visit DHHS’s Walk-in Family Vaccination Sites to find a family vaccine event or the online tool Find a Vaccine Location to find a nearby vaccination site. The North Carolina Vaccine Help Center at 888-675-4567 can also help individuals make an appointment; it is open 7 a.m.-7 p.m. on weekdays and 8 a.m.-4 p.m. on weekends.
IRS Increases Standard Business Mileage Rate for 2022
The IRS has announced that the standard business mileage rate will increase to 58.5 cents per mile in 2022 (up from 56 cents per mile in 2021). Many nonprofits use this rate when reimbursing their employees for work-related driving. The volunteer mileage rate – the amount that is tax-deductible when your nonprofit's volunteers drive on behalf of your organization – remains at 14 cents per mile and can only be changed by Congress. The Center continues to advocate for Congress to increase the volunteer mileage rate.
Take 2 Minutes to Let Us Know If Your Nonprofit Has Local Elected Officials on Its Board
Beginning on January 1, 2022, a new state law will require local government elected officials who serve on nonprofit boards to recuse themselves from decisions to provide government funding to those organizations. Essentially, the law means that most local officials who serve on nonprofit boards won’t be allowed to vote on local government budgets that include funding for the nonprofits on whose boards they serve. The nonprofit funding provision in the bill only applies to cities, towns, or villages with more than 15,000 residents and to counties that have municipalities with 15,000 or more residents. This means that it will only apply in about 60 of the 100 counties in North Carolina.

Over the past seven months, the Center has worked with the bill sponsor and other legislators to improve the bill by minimizing unintended consequences that could jeopardize nonprofit funding and/or board recruitment and retention. The final version that Governor Cooper signed into law is a significant improvement over the original bill. However, the Center remains concerned that the bill could create challenges that would make it difficult for some local governments to pass budgets with nonprofit funding if a majority of the members of a city council or county board of commissioners serve on boards of nonprofits that would likely receive local government funding. In those instances, so many local elected officials may have to recuse themselves that there would not be a quorum to vote on a budget without eliminating funding for some nonprofits. The Center continues to work with lawmakers, state officials, and local government advocates for a solution to this potential issue.

To help us better understand the impact of the new law on conflicts of interest between nonprofits and local elected officials, we are seeking input from nonprofits on their experiences with local government elected officials serving as board members. Please take two minutes to send us an email answering these questions:
  1. Does your nonprofit have local elected officials (e.g. county commissioners and/or city or town council members or mayors) on your board of directors?
  2. If so, do your bylaws require your organization to have local elected officials on your board?
  3. Do any federal laws or other funding sources require your nonprofit to have elected officials on your board?

Your answers will help us and our partners advocate for changes to this new law in 2022. Thanks to the dozens of you who responded in the past two weeks!
NC Supreme Court Rules Nonprofit Charter Schools Can’t Claim Sovereign Immunity
Last Friday, the NC Supreme Court issued a unanimous decision holding that a nonprofit charter school is not an “arm of the state” and therefore cannot use the defense of sovereign immunity to protect itself from legal claims. As part of its reasoning, the court noted that charter schools are private nonprofits rather than state agencies. Typically, only state agencies are permitted to use the defense of sovereign immunity. The court’s opinion is helpful in clarifying that nonprofits – including those with significant state support – operate independently from state government and should not be treated as quasi-governmental entities.
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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.