House to Vote on Restoring Expired Charitable Giving Incentives
The House of Representatives is expected to debate and vote this week on a package of charitable giving incentive bills that were recently approved individually by the House Ways and Means Committee. Using the same name as a similar bill from last July, the America Gives More Act of 2015 (H.R. 644), includes bills that would extend and make permanent these giving incentives: the IRA charitable rollover (H.R. 637), an enhanced and expanded deduction of food inventories (H.R. 644), and an expanded tax deduction to promote donation of land for conservation purposes (H.R. 641). The provisions were briefly restored towards the end of last year, but expired again on December 31, 2004. The bill package will also include a proposal to streamline the foundation excise tax by setting a single tax rate of 1 percent on net investment income for private foundations (H.R. 640).
Each of the separate components was approved by the House tax committee by a vote along party lines, but received vocal support from almost all committee members. Democratic members, however, explained that they were voting against the bills because the provisions 1) are not paid for with offsetting tax hikes or spending cuts, and 2) should not be considered in a piecemeal fashion, but as part of the negotiations that produce comprehensive tax reform. The White House may issue a veto statement for the same reasons in advance of the vote, which is likely to occur on Wednesday or Thursday.
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President Outlines Spending, Policy Priorities
The federal budget and appropriations process officially began last week with the release of President Obama’s $4 trillion budget proposal for fiscal year 2016. In addition to making spending requests for each federal department, agency, and program, the President’s budget blueprint proposes making several policy changes, including ending sequestration, which it calls “mindless austerity,” and spending $74 billion more than permitted under the Budget Control Act of 2011. He also recommends increasing taxes on bequests of property and again, for the seventh time, urges Congress to limit the value of itemized deductions (including the charitable deduction) for higher-income taxpayers. In the coming weeks, congressional hearings will review and challenge many of the proposals in the President’s budget blueprint. Over the spring and summer, Congress is responsible for turning policy discussions into line-item spending decisions that must be enacted into law before the new fiscal year starts on October 1, 2015. For more information, see “Federal Budget ‘Sausage-Making’ Season Opens.”
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Pennsylvania at the Epicenter of Debate on Nonprofit Property-Tax Exemption
Pennsylvania has become the epicenter on the debate over nonprofit property-tax exemption as some lawmakers seek to overturn a court decision regarding the meaning of the phrase "institutions of purely public charity," while municipalities and others look for opportunities to take resources dedicated to nonprofit missions. All of the many issues were raised at a hearing last week before the Pennsylvania Senate tax-writing committee that heard testimony on a pending amendment to the Pennsylvania constitution to recognize the General Assembly’s sole authority to establish what qualifies an organization as a charitable nonprofit for property taxation purposes. That amendment passed the legislature last year, but under Pennsylvania law must be passed again by the newly-elected legislature and then be approved by the voters before it can become effective. Municipalities and their associations are lobbying against the amendment, and sympathetic lawmakers pressed their argument that some nonprofits should be required to pay property taxes and/or make “voluntary” payments in lieu of taxes. Read, “From the Fault Line on Nonprofit Property-Tax Exemptions,” for more on the hearing, including the testimony of David L. Thompson, VP of Public Policy for the National Council of Nonprofits, regarding the challenges nonprofits face in Pennsylvania and elsewhere.
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Kentucky Takes Step Toward Government-Nonprofit Contracting Reform
A concurrent resolution introduced in Kentucky calls for the creation of a Government Nonprofit Contracting Task Force for the purpose of identifying ways to eliminate redundant, unreasonable, or unnecessary laws, regulations, or policies that negatively affect nonprofit government contracting or funding. The task force, to be made up of representatives from the legislature, state agencies, and nonprofits, would be required to issue a preliminary report in October and a final report a year later, offering recommendations and any proposed legislative changes. The Kentucky Nonprofit Network (KNN), the state association of nonprofits in the commonwealth, supports the task force as an “opportunity for government and nonprofits to work together to identify solutions for contracting relationships that would allow both to benefit from increased efficiency and financial savings - resulting in better services being delivered to the citizens of the Commonwealth.” Read the KNN fact sheet on the concurrent resolution and the National Council of Nonprofits report, Investing for Impact: Government-Nonprofit Task Forces Produce Results for Taxpayers (April 2013).
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Philadelphia’s Wage Floor Raises Familiar Challenge for Nonprofits
Some nonprofits providing services under government contracts and grants are seeking exemptions from Philadelphia’s new $12 per hour wage mandate for city contractors on the grounds that their written agreements do not provide funding for the added costs. The city’s Commissioner for the Department of Human Services (DHS), whose agency has the most contracts with providers affected by the wage increase, agrees with the nonprofits and supports temporary waivers for nonprofits performing under DHS contracts until contract renewal time. Similar concerns have been expressed elsewhere in the country when wage mandates, such as an increase in the federal or state minimum wage, are considered. Last month, for example, CalNonprofits stressed the need for policymakers “to provide a longer phase-in schedule for nonprofits in order to provide time to re-negotiate government contracts that reimburse at minimum wage levels, allowing nonprofits to maintain delivery of critical human services.”
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Utah Considers Improving Nonprofit Regulations, Disclosures
The Utah Legislature is considering a regulatory clean-up bill that addresses several simmering issues for nonprofits. The bill would repeal a statute authorizing the state to invade the privacy of nonprofit officers by looking into their personal accounts, remove requirements about nonprofit bylaws, repeal existing and delineate new auditing requirements, and create a $25,000 floor for nonprofits that receive government funding to report to the State Auditor's Office. This last item would lessen the adverse impact of a bill passed last year requiring nonprofits that receive “state money” to submit redundant and unnecessary reports.
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Tax Exemption Preserved in Florida
A Florida county assessor’s efforts to force a nonprofit blood bank onto the property tax rolls has been blocked by the Alachua County Value Adjustment Board, which ruled that LifeSouth Community Blood Centers’ work is charitable. The assessor had taken the position that LifeSouth charged for each pint of blood sold to hospitals and thus did not provide charity to individuals who cannot pay. The Value Adjustment Board rejected the assessor’s narrow view of charity and deemed the work of the nonprofit blood bank essential to reducing the burden of government, a component in the Florida property-tax exemption law. According to the Gainesville (FL) Sun, for-profit blood centers in the 1970s were paying individuals to donate blood, which many believed led to hepatitis tainting the nation’s blood supply. The National Blood Policy of 1973 promoted an all-volunteer donor system. In 1974, the Gainesville Civitan Club started Civitan Regional Blood Center, which later became LifeSouth.
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Localities Support Nonprofits with Revenue Surpluses
The work of nonprofits may benefit from improving tax revenues and local government budgets in at least two communities located on opposite sides of the country. Portland, Oregon is planning to provide additional grants totaling $1.4 million to 16 cultural nonprofits, thanks to new funds from the local arts tax and a surplus in the city’s budget. The seacoast community of Tybee Island, Georgia is considering increasing its support for the work of local nonprofits, such as the Historical Society, by increasing the share of a hotel/motel tax that is made available to cultural and community development organizations. The Tybee Island Mayor is proposing this increased funding because nonprofits act to “enhance the quality of life for people who live on the island year round.”
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Talking a Stand, Publicly
It is one thing to express strong views about an issue affecting nonprofit missions in the privacy of the board room or among like-minded people. To really advance the mission, however, it is necessary to give voice, publicly, to those views. Three state association leaders did just that in recent weeks through articles in their local newspapers. Each took public stands for their missions and the work of nonprofits:
Mary Ellen Jackson, President & CEO of the New Hampshire Center for Nonprofits, penned “My Turn: Taxing nonprofits is a lose-lose situation,” published in the Concord (NH) Monitor, on February 4. New Hampshire legislators are once again considering a bill mandating that nonprofit charitable organizations with revenue greater than $10 million be taxed under the state’s Business Enterprise Tax. Jackson explains that the bill, “if passed, will result in a loss in revenue for the state, a loss in revenue for charitable organizations, and, most importantly, a loss for people and communities.” She points out that “nonprofits such as Easter Seals, Goodwill, Gateways Community Services, Nashua’s Harbor Homes and others who serve our most vulnerable families will need to come up with revenue to pay this hefty tax,” forcing them “to either curb services or raise more money each year to pay this tax.”
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In neighboring Maine, Scott Schnapp, Executive Director of the Maine Association of Nonprofits, is taking issue, publicly, with the Governor’s plan of repealing property-tax exemption for property owned by tax-exempt nonprofits. In “Another View: Hospitals aren’t the only nonprofits affected by LePage’s budget plan,” in the Portland (ME) Press Herald, January 29, Schnapp helps nonprofits and the general public understand how the proposal to allow municipalities to tax nonprofits with property valued above $500,000 “would undoubtedly result in staffing cuts that would diminish services for vulnerable populations and reduce programs that Maine residents rely on and value.” He also corrected the misinformation that the proposal would only apply permit “taxing large nonprofits,” pointing out that the Governor’s plan would also affect “social service agencies, land trusts, educational institutions and organizations that provide healthy outlets for young people, to name just a few.”
Readers may recall that the Maine Governor asserted in November that Maine nonprofits “don’t pay their fair share,” and that “they are takers, not givers.” Schnapp and the Maine Association of Nonprofits have been aggressive in pushing back against this mindset and this proposal.
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Heading west from the Northeast, we take note of the article “Charity Inc.: Advocacy for nonprofits,” (Oklahoma City The Journal Record, February 4) by Marnie Taylor, President & CEO, Oklahoma Center for Nonprofits. Writing at the start of the Oklahoma legislative session, Taylor encourages “all nonprofits, large and small, to dedicate time and resources to advocacy and public policy.” Here’s more good advice: “Nonprofit leaders and volunteers should be able to show the public and our policymakers how their missions not only affect the lives they serve but how they save taxpayer dollars, help the economy and improve the state’s standards compared with other states.”
These three leaders are modelling the way for advancing the missions of nonprofits by advocating through the news media.
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- Charitable Giving Incentives
- Budget and Spending
State and Local Issues
- Property Tax Policy: PA
- Government-Nonprofit Task Force: KY
- Wage Mandates: CA, PA
- Nonprofit Regulation and Disclosure: UT
- Property Tax Exemption: FL
- Arts Funding: GA, OR
Advocacy in Action
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Nonprofit VOTE Webinar
Voter engagement takes planning. Learn about general tactics, strategies, and resources to support your efforts, while developing a 2015 voter engagement timeline for your organization. Register now.
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Worth Reading
On OMB Uniform Guidance
“One Small Step for Government, One Giant Leap for Nonprofits,” by Tim Delaney, President & CEO, National Council of Nonprofits, published in GuideStar newsletter, February 5, 2015, explaining how an assist from a new federal law may help nonprofits both recover more funds and bust the Overhead Myth.
“Survey, Reform, Repeat,“ Beth Bowsky, Policy Specialist for Government-Nonprofit Contracting at the National Council of Nonprofits, published on Nonprofit Finance Fund blog, February 5, 2015, using the OMB Uniform Guidance that calls for more payments to nonprofits as an example to demonstrate the importance of data for nonprofit advocacy.
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On the Federal Budget Process
“Mr. Obama and Congress should work to end sequestration,” Washington Post editorial, February 1, 2015, calling for an end to the arbitrary, across-the-board budget cuts, while reminding readers of how the sequestration budget gimmick came about and stressing the need for policymakers to embrace entitlement and tax reform.
Survey Worth Taking
 Nonprofit Finance Fund's seventh annual nationwide survey examining the state of the nonprofit sector. The results help illustrate the vitality of the sector in your state and across the country, define the challenges that we all face, and provide information that advances our collective advocacy work. Please take the survey and share it with other nonprofits in your network!
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Worth Quoting
“Many nonprofits provide needed community services that the government does not. Shelters for those seeking to escape domestic violence provide a safe place to go. Programs at the local YMCA might keep kids in school and away from crime and seniors active and out of the hospital. Land trusts preserve and maintain open space for recreation, wildlife and aesthetics. Many nonprofits, especially museums, theaters and musical groups, are touted to visitors and potential residents as cultural draws to communities.”
- “Taxing nonprofits ‘neither feasible nor desirable’,” Maine Bangor Daily News editorial, February 3, 2015, expressing strong opposition to the Maine Governor’s proposal to tax charitable nonprofits, and quoting the Council of Nonprofits’ David L. Thompson: “Local budget holes are smaller because of the work nonprofits do.”
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Worth Studying
Senate Democrats letter to Hatch on Tax Reform
Ratios in the News
Legislators in different states have fewer or more constituents to represent. Presuming that fewer is preferred, here is how states’ Houses of Representatives measure up (excluding the unicameral Nebraska legislature):
#1: New Hampshire
(3,309:1 ratio)
#49: California
(479,157:1 ratio)
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Nonprofit Events
- Feb. 9-11, SC Nonprofit Summit, South Carolina Association of Nonprofit Organizations
- Feb. 12, Kentucky Nonprofit Day at the Capitol, Kentucky Nonprofit Network
- Mar. 9-10, Public Policy Forum and NC Nonprofits Day, North Carolina Center for Nonprofits
- Mar. 31, Florida Nonprofit Alliance Legislative Symposium, Florida Nonprofit Alliance
- Apr. 1, Nonprofit Day at the Capitol, Mississippi Center for Nonprofits
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