This week, bipartisan bills were filed in both the U.S. Senate ( S.4032) and the U.S. House of Representatives ( H.R. 7324) to expand the temporary universal charitable deduction that was established in the CARES Act. Congressman Mark Walker (R-NC) is the primary sponsor of the House bill. The Universal Giving Pandemic Response Act would significantly increase the limit on the deduction (currently set at $300 in contributions per year for all taxpayers) to one-third of the amount of the standard deduction ($4,133 for individuals and $8,266 for married couples filing jointly). It also would encourage immediate donations to nonprofits by allowing taxpayers to take the deduction for 2019 for contributions made before July 15, 2020 and to file amended tax returns to claim this deduction. 

An enhanced universal charitable deduction is particularly important in light of two recent reports that show declines in charitable contributions. The recent Giving USA report found that, when adjusted for inflation, overall charitable giving was lower in 2019 than in 2017. A quarterly report from the Fundraising Effectiveness Project showed that donations to nonprofits declined by 6% during the first quarter of 2020 as many donors faced financial uncertainty due to the COVID-19 pandemic.

Your advocacy made a difference in getting these bills introduced. In April, the Center and a group of 461 North Carolina nonprofits sent a letter to Congressman Walker and the rest of our state’s congressional delegation asking for them to expand the universal charitable deduction and provide three other types of relief to help nonprofits deal with the COVID-19 pandemic. The bills to bolster charitable giving are a direct response to nonprofits’ unified message. Look for an additional call to action on this issue in the coming weeks.

Yesterday, the NC House of Representatives gave final approval to a bill ( H.B. 1023) that would spend about $600 million of the state’s CARES Act funding on a variety of appropriations and programs. Several parts of the bill would help nonprofits including:

The Senate approved the bill earlier in the week, and it now goes to Governor Cooper for his consideration.

In a separate bill ( S.816) that passed the House and Senate on Tuesday, legislators allocated $645.4 million of the state’s CARES Act funding to be used to fund certain parts of state government operations during the FY2020-21 fiscal year. This could help cover some of the estimated $4.2 billion revenue shortfall for the upcoming fiscal year, which begins on July 1, 2020. A smaller revenue shortfall is good news (or at least less bad news) for nonprofits; during past recessions, state legislators have made steep cuts to nonprofit funding to help fill budget shortfalls. That bill has also gone to Governor Cooper for his consideration.

Even with the General Assembly finishing its 2020 session, North Carolina has not spent all of its CARES Act funding. Legislators have indicated that, if the federal government provides state and local governments more flexibility, the remaining CARES Act money could be used to reduce the state’s budget hole for next year even more. Legislators also expect that Congress will provide state and local governments with additional federal support to fill budget holes later this summer.

Late last night, the NC House of Representatives approved an amendment to a bill ( S.730) that would create a new grant program for businesses that had to close due to COVID-19 and the related executive orders. Under the proposal, businesses would be eligible for grants of up to $50,000. The Senate could consider the bill when legislators return to Raleigh in September. The Center has been working with House and Senate members to make nonprofits eligible for these grants. If enacted, the grant program could provide significant financial relief for many nonprofits that have had to cancel programs and services over the past three months.

On Tuesday, the NC House of Representatives approved a bill ( H.B. 118) that would provide immunity for nonprofits, businesses, and individuals from liability for alleged transmission of COVID-19. By extending the immunity to individuals, nonprofit board members and volunteers also would be protected from liability under this legislation. The limited immunity would not apply if alleged contraction of COVID-19 were due to the gross negligence, willful or wanton conduct, or intentional wrongdoing of the nonprofit, business, or individual. The bill would not limit the ability of workers to file workers’ compensation claims if they contracted COVID-19 in the course of their employment. The limitation on liability would be applicable for claims up to 180 days after the end of the COVID-19 state of emergency in North Carolina ( Executive Order No. 116).

The bill also would require nonprofits, businesses, and governmental agencies to provide reasonable notice to people entering their facilities of actions they are taking to reduce the risk of COVID-19 transmission. Many nonprofits are already doing this by posting signs about their policies for social distancing, mask wearing, and sanitizing.

The NC Senate approved the bill last week, so the bill now goes to Governor Roy Cooper for his consideration.

Yesterday, the NC House of Representatives and NC Senate gave final approval to a bill ( S.808) that would delay Medicaid transformation – the state's planned transition of Medicaid to a managed care network – until July 1, 2021. Last fall, the NC Department of Health and Human Services (DHHS) indefinitely suspended its Medicaid transformation plans after the General Assembly and Governor Cooper were unable to agree on a state budget that included necessary funding for this transition. The bill also would:

Many of the provisions in the bill are (at least partial) good news for nonprofits. Specifically:

The General Assembly finished the main part of its 2020 legislative session early this morning. Technically, the legislature will remain in session through Saturday, July 11 so lawmakers can reconsider any bills that Governor Cooper vetoes in the next two weeks and take action on other urgent legislation. Legislators will then return to Raleigh on September 2-3 for a brief session to appropriate the remaining state funds from the CARES Act and other federal support for COVID-19. Congress is expected to pass another COVID-19 relief bill in July or August that would provide additional support to state and local governments.

Last Friday, a bipartisan group of 10 U.S. Senators introduced the Protecting Nonprofits from Catastrophic Cash Flow Strain Act (S. 4001), which would partially fix the unemployment payments challenge for reimbursing nonprofits. Specifically, the bill clarifies that self-insured nonprofits would not have to pay 100% of their unemployment bill up front and wait for repayment from the state. This would fix problematic guidance from the U.S. Department of Labor requiring nonprofits to fully reimburse states for the costs of their COVID-19 related UI claims and then seek reimbursement of their reimbursement.

On Wednesday, Governor Cooper issued Executive Order No. 147 extending Phase 2 of the re-opening of the state’s economy by three weeks, until July 17 at 5 p.m. The Executive Order also requires North Carolinians to wear face coverings in most public settings where social distancing is not practical. This Executive Order comes after COVID-19 cases and hospitalizations have spiked in North Carolina over the past two weeks. Some notable provisions for nonprofits include:

On Monday, the Center submitted comments to the Federal Reserve on its plan to expand the Main Street Lending Program to provide access to credit for nonprofit organizations. Under the Federal Reserve’s proposal, these loans – which would not be forgivable – would be available to 501(c)(3) nonprofits with between 50 and 15,000 employees if: (a) their endowments are less than $3 billion; and (b) less than 30% of their total 2019 revenue came from donations. The Center’s comments focused on three main concerns:

Yesterday, the NC Senate gave final approval to a bill ( H.B. 1080) that would decouple the state tax code from the Internal Revenue Code on most of the new tax provisions from the CARES Act. Notably for nonprofits, this would mean that:

While these three provisions are not ideal, the Center’s analysis is that their impact on charitable giving should be negligible.

A separate provision of the bill would make a technical change to ensure that nonprofits are able to receive refunds of the sales tax they pay on digital property. The bill now goes to Governor Cooper for his consideration.

Last month, the Center and our state government partners launched a new survey on the impact of COVID-19 on North Carolina nonprofits. More than 1,300 nonprofits have already completed the survey, and we're hoping to have thousands more organizations reply in the coming days and weeks. Please take 12 minutes to complete the survey, which asks about your organization's operations and needs during the COVID-19 crisis and in the coming months. Your response to the survey will inform government, philanthropy, and others about what COVID-19 related needs are most pressing in North Carolina. To maximize the benefits and value of this survey, responses will be publicly available.

The survey, which is available in both English and Spanish, is a joint effort of the Center, the Office of the NC Secretary of State, and the Strategic Partnerships office at the NC Office of State Budget and Management. The Center encourages nonprofits to complete the survey even if you responded to our original COVID-19 survey in March. Thank you if your organization has already completed the survey!

Yesterday, the NC House of Representatives and NC Senate both approved a new bill ( S.105) that would require the Governor to receive consent of the 10-member Council of State before issuing many types of executive orders during a state of emergency like the COVID-19 pandemic. The bill was approved after Governor Cooper vetoed two bills to reopen certain types of businesses that are currently closed due to executive orders.

The Center and other nonprofits have been working with the Governor’s Office for months on a variety of potential executive orders that could help nonprofits and the communities they serve respond to the pandemic. If enacted, this legislation could make it harder for Governor Cooper to take action by executive order. It is quite likely that Governor Cooper will veto it.

Early this morning, the NC House of Representatives and NC Senate released and approved a bill ( S.681) that would enact a variety of non-controversial provisions from the state budget for FY2019-21, which was vetoed by Governor Cooper last year. Among other things, the bill adds new reporting requirements for nonprofits receiving appropriations (but not grant funding) through the NC Department of Commerce and establishes new criteria for conservation grants. The bill now goes to Governor Cooper for his consideration.

On Tuesday, the U.S. Small Business Administration (SBA) issued another interim final rule on loan forgiveness under the Paycheck Protection Program (PPP). Notably, the rule clarifies that borrowers do not need to wait until the end of their eight-week or 24-week loan period to apply for forgiveness.

This week, the IRS updated its frequently asked questions on the Employee Retention Credit under the CARES Act. Most notably, the IRS provides guidance for tax-exempt employers on how to calculate “gross receipts” under the credit. Specifically, the answer to FAQ #46 explains that gross receipts for tax-exempt organizations include total revenue from all operations, not just from (taxable) unrelated business income activities. If the state COVID-19 grant program is enacted, the Center will advocate for the NC Department of Commerce to follow the IRS’s guidance for nonprofits to calculate changes in their gross receipts as they determine whether they are eligible for grants.