Yesterday, the NC Senate Finance Committee approved a bill ( S.848) that would create three new state COVID-19 economic recovery grant programs. One of these programs would provide $50 million in grant funds for businesses that maintained at least 90% of their employees from March 1, 2020 through May 31, 2020 if they have not received financial assistance through the Paycheck Protection Program (PPP) or the Main Street Lending Program. However, under the bill’s current language, most nonprofits would not be eligible for these grants.

The Center is working with the bill sponsors and other state senators to revise the bill to make nonprofits eligible for these grants. Including nonprofits in this grant program would be consistent with one of the six requests in last month’s letter to state legislators from 460 nonprofit organizations: “ Include nonprofits in small business relief. Like small businesses, many nonprofits need immediate financial support to continue to operate and provide services. As the General Assembly develops or expands loan programs, grants, or other measures to help small businesses, it is essential that nonprofits have full access to these programs.”

Let us know if your nonprofit could benefit from this proposed state COVID-19 recovery grant program. Your stories can help show legislators why it is essential to allow nonprofits to access these economic support grants.

On Tuesday, the Congressional Joint Economic Committee held a hearing on Supporting Charitable Giving during the COVID-19 Crisis. During the hearing, six U.S. Senators (three Democrats and three Republicans) described plans for their bill to greatly expand the above-the-line deduction for charitable contributions that was included in the CARES Act. The current universal charitable deduction is limited to $300 per year and only applies on 2020 taxes. The six Senators are proposing a much larger deduction (with caps of $4,000 for individuals and $8,000 for married couples filing jointly) that also could be applied to 2019 taxes (creating an incentive for more immediate charitable contributions, since 2019 tax returns are now due on July 15, 2020). Congressman Mark Walker (R-NC) has introduced similar legislation in the U.S. House of Representatives.

Three weeks ago, the Center and our state government partners launched a new survey on the impact of COVID-19 on North Carolina nonprofits. More than 900 nonprofits have already completed the survey, and we're hoping to have thousands more organizations reply in the coming days and weeks. Please take 15 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.

This week, two NC Senate committees approved a bill ( S.805) that would allow North Carolina to use $645.4 million of the state’s CARES Act funding 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.

However, restrictions in the CARES Act currently limit how much the NC legislature can fill revenue gaps by drawing on CARES Act funding. Consequently, even if the General Assembly passes S.805, North Carolina will still have more than $1 billion in unspent CARES Act funding.

Congress can help minimize this budget shortfall in North Carolina (and virtually every other state) by providing additional funding to state and local governments to help alleviate the fiscal impacts of the COVID-19 crisis. Two ways that Congress can help are:

On Tuesday, the U.S. Senate Finance Committee held a hearing on unemployment insurance (UI) issues related to COVID-19. The Center and other nonprofits continue to ask Congress and the U.S. Department of Labor (DOL) to take action to rescind the problematic DOL guidance that requires self-insured nonprofits to reimburse states for the full amount of their COVID-19 related UI claims before they are reimbursed for 50% of these claims. The National Council of Nonprofits submitted a statement for the record to the Senate Finance Committee explaining this issue and providing an analysis of the challenges that the current DOL policy is creating for many nonprofits. Unfortunately, Senators did not address nonprofits' UI issues during this week's hearing.

This week, the Small Business Administration (SBA) issued revised regulations making changes to the SBA Interim Final Rule to be consistent with the PPP Flexibility Act. The following Revisions to the First Interim Final Rule go into effect immediately:

Like the state legislature, North Carolina’s local government leaders are in the process of planning their budgets for the upcoming year. Most counties, cities, and towns are also facing significant funding shortfalls and could look to fill their budget gaps by cutting or eliminating nonprofit grants or imposing new taxes, fees, or payments in lieu of taxes (PILOTs) on charitable nonprofits. For example, Wake County is proposing eliminating most of its grant funding for nonprofits in its recommended budget for the next fiscal year.

Let us know if your nonprofit is facing funding cuts from your local governments. Also, let us know if your county, city, or town is proposing any new taxes, fees, or PILOTs on local nonprofits. As the Center learns about budget proposals in different parts of the state that could be harmful to nonprofits, we are available to help local organizations advocate for preservation of their government funding or in opposition to unreasonable new taxes, fees, or PILOTs. Thank you if you have already replied!

In addition to looming cuts to state and local government grant funding, many nonprofits have seen steep reductions in earned income and individual and corporate contributions over the past three months. Because of this lost revenue, some nonprofits have expressed concerns to the Center about meeting matching fund requirements for their state grants next year. The Center is exploring ways to advocate for temporary changes to matching grant requirements if this is a widespread problem for North Carolina nonprofits. Let us know if your organization may have difficulty meeting a matching fund requirement for a state grant next year (and let us know the specific grant program and/or the state agency through which you receive grants).

Yesterday, the NC Senate and NC House of Representatives gave final approval to a bill ( H.B. 1169) that would make several changes to North Carolina’s absentee voting process to make it easier for North Carolinians to vote by mail in 2020. Changes would include:

North Carolina’s current absentee ballot requirements, which are stricter than most other states, make it challenging for many North Carolinians – particularly homebound seniors and individuals with disabilities – to request absentee ballots. The Center supports the absentee ballot provisions in the bill, since these changes would help many North Carolinians who receive nonprofits’ services vote by mail this fall if COVID-19 remains a problem.

While the bill originally passed the House with broad bipartisan support, it passed the Senate and House yesterday by a narrower margin after discussion of an unrelated provision in the bill that would allow government-issued ID cards for public assistance programs to be an acceptable form of photo ID requirement for voting. North Carolina’s voter ID law is currently not in effect due to two court orders, and one of the reasons for the courts’ injunctions is the failure of the state voter ID law to include public assistance IDs. Some advocates are concerned that the inclusion of this voter ID change in the bill could affect the court injunctions.

In the past few months, nonprofits have successfully adapted to the challenges of serving our missions in the face of a pandemic. Now, as North Carolina reopens and nonprofit staff begin to return to offices and reopen facilities, the Center has pulled together recommendations and considerations to help organizations plan and prepare. Going Forward: Best Practices and Considerations for Nonprofit Re-Engagement, offers guidance on everything from operations, human resources and board governance to communications, donor relationships and events.

Last Friday, Governor Cooper signed into law a bill ( H.B. 1079) that exempts many types of remote services provided by nonprofits from the sales tax on digital property. Since October 1, 2019, nonprofits and businesses had been required to collect and remit sales tax on any sale of digital property, which includes online learnings like classes, webinars, and conferences. The Center has advocated for legislators to amend this law so that nonprofits would not need to charge sales tax on their educational offerings if the same types of learnings would not be taxable if offered as in-person events. Nonprofits’ concern over this issue has become much more significant over the past three months, as almost all in-person educational events have had to be conducted as webinars or other types of online events.

The new law addresses most of nonprofits’ concern by providing an exemption from sales tax for any digital audio or audiovisual work that consists of the contemporaneous electronic transmission of a nontaxable service. To translate that from legalese: Nonprofits do not need to charge sales tax on fees for attending online conferences, webinars, or workshops or for providing real-time online services like exercise or wellness classes or telemedicine. Note that nonprofits or businesses still need to charge sales tax if they sell the recordings of events (going back to October 1, 2019). However, the new law provides a limited grace period through August 1, 2020 when nonprofits and businesses will not need to collect and remit sales tax when they sell recordings of continuing education classes approved by occupational licensing boards.

The NC Senate is considering several mini-budget bills that would provide funding for parts of the state government for the FY2020-21 fiscal year. This week, the Senate Appropriations Committee and Senate Finance Committee approved a mini-budget bill ( S.808) that would provide funding for Medicaid transformation – the state's planned transition of Medicaid to a managed care network. If enacted, this bill would plan for Medicaid transformation to begin on January 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 would also:

Yesterday, the Internal Revenue Service issued guidance ( Notice 2020-46) clarifying that both employees and their employers can receive tax benefits when employees can donate their accrued paid vacation, sick, and personal leave to charitable nonprofits providing COVID-19 relief. The IRS guidance provides that these donations of accrued leave will not count as taxable income for employees and that employers may take tax deductions for their contributions to charitable nonprofits for the value of leave donated by their employees.