Last Friday, the results of North Carolina’s elections were finalized as local boards of elections certified the results of elections in all 100 counties of the state. The post-election period is an excellent time for nonprofit leaders to build relationships with newly-elected members of Congress and the NC General Assembly by sending notes to congratulate them on their recent victories. To help make it easy for your nonprofit, friend of the Center Lisa Hazirjian has shared some basic tips and sample emails that you can send to your newly-elected (or newly-re-elected) lawmakers.

Last month, the Internal Revenue Service issued a final regulation that could lower health care costs for the families of many nonprofit employees by addressing a quirk in the Affordable Care Act (ACA) health insurance marketplace known as the “family glitch.” Essentially, the new regulation means that many nonprofit employees will be able to purchase subsidized health insurance on the ACA marketplace for their spouses and dependents starting in January 2023. See the last paragraph of this item for a slightly longer legal explanation of the new regulation.

To help your employees better understand whether they might be able to get higher quality and less expensive health insurance for their spouses and dependents, Marsh McLennan Agency, a partner of the Center, has prepared a summary of the new IRS fix to the “family glitch”, including several sample affordability calculations. And to learn more about the many health care options available to small and midsized nonprofits, check out the Center’s recently-updated information page on nonprofits and health insurance.

As promised above, here is the slightly longer legal explanation: Under a 2013 Internal Revenue Service regulation, employees and their spouses and dependents were ineligible for ACA marketplace premium subsidies if the employee had access to “affordable” health insurance through their employer, regardless of whether other family members had access to “affordable” health coverage (with “affordable” defined through a calculation in the regulation). The new rule, which takes effect on January 1, 2023, changes the “affordability calculation to cover the entire family’s health care costs. Starting in 2023, nonprofit employees’ families and dependents will be eligible for ACA marketplace premium subsidies – which may be significantly less expensive and offer more plan options than nonprofit group health plans – if health coverage for the entire family under the lowest-cost employer provided health plan costs more than 9.12% of household income.

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. To register your nonprofit’s assumed business name, you can complete the current registration form and submit it to your county register of deeds.

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 continues next 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. Last 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-itemizers 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. To help your nonprofit take action, the NC Budget and Tax Center has made it easy to contact your U.S. Representative and our two U.S. Senators to urge them to reinstate and make permanent the improvements to the child tax credit in year-end legislation.

• 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.

Yesterday, the NC Secretary of State released its annual report on charitable solicitation in North Carolina. The report found that donations to North Carolina nonprofits made through licensed fundraising professionals increased from $34 million in FY2020-21 to more than $47 million in FY2021-22. While this apparent increase in contributions to nonprofits is dramatic, it is important to remember that contributions through licensed professional fundraisers reflects only a small percentage of the overall revenue for nonprofits – and only a small percentage of overall donations to nonprofits. Overall, North Carolina nonprofits have total revenue of more than $56 billion per year, so donations raised through licensed professional fundraisers only account for about 0.08% of total funding for nonprofit organizations. The vast majority of nonprofits’ revenue comes from other sources including fees for service, government grants and contracts, foundation grants, bequests, and individual and corporate donations that are made directly to nonprofit organizations rather than through professional fundraisers.

The report also found that about 82% of the amount of contributions made through licensed fundraisers went to support the work of nonprofits (with the remaining 18% presumably being retained by these contract fundraisers), the highest percentage in the 22 years that the NC Secretary of State has tracked this data. Secretary of State Elaine Marshall noted: “As North Carolinians have faced incredible challenges due to global economic disruptions and the lingering effects of the COVID pandemic, their neighbors across the state have responded with unmatched generosity. This record high percentage of overall donations going to charities’ programs shows that North Carolinians are doing their homework and practicing smart giving to charities that are continuing to stretch every dollar to meet the growing needs in our communities.” Secretary Marshall also astutely noted that administrative or fundraising ratios don’t always tell the full story about nonprofits “because the percentage can be effected by a number of factors in any given year, including beginning a fundraising campaign shortly before the reporting deadline.”

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 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.