Over the past year (and the past decade), the Center has heard from MANY nonprofits about challenges they are experiencing with government grants and contracts. The Center is working with state agencies and state legislators to try to identify ways to strengthen the contractual partnerships between state government and nonprofits. With the 2023 legislative session underway and many nonprofits in the middle of their FY 2022-23 contracts with the state, the Center is seeking input to help identify policy solutions that could strengthen nonprofit-government contracting. If your nonprofit has state grants or contracts, please take a few minutes to complete a brief survey on the challenges your nonprofit is experiencing, your positive experiences with state agencies, and potential policy solutions. If it’s easier, you can share your input with us by email. Thank you if you have recently shared your input with us!

Yesterday, the NC House of Representatives approved a bill (H.B. 76) that would enact Medicaid expansion in North Carolina, providing health coverage for about 600,000 North Carolinians in the health coverage gap who have incomes too high to qualify for Medicaid but too low to receive health care subsidies under the Affordable Care Act marketplace. The bill now goes to the Senate for consideration. If the bill becomes law, North Carolina would begin Medicaid expansion on January 1, 2024 as long as a state budget for FY 2023-24 is in place by then.

As we explained in a Care4Carolina blog post last summer, the Center strongly supports Medicaid expansion because it would support the work of charitable nonprofits by:

1. Complementing the work of many nonprofits that provide services to North Carolinians who don’t currently have adequate health coverage;
2. Providing health coverage for some employees of nonprofits that don’t offer group health plans and whose salaries leave them in the health care coverage gap; and 
3. Providing payment for some types of Medicaid-eligible services that nonprofits currently provide to clients for free.

The Medicaid expansion bill passed by the House this week also would enable North Carolina to participate in the Healthcare Access and Stabilization Program (HASP), a federal program that would help provide better financial stability for many nonprofit hospitals. The bill also would develop a program to improve access to workforce development services for North Carolinians enrolled in the state’s Medicaid program.

Notably, the House bill makes no changes to the state’s Certificate of Need (CON) laws that limit the ability of health care providers to offer a variety of health-related services. Hospitals and health systems – many of which are 501(c)(3) nonprofits – have been concerned that major changes to CON laws could significantly reduce their revenue, potentially causing some hospitals to close. Last year, leadership in the NC Senate included CON changes in its version of Medicaid expansion legislation. A separate bill (H.B. 107) filed in the House this week would repeal North Carolina’s Certificate of Need (CON) law. An identical CON repeal bill (S.48) was introduced in the Senate last month.

The Senate is likely to add CON changes and other health care policy changes to the House-passed Medicaid expansion legislation before voting on it. Senate leadership has not yet indicated how soon it will take up the bill. The Center will keep you posted when there is a need for nonprofits to take action to support Medicaid expansion.

This week, the NC Office of State Budget and Management (OSBM) and the General Assembly’s Fiscal Research Division released a consensus revenue forecast for FY 2022-23. The report projects that the state will collect about $3.25 billion more revenue than originally projected for the current fiscal year. However, in anticipation of a “slow-cession” in the economy, the report projects that state revenue could decline slightly for the next two years. State legislators could use the surplus to provide additional funding for a variety of state programs and services (including many services provided by nonprofits), make further cuts to state taxes, and/or increase the state’s savings reserves.

For the past eight years, the state budget has included a provision that prohibits nonprofits from using more than $120,000 in state funds to pay for any individual employee’s “annual salary.” Nothing in budget or other state law prohibits nonprofits with state grants and contracts from paying any of their employees salaries of more than $120,000 per year, as long as any amount above $120,000 is funded by other revenue sources like individual donations, foundation grants, or fees for services. As legislators begin the process of developing the FY 2023-25 state budget, the Center is trying to assess whether there may be a need to increase the amount of the salary cap to keep up with inflation and/or increases in state employee compensation over the past eight years. Let us know if your nonprofit has state funding and would be interested in having the salary cap increased.

Is there a policy change you wish you could convince your state or local lawmakers to make? If so, we have a new program for you. The Center is launching the NC Nonprofit Public Policy Advocacy Academy to empower participating organizations with the concepts, skills, and coaching they need to develop effective public policy advocacy programs. This three-month program will help a small group of nonprofit leaders:

1. Develop their own organization-specific policy advocacy campaign strategy; 
2. Reach at least one milestone toward achieving their desired policy goal; and
3. Develop the confidence and skills to continue their campaigns. 

Check out the NC Nonprofit Public Policy Advocacy Academy resource page for more information and to apply. We have been reviewing applications on a rolling basis and anticipate that all spaces will be filled by next week; if you have not yet applied and wish to be considered, we strongly encourage you to complete the application today.

The Center is currently hosting Nonprofit Policy Conversations around the state to bring together nonprofit leaders and local elected officials (mostly state legislators) to discuss public policy issues that are important to charitable nonprofits and the people and communities they serve. At each Conversation, the Center provides a briefing on 2023 state legislative priorities, nonprofit sector trends, and potential public policy solutions and challenges for nonprofits in 2023 and beyond. The Conversations also include discussions about state and federal public policy issues affecting local nonprofits.

The Center and local partners will host upcoming events in Kannapolis (February 24), Raleigh (March 6), and Fayetteville (March 27) – register now. While we request a registration fee in support of these events, please let us know if this is a barrier as we can assist if asked.

On Tuesday, the North Carolina State Treasurer and the State Health Plan released a report on executive compensation at nonprofit hospitals. The report is the latest in a series of reports from the State Treasurer questioning the finances of nonprofit hospitals. 

While many of the hospital executive salaries identified in the report are considerably higher than average nonprofit compensation, the Center is concerned that this report, along with others in the series of reports from the State Treasurer, misrepresents the operations, community benefits, and legal requirements of nonprofit hospitals and the challenges facing charitable nonprofits across North Carolina. Specifically, this week’s report ignores the realities that:

1. Nonprofit hospitals (like other 501(c)(3) nonprofits) must use comparability data to set executive compensation; and
2. Nonprofit hospitals (like other 501(c)(3) nonprofits) must reinvest all of their net earnings back into their missions rather than distributing a portion of their net revenue to their executive leadership, shareholders, or other insiders.  

The Center is particularly concerned that this series of reports from the State Treasurer could encourage policymakers to consider limiting or eliminating nonprofit sales tax refunds and/or property tax exemption. The Center has long held the position that all 501(c)(3) nonprofits should be exempt from these state and local taxes. As we noted in a 2019 blog post highlighting potential threats to nonprofit tax exemption, “it is essential for all 501(c)(3) nonprofits to work together as a sector to preserve – and improve upon – nonprofit tax exemption. New taxes and fees on nonprofits – even if they initially only apply to a few organizations – ultimately harm our communities by taking resources away from the work of charitable nonprofits throughout North Carolina.”

Last week, the U.S. Department of Labor issued a bulletin providing guidance to employers about the ways that the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA) apply to employees who work remotely all or part of the time. The bulletin, which is written for a general audience rather than in legalese, includes answers to questions nonprofits may have about short break time, flexible work schedules, and meal times for staff who work remotely.

In response to a recent Center survey, many Nonprofit Policy Update readers told us they would like to get to know their state legislators better. One great way to develop (or strengthen) your relationship with your state senator and representatives is to come to Raleigh to meet with them at their office in the NC General Assembly. While the Center is not planning a nonprofit lobby day at the NC General Assembly this year, we are always happy to provide one-on-one coaching, encouragement, and advocacy tips to nonprofit leaders who are coming to Raleigh to meet with state legislators. Let us know if you are interested in coming to Raleigh to meet with your legislators sometime this winter or spring – or if you already have a trip scheduled – and we can work with you both before and during your visit to ensure that you have a successful advocacy experience. Scheduling tip: Legislators are typically in Raleigh from Monday evenings through mid-day on Thursdays during most of the legislative session, so it’s often best to plan for meetings on a Tuesday, Wednesday, or Thursday.

This week, the NC House Committee on Education – K-12 approved a bill (S.62) that would create independent boards for three state schools for individuals with disabilities. One provision in the bill would enable the schools to create independent nonprofits to raise private funds to support their operations. Unfortunately, the bill requires that these nonprofits “shall not engage in partisan political activity or policy advocacy.” While the prohibition on partisan political activity makes sense and is the same limitation that is in place for any 501(c)(3), the limitation on “policy advocacy” may be problematic for nonprofits established to support these schools. Because “policy advocacy” is a very broad term, this limitation could prevent nonprofits formed by these schools from engaging in many forms of legal and legitimate policy advocacy such as educating the public about policy issues and advocating with local governments on matters affecting their organizations’ operations or the people they serve.

Governor Roy Cooper vetoed a similar bill (S.593) that was introduced and quickly passed near the end of last year’s legislative session. At the time, the Center explained to legislators and the Governor’s staff that the bill could set a troublesome precedent by limiting the ability of a few 501(c)(3) nonprofits to engage in policy advocacy. The Center will continue to work with legislators to educate them that 501(c)(3) nonprofits can – and often should – legally engage in policy advocacy and to ensure that future legislation doesn’t set unreasonable limits on some nonprofits’ advocacy.

The language in the bill tracks a similar (and similarly problematic) provision in state law that prohibits nonprofits formed by local school systems from engaging in “partisan political activity” or “policy advocacy.” The Center is trying to learn whether any nonprofits have been created under the existing law and, if so, how the law has limited those organizations’ advocacy efforts. Let us know if your nonprofit was created to support a local school system or if you know of any nonprofits in your area that were created by school systems.

A bill (H.B. 123) filed in the NC House of Representatives this week would place a constitutional amendment on the ballot in November 2024 to limit the Early Voting period to seven days. Currently, North Carolina has a 17-day Early Voting period. Many nonprofits encourage their staff, volunteers, and clients to vote early for a variety of reasons, including: 

1. Early Voting is the only time that North Carolinians can register and vote at the same time (so it’s ideal for people who are new to the state or have recently moved);
2. Early Voting offers greater flexibility for people who may have other commitments on Election Day; and
3. North Carolinians can vote at any Early Voting site in their county, whereas they have to vote at their assigned precinct on Election Day.

The Center provides Nonprofit Policy Update as a weekly benefit to its nonprofit members. However, to help all North Carolina nonprofits respond to continuing challenges from the COVID-19 pandemic, we're temporarily providing this newsletter to non-member nonprofits. Become a member to continue receiving these updates along with many other valuable benefits.