Last night, the U.S. Senate passed a one-week continuing budget resolution that extends temporary funding for the federal government through next Friday, December 23. The U.S. House of Representatives had passed it on Wednesday, and President Biden is expected to sign it into law today. Without the passage of this continuing resolution, funding for the federal government would have expired after today. The Senate is planning to finish its business for the year next week, so Congress has until next Friday either to:

1. Approve an omnibus appropriations bill for the remainder of the federal fiscal year (through September 30, 2022); or
2. Pass another continuing budget resolution to fund the federal government through a date in early 2023 and give the incoming Congress an opportunity to work out the details of a full appropriations bill.

The first option appears likely to happen, as congressional leaders have said this week that they are close to finalizing negotiations on details of an omnibus spending bill.

For nonprofits, an omnibus spending bill – whether passed next week or sometime in 2023 – is preferable to a continuing budget resolution. A continuing resolution merely keeps the government’s doors open at current spending levels. An omnibus appropriations bill, on the other hand, provides the opportunity for Congress to enact a variety of appropriations and policy changes that could benefit nonprofits and the people they serve, including new or increased appropriations, one-time funding opportunities for nonprofit organizations, and tax law changes. See below for more details on these nonprofit priorities.

As members of Congress attempt to negotiate details of an omnibus spending bill over the next few days, it is important for them to hear directly from charitable nonprofits about the policy solutions that could help them continue to provide services in their communities. We encourage you to call and tweet Senator Richard Burr (R-NC), Senator Thom Tillis (R-NC), and your U.S. Representative today with these three messages:

1. Charitable nonprofits are still reeling from years of significantly increased demand for services and unstable or declining resources;
2. The charitable giving incentives enacted by Congress, especially the Universal Charitable Deduction, helped nonprofits meet those needs and maintain services until the incentives expired at the end of 2021; and
3. We ask that you immediately restore and extend the charitable giving incentives through 2023 to provide support for nonprofits now while giving Congress time to consider permanent solutions.

You can find your U.S. Representative by typing your address in the “Find Your Legislators” search and seeing the name listed for “US House”. To find the phone number and Twitter handle for Senator Burr, Senator Tillis, and your U.S. Representative, check out the Center’s contact list for North Carolina’s members of Congress.

As promised above, here are more details about nonprofit priorities (and an additional way you can take action on one more of these priorities): 

• Incentives for Charitable Giving. Nonprofits from North Carolina and around the country are calling on Congress to renew and improve upon the universal charitable deduction, a temporary tax incentive for charitable giving that expired at the end of 2021. 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 them in tax legislation this month. 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 this month.
• Appropriations. 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.

As a reader of these weekly Nonprofit Policy Updates, you are likely aware that the Center takes positions on – and lobbies on – state and federal public policy issues that affect most or all 501(c)(3) nonprofits in North Carolina. Yesterday, the Center’s Board of Directors approved the 2023 Public Policy Agenda for North Carolina’s Nonprofit Sector, which describes the Center’s current positions on state and federal public policy issues affecting nonprofits. Many of the public policy solutions and challenges identified on the Center’s 2023 public policy agenda are included because of your input and the input of other nonprofits.

With the 2023 legislative session beginning next month, many nonprofits will be advocating on policy issues affecting their organizations, their missions, and the people they serve. The Center is offering a free webinar on Friday, January 6 to provide an overview of federal and state lobbying laws affecting nonprofits. We’ll include answers to common questions about limits on lobbying and the basics on state rules on lobbying registration and reporting. Register today!

Starting next month, the Center will host a series of 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 Nonprofit Policy Conversation, the Center will provide a briefing on nonprofit sector trends and potential public policy solutions and challenges for nonprofits in 2023 and beyond. The Conversations will also include discussions about state and federal public policy issues of particular interest to local nonprofits. The Center is working with local partners to host these events in Asheville (January 10), Charlotte (January 17), Winston-Salem (January 20), Burlington (January 30), Wilmington (February 10), Concord (date TBD), Fayetteville (date TBD), and Raleigh (date TBD). Registration is open and we’ll keep you posted as additional dates are finalized.

The Center’s weekly Nonprofit Policy Update (i.e., the email you are reading right now!) provides updates on new and proposed legislation and regulations that might affect your nonprofit’s operations and mission. The Center also recognizes that it is helpful for nonprofits to review the many federal and state laws (some new, some longstanding) that are necessary for your nonprofit to remain compliant. With this in mind, the Center has published its annual Legal Compliance Checklist for North Carolina Nonprofits, a comprehensive summary of laws affecting NC nonprofits’ tax exemption, governance, finances, advocacy, human resources, and fundraising – and how to comply.

This year’s edition includes details on legal issues related to new nonprofit remote meeting laws, health coverage options for nonprofit workers, changes to employment regulations and state grant reporting requirements, and more. Based on reader input, we have reformatted this year’s checklist to allow room for nonprofit staff and board members to make notes about additional actions their organizations may need to take on each item.

The Legal Compliance Checklist is included as part of membership in the Center. If your nonprofit is a Center member, all of your staff and board members have access (download it here). The Legal Compliance Checklist is also available for purchase for nonprofits and others that aren’t Center members (purchase it here). Any 501(c)(3) nonprofit can also become a Center member to get free access to the Legal Compliance Checklist and a wide range of other resources and services.

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.