When the NC Senate and NC House of Representatives adjourned two weeks ago, they ended the General Assembly's 2022 short session. Technically, legislators are still scheduled to come back to Raleigh for brief sessions each month for the remainder of the year, but lawmakers are unlikely to pass any substantive legislation during most of these three-day mini-sessions. Now that the lawmakers are mostly done with their legislative work for the 2021-22 session, the Center has prepared a summary of legislation that affected the work of charitable nonprofits.

Last Thursday, Governor Roy Cooper signed a new law (H.B. 791) that addresses many of the issues that nonprofits have experienced with their grants and contracts with the NC Department of Health and Human Services (DHHS). Specifically, the new law makes four reforms to DHHS grants and contracts with nonprofits:

This new law, which takes effect today, is based on input from dozens of nonprofits that have shared their stories about late payments, late contracts, underpayment for indirect costs, and red tape in their grants and contracts with DHHS. The Center worked with Senator Jim Burgin (R-Harnett), DHHS, and a variety of nonprofit partners on this bill.

While this new law should help with some of the challenges that nonprofits have experienced with their grants and contracts with DHHS, it is only the start of the process of nonprofit-government contracting reforms. The Center is continuing to work with our partners in state government on additional nonprofit contracting reforms that will help strengthen partnerships between nonprofits and the many state agencies with which they partner through grants and contracts. We’ll keep you posted as opportunities arise for your nonprofit to be a part of this process.

On Monday, Governor Cooper signed into law the state budget for FY2022-23 (H.B. 103). The $27.9 billion budget includes more than $230 million in new funding for nonprofits, including $155 million in increased support for nonprofit programs and operations and $79 million in support for building projects at nonprofits. Some highlights include:

The Center has prepared a comprehensive analysis of the budget with more details about various nonprofit provisions and appropriations, including lists of all nonprofits receiving earmarks.

The main part of the 2022 legislative session ended earlier this month without agreement on a plan to expand Medicaid coverage to adults with incomes up to 133% of the federal poverty level. Medicaid expansion would provide health coverage for about 600,000 North Carolinians whose incomes are too much to qualify for Medicaid currently but not enough to receive health care subsidies in the Affordable Care Act health marketplace. This summer, both the House and Senate passed Medicaid expansion legislation. The House version (S.408) would have legislators return to Raleigh in December to approve a recommendation from the NC DHHS on:

The Senate version (H.B. 149) would enact Medicaid expansion in North Carolina and would also includes several other major health care policy provisions, including changes to the state’s certificate of need laws and a version the SAVE Act, which would enable more nurses to provide services without supervision by a physician.

The Center strongly supports Medicaid expansion for two reasons. First, it would complement the work of many nonprofits that provide services to North Carolinians who don’t currently have adequate health coverage. Second, it would provide 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.

Governor Cooper announced on Monday that North Carolina will end its COVID-19 state of emergency on August 15. Governor Cooper originally declared a state of emergency (Executive Order No. 116) on March 10, 2020. The emergency declaration has allowed the Governor, NC DHHS, and other state agencies to take a variety of executive actions (many of which would require legislative approval under normal circumstances) to protect the public health and to minimize the economic impacts of the pandemic.

More borrowers would be eligible for public service loan forgiveness under proposed regulations by the U.S. Department of Education that will be published soon. The rules propose making permanent some, but not all, of the relaxed eligibility terms in the temporary Limited PSLF Waiver set to expire October 31. Key provisions would allow more kinds of payments (certain types of deferment, forbearance, and lump sum and late payments) to count as qualifying payments; clarify the definitions of full-time employment and qualifying employer; and codify the reconsideration process. The proposed regulations, if adopted, would also provide a hold-harmless option for deferment or forbearance, automate progress toward forgiveness, and eliminate prospective interest capitalization not required by statute. Once published, the rules will be open for public comments for 30 days. Borrowers are encouraged to access the PSLF Help Tool and take immediate action regarding the limited temporary waiver.

This fall, the U.S. Department of Labor (DOL) plans to release new proposed regulations on the salary threshold under the Fair Labor Standards Act (FLSA). Currently, FLSA requires employers, including nonprofits, to pay their employees at least $7.25 per hour and to pay employees one-and-one-half time their regular rate of pay when they work more than 40 hours in a workweek. Employees are exempt from the FLSA overtime pay requirement if they:

In 2016, near the end of the Obama administration, DOL attempted to raise the salary threshold for exemption from overtime pay to $47,476 per year. Ultimately, federal courts stopped the implementation of the Obama-era overtime rule, and the Trump administration elected to use a lower salary threshold (the current level of $35,568) for exemption from overtime pay. It is likely that the forthcoming DOL regulations will set a salary threshold closer to that of the 2016 proposal. DOL also could make changes to the duties tests for administrative, executive, and professional employees.

It is important for nonprofits to regularly review their employees’ job descriptions to see whether they meet the criteria for one of these three duties tests. Unfortunately for nonprofits, the DOL guidance on the three duties test often focuses on typical for-profit positions and doesn’t provide analysis of nonprofit positions (e.g., the guidance isn’t clear on whether certain fundraising/development jobs or volunteer management positions meet one of the duties tests). The new regulations are a chance to fix this issue and provide clearer guidance for nonprofits. The Center and our national partners have reached out to DOL to raise this issue, and we are seeking your help in identifying positions at your nonprofit that don’t fit clearly within the existing guidance for administrative, executive, or professional employees. Let us know some examples of positions at your nonprofit for which it would be helpful to have clarity from DOL about whether they meet the duties tests for FLSA exemption.

On Monday, Governor Cooper vetoed a bill (S.593) that would create independent boards for three state schools for individuals with disabilities. One provision in the bill would have enabled the schools to create independent nonprofits to raise private funds to support their operations. Unfortunately, the bill would have required that these nonprofits “shall not engage in partisan political activity or policy advocacy.” The Center explained to legislators that the prohibition on partisan political activity makes sense and is the same limitation that is in place for any 501(c)(3), but that the limitation on “policy advocacy” may be problematic for nonprofits established to support these school. 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 education of the public about policy issues and advocating with local governments on matters affecting their organizations’ operations or the people they serve.

The Center supports Governor Cooper’s decision to veto the bill. The bill was introduced and passed in the final days of the legislative session, and there was little opportunity for lawmakers to fully understand or make changes to the bill, including the problematic nonprofit language. The Center is continuing 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.

One of the easiest ways nonprofits can help promote elections is by giving your staff paid time off to vote during Early Voting or on Election Day. To help ensure that nonprofits show leadership when it comes to empowering the millions who work daily to create a more equitable society, Nonprofit VOTE, the National Council of Nonprofits, and several other national organizations have launched the Nonprofit Staff Vote campaign. 

The Center has proudly signed on to the Nonprofit Staff Vote campaign, and we encourage your nonprofit to join also. To model best practices, the Center is sharing its policy (below) allowing staff to take time off to vote or to volunteer as nonpartisan poll workers. Feel free to borrow this language and adapt it to fit into your organization’s personnel policies.

On Monday, a federal court ordered that people with disabilities can get assistance from anyone they choose – including from nonprofit employees or volunteers – in completing applications for absentee ballots. The court found that a state law enacted in 2020 prohibiting people other than close relatives or legal guardians from helping people complete absentee ballot request forms violates the federal Voting Rights Act. Nonprofits serving seniors and people with disabilities – particularly those who are homebound or live in nonprofit residential facilities – had expressed concerns that this law might make it harder for people to vote, particularly if their primary caregivers are nonprofit staff and volunteers who are not their immediate family members or legal guardians. The court ruling, which is applicable starting in the 2022 election, only applies to people with disabilities, so nonprofits still can’t help people without disabilities complete absentee ballot request forms.

The court ruling is a good example of how nonprofits can use litigation as a way to effectively advocate for the people they serve. Disability Rights North Carolina, a 501(c)(3) nonprofit was the plaintiff in the case.

Yesterday, the NC State Board of Elections (NCSBE) denied a request for a declaratory ruling that would have allowed county boards of elections to use a signature matching process to determine whether to accept absentee ballots. Some organizations had expressed concerns that a signature match requirement could make it impossible for some people served by nonprofits – including seniors and people with disabilities – to vote by absentee ballot, particularly if their signatures have changed since they originally registered to vote.

Earlier this month, two U.S. House members introduced the Tax Emergency Adjustment for Mileage Volunteers (TEAM Volunteers) Act (H.R. 8265) to increase the volunteer mileage rate. The bill would temporarily raise the volunteer mileage rate from 14 cents per mile to the full business mileage rate (currently 62.5 cents per mile) for two years “in order to address the financial burden that rising gas prices and inflationary pressures have placed on volunteer drivers.” Following those two years, the legislation would set the permanent rate for volunteer drivers at 24 cents per mile to adjust for inflation since the volunteer rate was last set 25 years ago. The IRS would be responsible for adjusting the volunteer mileage rate annually. The volunteer mileage rate is the amount that is tax-deductible when nonprofit volunteers drive their own vehicles on behalf of the charitable organization.

Advocacy is a broad concept encompassing all the strategies and communications that advance a nonprofit’s mission. To help your nonprofit strengthen its advocacy, the Center is offering a three-part webinar series designed to equip nonprofit leaders with a better understanding of and concrete tools to be more effective advocates for your missions. Join us beginning August 16 to define your nonprofit’s goals, audiences, and resources as you develop your advocacy strategies and tactics; study proven narratives and practical storytelling tools; and identify and track the data that supports the need for your organization’s programs. Register for the full series or individual webinars. We especially encourage staff, board, volunteers, and leaders from lower-resourced, rural, BIPOC-led, and new (less than two years old) nonprofit organizations to attend. Learn more and register.

Charitable nonprofits are allowed to engage in activities that promote voting and civic participation, but 501(c)(3) organizations must remain strictly nonpartisan when doing voter registration, candidate engagement, and voter education. To help your nonprofit understand how to remain nonpartisan, join Nonprofit VOTE for a free webinar on Staying Nonpartisan During Voter Engagement on Tuesday, July 19 at 2 p.m.

Second quarter lobbying expense reports are due to the NC Secretary of State by Friday, July 22. Nonprofits that are registered as lobbyist principals and nonprofit staff and contractors registered as lobbyists must submit their expense reports each quarter. For more information on lobbying registration and reporting requirements, check out the Center's summary of NC lobbying laws for nonprofits.

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. Don’t miss out – become a member to ensure you continue receiving these updates along with many other valuable benefits.