Join a NC Nonprofit Town Hall on the Proposed DOL Overtime Rule on October 20

The U.S. Department of Labor (DOL) recently released new proposed regulations on the salary threshold under the Fair Labor Standards Act (FLSA). The proposed regulations would increase the salary threshold for overtime pay by nearly 55% over the current level to $55,068 per year. The salary threshold in the final regulations may be even higher than the level in the proposed regulations – possibly as high as $60,209 per year. Were this proposal to take effect, most employees earning less than the new salary threshold would be entitled to overtime compensation when they work more than 40 hours in a workweek, regardless of whether they are classified as executive, administrative, or professional (white-collar) workers. The Center anticipates that this change would affect thousands of North Carolina nonprofits, and we have prepared an analysis of the proposed regulations and their potential impact on nonprofit organizations.

Because the proposed regulations appear to be relevant for so many North Carolina nonprofits, the Center is hosting a free virtual town hall on Friday, October 20 from 10:00-11:30 a.m. to give nonprofits an opportunity to share their input on the DOL’s latest overtime proposal. During the town hall, you will have the opportunity to share how the higher salary threshold would affect your staff and your nonprofit’s budget and to let us know ways DOL could minimize any challenges of the higher salary threshold in its final regulations and any additional support the Center can provide for nonprofits as they navigate this change. The Center will open the town hall with a brief overview of the proposed regulations, tips on submitting public comments, and an overview of compliance options for nonprofits. Registration for the town hall is now open. Note: If you would like the join the town hall but aren’t available the morning of October 20, we still encourage you to click on the registration link click on the box that indicates your interest; depending on the level of interest, the Center may offer a second town hall toward the end of October.

Nonprofits and others have until November 7 to submit public comments on the proposed rule. The Center is preparing comments to explain to DOL: (1) the impact of the proposed rule on North Carolina nonprofits; and (2) possible changes in the final rule that could help minimize operational challenges for nonprofit organizations. To help the Center best advocate for the needs of North Carolina nonprofits in our comments to DOL, it is critical that we give clear examples of the potential impact of a higher salary threshold on the operations of charitable nonprofits with exempt administrative, executive, or professional staff who are currently paid salaries below the proposed threshold.

State Budget for FY2023-25 Becomes Law

The state budget for FY2023-25 (H.B. 259) became law on Tuesday, and many of the provisions in the budget took effect this week. The Center has reviewed the 1,411 pages of budget documents and prepared an analysis of the nonprofit appropriations and provisions in the final version of the budget (this chart is relatively short if you are looking for a brief overview) and how the final budget compares to the versions passed by the House and Senate this spring (this chart is much longer than the short analysis linked above). Let us know if you see items that are missing from – or incorrect in – the Center’s summaries; we will continue to update these documents in the coming weeks.

Center Offers Analysis of Directed Grants to Nonprofits in the State Budget

This year’s state budget includes earmarked appropriations or “directed grants” of more than $1.5 billion to 644 nonprofits. While this investment in nonprofits is generally good news for the organizations receiving these earmarks, it also represents $1.5 billion in state funds that were unavailable to support other state investments that are important to the work of many nonprofits. In past years, many nonprofits were unaware that they had received appropriations in the state budget. To help you identify whether your nonprofit received a directed grant, the Center has prepared an updated list of nonprofits receiving new funding in the state budget. Let us know if you see mistakes or omissions in our list; we will continue to update it in the coming weeks.

The process and timing for when these nonprofits will receive this funding depends on the details of how the General Assembly directed the grant in the budget. For example, many nonprofits will receive directed grants through the NC Office of State Budget and Management (OSBM), some will receive them through a variety of state agencies, and others will receive them as pass-through grants to counties or cities. The budget requires state agencies to “begin disbursement of funds to a non-State entity that meets all applicable requirements as soon as practicable, but no later than 100 days after this act becomes law.” Translation: Nonprofits receiving directed grants through OSMB or other state agencies should begin receiving funding from the state by mid-January. For nonprofits with directed grants of $100,000 or less, state agencies can provide funding through a single payment. For organizations with directed grants of more than $100,000, agencies can provide funding through quarterly or monthly payments. State agencies need to make their full payments to nonprofits receiving directed grants by July 3, 2024 (nine months after the effective date of the budget). Nonprofits that received funding as pass-through grants to counties or cities could have to wait a little longer to receive their payments, since this will depend on the local governments’ internal processes.

If your nonprofit received a directed grant in the budget directly from OSBM or another state agency, it will need to comply with the state laws on grant reporting and accountability. Among other things:

1. A nonprofit receiving a state grant or appropriation must provide certification to its granting agency that its state funds were used for the purposes for which they were awarded (which is general operating support for most earmarks) and must provide an accounting of all state funds it receives; and
2. A nonprofit receiving a state grant or appropriation must provide its granting agency with a copy of its conflict of interest policy and must certify to the granting agency that it does not have overdue federal, state, or local tax debts.

Three New State Laws Set Bad Precedents for Nonprofits

On Monday, Governor Cooper allowed three bills to become law without his signature. All three bills set bad precedents for nonprofits by allowing legislators to meddle in the affairs of private 501(c)(3) nonprofits:

1. Among (many) other things, the state budget (H.B. 259): (a) gives the Joint Legislative Oversight Committee on Governmental Operations (GovOps) broad authority to launch warrantless investigations into any nonprofit that receives state funding; and (b) prevents attorneys working for Legal Aid of North Carolina, a 501(c)(3) nonprofit, from participating in the Legal Education Assistance Fund, a state tuition assistance program for public interest lawyers.
2. Another bill (H.B. 361) requires Disability Rights North Carolina, a 501(c)(3) that does not receive state appropriations, to provide the General Assembly with significant reports about its programs, activities, and advocacy work. During a committee hearing in June, the Center expressed its concern that the bill sets a precedent of allowing legislators to impose burdensome information requirements on any 501(c)(3) nonprofit, even organizations that receive no state funding.
3. A third bill (S.452) makes changes to the governance and operations requirements on the NC High School Athletic Association, the 501(c)(3) nonprofit that administers interscholastic high school athletic activities in North Carolina. The new law requires the nonprofit to sign a new memorandum of understanding with the state that will limit the organization’s contracting and fundraising ability and will make the organization subject to state open meeting laws and public records laws. These changes could jeopardize the viability of the organization to continue to operate as an effective 501(c)(3) nonprofit in the future. The Center opposes government policies that limit nonprofits’ governance as independent, nongovernmental corporations with control over their own organizational policies and practices, and we expressed concerns that the bill would have created a precedent of the state limiting the ability of a nonprofit organization to operate as an independent organization.

Governor Cooper’s decision to allow these three bills to become law without his signature indicates that he disapproved of some or all parts of the bills but that he recognized the political reality that legislators would override his vetoes.

Congress (Surprisingly) Avoids Federal Government Shutdown (For Now)

On Saturday, both the U.S. House of Representatives and the U.S. Senate passed a 45-day spending bill (H.R. 5860) that temporarily prevents a federal government shutdown by funding federal agencies and programs at current levels through November 17. Both of North Carolina’s U.S. Senators and 12 of the 14 U.S. House members from North Carolina voted in favor of the continuing resolution. Only Congressmen Dan Bishop and Greg Murphy voted against it.

While the continuing resolution prevented an immediate government shutdown, it did not represent any progress in Congress’ efforts to pass the 12 appropriations bills that are necessary to fund the federal government for the remainder of the year (through September 30, 2024). In fact, this week’s unprecedented House vote to remove the Speaker - which was the result of a few House members’ disapproval of the continuing resolution – could make it more difficult for Congress to agree on appropriations bills by November 17. That means that there will be another threat of a federal government shutdown next month. The Center for a Responsible Federal Budget has a helpful summary of the impact of a federal government shutdown, including details about the government programs most likely to be affected immediately and the fiscal impact of a shutdown. Government shutdowns can harm nonprofits and the communities they serve by causing delays in nonprofits’ payments from federal agencies and creating disruption in the delivery of federal benefits.

Let Us Know If Lobbying Fee Changes in State Budget will Affect Your Nonprofit

Two provisions in the state budget could create challenges for some nonprofits that lobby at the state level:

1. One provision increases the annual fee for lobbyist principals (including many nonprofits that lobby) and lobbyists (including many nonprofit staff and contractors) from $250 per year to $500 per year. This fee increase could create financial challenges for small and mid-sized nonprofits that advocate with the state legislature or state agencies and could discourage some nonprofits from lobbying or registering their staff as lobbyists. The Center opposed this provision and is working with other advocates to explore the possibility of legislators reversing the change in future legislation.
2. Another provision allows for legislative “fast passes” for lobbyists, which would cost up to $2,000 for lobbyists, including those who work for nonprofits. The Legislative Services Officer will set the final fee. Over the past few years, the NC General Assembly has added security checks, including metal detectors, for all members of the public who enter the Legislative Building and Legislative Office Building. Legislators and legislative staff receive passes that enable them to use separate entrances and bypass security checkpoints. On busy days, it can be difficult for lobbyists and other nonprofit advocates to get between the two buildings. The steep price of the “fast passes” could be prohibitive for many nonprofits, putting their organizations at a competitive disadvantage with for-profit lobbyists in legislative advocacy.

In the next few weeks, the Center plans to have conversations with legislators and legislative staff to see whether it would be possible to provide some financial relief for nonprofits that advocate at the state level (e.g., discounted fees for some or all 501(c)(3) nonprofits). Your input will be critical in making the case for legislators and legislative staff to help protect nonprofits from being disadvantaged by these significant increases in lobbying costs. Let us know if your nonprofit would be affected by the increased lobbying fees and/or the potential $2,000 charge for lobbyist “fast passes.” The Center will not share your organization’s name (or your lobbyists’ names) without your permission. Thank you if you have already provided feedback to the Center.

DHHS Publishes Materials to Help Nonprofits Provide Outreach on Medicaid Expansion

With Medicaid expansion beginning on December 1 in North Carolina, the NC Department of Health and Human Services (DHHS) has launched a new website to help with community outreach. The website includes basic information on eligibility for Medicaid coverage, details of costs and coverage, and free materials to help nonprofits provide clear and accurate information about Medicaid and Medicaid expansion to their clients and communities.

Biden Administration Proposes Significant Improvements to OMB Uniform Guidance

Yesterday, the White House Office of Management and Budget (OMB) formally posted on the Federal Register its proposal to make significant improvements to its Uniform Guidance, the rules that govern federal grant to nonprofits. The proposed changes include:

1. Increasing the de minimis indirect cost rate on federal grants from 10% to 15% of modified total direct costs. OMB explains: “This change would allow for a more reasonable and realistic recovery of indirect costs, particularly for new or inexperienced organizations that may not have the capacity to undergo a formal rate negotiation, but still deserve to be fully compensated for their overhead costs.”
2. Clarifying that federal agencies cannot force nonprofits receiving grants to use an indirect cost rate lower than the proposed 15% de minimis rate unless a lower rate is required by statute.
3. Clarifying that nonprofits with federally negotiated rates must receive these indirect cost rates even when federal funds flow through state and/or local governments.
4. Raising the federal single audit threshold from $750,000 to $1 million.
5. Requiring federal agencies to eliminate program reports that are not necessary for the effective monitoring of grants.
6. Revising the Notice of Funding Opportunities to make postings simpler and easier for nonprofits to navigate
7. Encouraging federal agencies to take a variety of steps to make their grantmaking process more equitable and inclusive.

The National Council of Nonprofits has prepared a helpful initial analysis of the proposed improvements to the OMB Uniform Guidance. The proposed changes to the OMB Uniform Guidance could help address many of the longstanding challenges nonprofits have experienced with their federal grants. The proposed changes will be open for public comment through December 4.

Governor Cooper Vetoes Regulatory Reform Bill

On Monday, Governor Cooper vetoed the General Assembly’s regulatory reform legislation for 2023 (H.B. 600). The bill includes a variety of provisions intended to cut red tape by reducing a variety of state and local government regulations, including many environmental rules. Governor Cooper explained that he vetoed the bill because it “will result in dirtier water, discriminatory permitting and threats to North Carolina’s environment” and “[i]t also undoes a significant policy to promote fairness in state contracting for historically underutilized businesses.”

Apart from the provisions that caused Governor Cooper to veto it, the regulatory reform bill makes two improvements to the state law on nonprofit raffles:

1. It would allow nonprofits to hold up to five raffles per year. Under current law, nonprofits can hold up to four raffles per year.
2. It would increase the maximum value of real estate that nonprofits can raffle each year from $500,000 to $2.25 million. Nonprofits occasionally receive houses or other real estate as bequests or donations. For some nonprofits, the best way to make use of this donated property is to raffle it as a high-value fundraiser to support the organization’s programs and services. With increased property values in recent years, the current $500,000 threshold may be well below the value of property that nonprofits receive and may want to raffle. The bill requires that any real estate raffled by a nonprofit is free of liens or encumbrances – essentially ensuring that a nonprofit isn’t raffling property that will come with significant and unexpected costs for supporters of the organization.

While the Center didn’t take a position on the entirety of the regulatory reform bill, we support the changes to raffle laws in the Senate version of the bill since they would create new (or at least improved) fundraising opportunities for some nonprofits.

Both the NC House of Representatives and NC Senate passed the regulatory reform bill with enough votes to override Governor Cooper’s veto, so it will likely become law soon. Legislators could vote on a veto override as soon as next week. 

Have Questions about Nonprofits and the 2023 Election? We Have Answers!



Have you been wondering what types of election-related activities your nonprofit can and cannot do between now and Election Day? Or perhaps you are wondering when Election Day is in your city or town this year (or if you even have an election this year). You are not alone. The Center has been fielding questions about what types of election-related activities are legal and advisable for charitable nonprofits, and we have posted answers to 31 of the most common questions we are hearing. We have included information on several new state election laws that could affect your nonprofit and the people you serve, including the new requirement to show a photo ID when voting. Let us know of other questions you have about your nonprofit’s engagement in the 2023 election.

Legislators Seeking Public Comments on Redistricting Process

This month, legislators will return to Raleigh for a special session on redistricting. During that session, legislators will draw the districts for North Carolina’s 14 congressional districts, 50 state Senate districts, and 120 state House districts to be used in the 2024, 2026, 2028, and 2030 elections. In preparation for the redistricting process, legislators are accepting public comments on congressional and state legislative redistricting plans. Nonprofit leaders can submit written comments to provide nonpartisan insights on the redistricting process and the ways districts can be drawn to best represent their communities.

Third Quarter Lobbying Reports Due by October 20

Nonprofits that are registered as lobbyist principals (and their staff or contractors who were registered as lobbyists) must file their third quarterly reports of 2023 with the Secretary of State Lobbying Compliance Division by October 20. All reports must be filed electronically. To help you understand the basics of state lobbying laws affecting nonprofits, check out the Center's recently updated summary of NC lobbying laws for nonprofits.

National Organizations Ask White House for Support in Improving Nonprofit Employment Data

Last week, a coalition of two dozen national nonprofits sent a letter to President Biden asking him to correct a data imbalance that adversely affects charitable nonprofits. Specifically, the letter seeks inclusion of money in his FY2024-25 budget request for the Bureau of Labor Statistics to include nonprofit workforce data in the Quarterly Census of Employment and Wages. The letter points out that almost “every sector of the economy – including many that are much smaller than nonprofits – can track its employment totals and wage information from BLS on a quarterly basis,” enabling employers in those sectors “to benchmark their outcomes against larger trends, while helping policymakers understand challenges and craft responsive policy.” Nonprofit jobs data, however, are only tracked every five years, at best, leaving nonprofit organizations to guess at employment trends or to pay for private data collection and analysis.

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Nonprofit Policy Update is North Carolina Center for Nonprofits' weekly newsletter of state and federal policy issues that affect all 501(c)(3) nonprofits. Learn about the Center's public policy priorities and agenda, or contact David Heinen, Vice President for Public Policy and Advocacy, for more information.