North Carolina Center for Nonprofits Nonprofit Policy Update newsletter

December 9, 2022

In this issue...

Coming in early 2023: Nonprofit Policy Conversations

Center offers updated Legal Compliance Checklist for NC Nonprofits

Congress needs to act on federal budget by next Friday

Omnibus spending bill could include many policy solutions to help nonprofits 

U.S. Supreme Court hears arguments on North Carolina election laws

Next Tuesday is deadline for public comments on DOL worker classification rule

New report highlights role of child care availability in economic recovery 

New accounting standards could mean changes for nonprofits with multi-year leases

New IRS guide may be helpful for nonprofits considering applying for ERTC

Coming in Early 2023: Nonprofit Policy Conversations

Starting next month, the Center will host a series of Nonprofit 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 trends in the nonprofit sector 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), and the Triangle (date TBD). Registration is open for the Asheville, Charlotte, Winston-Salem, Burlington, and Wilmington events; we’ll keep you posted as the other dates are finalized.

Center Offers Updated Legal Compliance Checklist for NC Nonprofits

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.

Congress Needs to Act on Federal Budget by Next Friday

The federal government is currently funded through a temporary appropriations bill that expires next Friday, December 16. This means that Congress needs to pass some form of appropriations legislation within the next week to prevent a partial shutdown of the federal government on December 17. Congressional leaders have three basic options:

  1. Approve an omnibus appropriations bill for the remainder of the federal fiscal year (through September 30, 2022) within the next week;
  2. Pass another continuing budget resolution to fund the federal government through sometime in early 2023 and give the incoming Congress an opportunity to work out the details of a full appropriations bill; or
  3. Approve a short-term continuing budget resolution that would keep the federal government funded through late December to allow the current Congress more time for negotiations on a full appropriations bill.


Because of dynamics in Congress, the third option appears to be the most likely to happen. Congressional Democrats are hoping to pass an omnibus appropriations bill before Republicans gain a majority in the U.S. House of Representatives in January. At the same time, congressional negotiations are complicated by a variety of competing interests within and between the two chambers.

Omnibus Spending Bill Could Include Many Policy Solutions to Help Nonprofits

For nonprofits, an omnibus spending bill – whether passed next week, later in December, 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. Nonprofit priorities include:

  • 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.
  • 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.


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.

U.S. Supreme Court Hears Arguments on North Carolina Election Laws

On Wednesday, the U.S. Supreme Court heard oral arguments in the Moore v. Harper case in which North Carolina legislative leaders are challenging the authority of the North Carolina Supreme Court to override legislatively-drawn congressional maps for the 2022 election. Among other things, leaders in the NC General Assembly have argued that state legislature should have the sole authority in determining how congressional elections are administered and results are determined. 


A broad ruling in the case could mean that state legislators in North Carolina – and elsewhere in the country – could have broad authority to draw congressional districts for partisan benefit and to set different rules for federal elections than for other elections. For example, state legislators could create separate Early Voting periods and separate voter identification requirements for congressional elections than for other things on the ballot, effectively forcing North Carolinians to vote twice – with different sets of rules – in even-numbered years. This could create confusion for voters and add much more work for nonprofits that provide nonpartisan information about elections to the people they serve. 


The Court is expected to issue a ruling on the case next June. Based on the questions that the nine justices asked during oral arguments this week, it is quite possible that the Court will issue a narrow ruling finding that the state supreme court overstepped its authority in the congressional redistricting case without establishing a broad precedent giving state legislatures the exclusive authority to set rules for federal elections.

Next Tuesday Is Deadline for Public Comments on DOL Worker Classification Rule

In October, the U.S. Department of Labor (DOL) announced a new proposed rule for determining whether workers are employees or independent contractors under the Fair Labor Standards Act (FLSA). Under FLSA, nonprofits and other employers are required to pay a minimum wage and offer overtime pay for certain workers who are classified as employees. Independent contractors aren’t entitled to these or other benefits of employees.


The new rule would replace a rule from early 2021 that made it easier for employers to classify workers as independent contractors. The current rule focuses on two criteria – opportunity for profit or loss and control over work – in determining whether workers are employees or independent contractors. The proposed new rule would return to a more traditional six-factor “economic realities” test that would consider:

  1. Opportunity for profit or loss depending on managerial skill;
  2. Investments by the worker and the employer;
  3. Degree of permanence of the work relationship;
  4. Nature and degree of control by the employer;
  5. Extent to which the work performed is an integral part of the employer’s business; and
  6. The worker’s skill and initiative.


The new rule may mean that more nonprofit workers need to be classified as employees rather than independent contractors and receive employee benefits. Nonprofits can submit comments to DOL with insights about the potential impact of the proposed rule or suggestions for ways DOL could improve its proposed rule. The deadline for public comments is next Tuesday, December 13. If you are considering submitting comments but don’t know how to get started, check out the National Council of Nonprofits’ tips for nonprofits on filing comments to proposed rules.

New Report Highlights Role of Child Care Availability in Economic Recovery

Last month, the North Carolina Early Childhood Foundation (NCECF) published a report highlighting the link between child care availability and the state’s economy. The report is particularly relevant to nonprofit organizations, as a national study of the nonprofit workforce shortage has identified lack of access to affordable, high quality child care as one of the main reasons that nonprofits have struggled to maintain full staffing levels over the past two years. Policymakers at the federal, state, and local levels can all help come up with solutions to alleviate the state’s child care crisis, and the Center will keep you posted when there are opportunities for your nonprofit to take action.

New Accounting Standards Could Mean Changes for Nonprofits with Multi-Year Leases

Nonprofits operate under accounting standards set and adjusted by the Financial Accounting Standards Board (FASB), including new standards that are taking effect this year. An article from the National Council of Nonprofits explains the way these changes may particularly affect the financial reporting or organizations that lease their office space or other items for periods longer than a year.

New IRS Guide May Be Helpful for Nonprofits Considering Applying for ERTC

As noted above, many nonprofits qualified for the Employee Retention Tax Credit (ERTC) for the first three quarters of 2021. Some eligible organizations may not yet have applied for the ERTC. To help nonprofits and businesses better understanding eligibility, definitions, and calculation of the credit, the IRS recently released an Employee Retention Credit Training Guide. The guide, which might be particularly useful for finance staff at nonprofits considering applying for the ERTC for 2021, includes 47 examples, many of which are relevant to nonprofit organizations. It also provides a clear definition of “gross receipts” for tax-exempt organizations on pages 3-26 and 3-27.

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.

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


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