U.S. House Committee Seeks Information on Nonprofits’ Political Campaign Intervention

On Monday, the U.S. House of Representatives Ways and Means Committee published a “request for information” about “political campaign intervention” by 501(c)(3) charitable nonprofits and 501(c)(4) social welfare organizations. Federal tax law prohibits 501(c)(3) nonprofits from engaging in partisan election-related activities like endorsing or opposing candidates for public office or making financial contributions to political campaigns. However, longstanding guidance from the Internal Revenue Service makes clear that 501(c)(3) organizations can participate in nonpartisan voter registration, voter education, and get-out-the-vote work.

The Ways and Means Committee’s request for information seeks feedback on a series of questions, which focus on:

1. Whether there is a need to update definitions and guidance on nonprofit “political campaign intervention”;
2. Potential new reporting requirements for nonprofits on their election-related activities, potentially including new reporting on permissible nonpartisan voter engagement activities of 501(c)(3) nonprofits;
3. Identification of tax-exempt nonprofits whose voter engagement work or other programs and services have the effect of favoring one candidate or political party;
4. Information about the influence of foreign nationals on the election-related programs of 501(c)(3) or 501(c)(4) organizations; and
5. Specific examples of 501(c)(3) nonprofits that have misused donor funds in ways that benefit nonprofit executives or are inconsistent with donors’ intent.

While the committee’s request for information letter seeks information about activities of tax-exempt nonprofits that benefit any candidate or political party, the letter concludes with several examples of nonprofits’ election-related activities that the committee chairs suggest have benefitted Democratic candidates.

Comments are due to the Ways and Means Committee by September 4. The committee is accepting comments by email at waysandmeansRFI@mail.house.gov. The Center is working with our national partners, including the National Council of Nonprofits, to identify the best way to respond to the request for information. The Center hopes that nonprofits can make clear to the committee that the vast majority of 501(c)(3) nonprofits that engage in election-related activities do so in a nonpartisan way with intent of maximizing voter participation in their communities and without any expectation that their activities will benefit particular candidates or political parties.

State Budget Delay Set to Continue into September

More than a month and a half into the state’s new fiscal year, legislators remain at an impasse on the state budget for FY2023-25 (H.B. 259). Leaders of the NC Senate and NC House of Representatives are continuing to negotiate a variety of differences between the versions of the budget passed by each chamber in the spring, but legislative leaders said this week that they do not anticipate having a final budget in place until at least mid-September.

Unlike with the federal government, the failure to pass a state budget on time doesn’t cause parts of state government to shut down. Under state law, spending levels will continue in place at current levels until a new state budget becomes law. Even without the threat of a government shutdown, the continued delay in the state budget creates challenges for nonprofits, including:

1. Preventing many nonprofits from knowing whether they will have state appropriations in the current fiscal year and/or knowing how much state funding they will receive. 
2. Delaying the start dates of many state grants and contracts with nonprofits.
3. Exacerbating the workforce shortage in state government by freezing state employee wages at last year’s levels and delaying other policy changes intended to help state agencies fill vacant positions. The high vacancy rates in state government are one of the most significant factors in several of the challenges that nonprofits are experiencing with their state grants and contracts.
4. Delaying the start of Medicaid expansion (see the next item for more details).

To help your nonprofit better understand the differences between the two competing versions of the state budget, the Center has posted an analysis of the nonprofit provisions and appropriations in the House and Senate budgets and a tutorial video on the state budget.

Lack of State Budget Delays Start of Medicaid Expansion in North Carolina

In July, the NC Department of Health and Human Services (DHHS) announced that it plans to begin Medicaid expansion in North Carolina on October 1, as long as it has authority to do so by the end of August. Medicaid expansion will provide 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. In March, legislators and Governor Roy Cooper agreed on a law (H.B. 76) giving DHHS authority to begin Medicaid expansion once a state budget for FY2023-24 is in place. Legislators had expected to finalize the state budget in June, but House and Senate leaders are still negotiating several key provisions (see the second item in today’s update for more details). 

Normally, it would take several months for a state to get the federal government to approve its Medicaid expansion plans. DHHS had worked out an agreement with the federal Centers for Medicare & Medicaid Services to start that process early, as long as a budget was in place by September 1. Now that legislators have made clear that they can’t meet that deadline, Medicaid expansion will be delayed until at least December 1 – and possibly into 2024. Technically, legislators could still enable Medicaid expansion to begin on October 1 by passing separate legislation decoupling Medicaid expansion from the state budget, but legislative leaders have said they don’t plan to take this approach since it could change the dynamics of budget negotiations.

Medicaid expansion has been a major policy priority for the Center and hundreds of other nonprofits for more than a decade. 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.

Take Action Today: Let DHHS Know Your Nonprofit’s Capacity to Support or Promote Medicaid Expansion

As a part of its Medicaid expansion implementation efforts, DHHS is creating an External Partner Mind Map to better understand the existing community organizations (and their capabilities) involved in supporting and promoting access to Medicaid expansion across all 100 counties of North Carolina. The goal is to identify nonprofits, the populations they serve, how they reach those populations, and where they are located. Please complete this short questionnaire today and provide the details of your organization. If you would like DHHS to be aware of your organization but do not want your information shared in the Mind Map, please indicate that in the questionnaire. NCDHHS requests that organizations complete the short questionnaire by today (we apologize for the short notice).

Legislators Approve Election Law Changes that Could Affect People Served by Nonprofits

On Wednesday, the NC House of Representatives and NC Senate both approved a bill (S.747) that would make a variety of changes to state election laws. Several of these changes could affect nonprofits and the people they serve, including:

1. A provision that would prohibit nonprofits from providing funding to the State Board of Elections or to county election boards. In the past, legislators have expressed concern that some organizations – including nonpartisan 501(c)(3) nonprofits – could provide funding to local elections boards to bolster support in communities with strong partisan leanings. The bill provides that nonprofits can make in-kind donations of facilities to be used as voting sites and in-kind donations of food and beverages for poll workers and ink pens or personal protection equipment for polling places, but cannot make other in-kind donations (e.g., use of the nonprofit’s staff, resources, or facilities) for other purposes.
2. A provision that would eliminate the three-day grace period after Election Day for receipt of absentee ballots. This change would mean that absentee ballots would need to be received by the county board of elections by 7:30 p.m. on Election Day.
3. A requirement that voters who use same-day registration during Early Voting must submit a retrievable ballot so that election officials can confirm their address and eligibility to vote. An earlier version of the bill would have required people who register during Early Voting to submit provisional ballots, which could have led to more challenges of ballots from people who registered or updated their registration during Early Voting. Many nonprofits encourage their staff, volunteers, and clients to vote early.
4. A variety of changes to the state election statute that would treat Early Voting as a type of in-person voting rather than a form of absentee voting. While this change should not have much of a practical impact for North Carolinians who choose to vote early, it would make the laws around Early Voting a bit clearer and may mean that nonprofits that share information about Early Voting may need to tweak their wording if they refer to it as a form of absentee voting rather than in-person voting. 

Unlike other legislative proposals from this year, the final version of the bill does not shorten the Early Voting period, meaning Early Voting will remain open for 17 days during each election cycle if the bill becomes law.

Both chambers approved the bill in party-line votes, and both now go to Governor Roy Cooper for his consideration. If Governor Cooper vetoes the bill, legislators should be able to override his veto.

Nonprofits Are Important Messengers about Obtaining Free IDs for Voting This Fall

In April, the NC Supreme Court issued a decision reinstating a 2018 law that requires North Carolinians to show photo identification when voting in elections. Many nonprofit organizations have expressed concerns that the voter ID law could make voting more difficult for many people served by nonprofits, particularly seniors, people with disabilities, and low-income citizens. Voter ID requirements will go into effect for this fall’s municipal elections. That means that many North Carolinians who don’t have a current photo ID will need to obtain one in the coming weeks to be able to vote in this fall’s municipal elections.

Nonprofit organizations have historically been among the most effective messengers for educating the people they serve about what steps to follow in order to vote because nonprofits are trusted by the people they serve. Nonprofits often serve people who don’t have photo IDs, so it is important for them to share resources for getting free photo IDs. The NC State Board of Elections (NCSBE) recently explained that voters without photo IDs have two options for obtaining free photo IDs:

1. The NC Department of Motor Vehicles (DMV) offers free photo IDs that can be used for voting. Carolina Demography posted information about the 116 DMV offices in the state and the number of voters living in the vicinity of each of these sites.
2. Voters also can obtain free photo IDs from their county board of election. Voters will simply need to provide their name, date of birth, and the last four digits of their Social Security number, and have their photo taken to get these IDs.

For more information, check out NCSBE’s 10 facts about photo IDs for voting. The Center will continue to share information about how your nonprofit can help people in your community understand voting rules as we get closer to this fall’s municipal elections.

Take Action: Help People Connected to Your Nonprofit Maintain Medicaid Coverage

During the COVID-19 pandemic, Congress created a temporary exemption (known as continuous coverage) from annual Medicaid recertification rules that normally require Medicaid recipients to provide verification of their income, family size, and other information to ensure they remain qualified. The Medicaid continuous coverage provision ended on April 1, and the NC Department of Health and Human Services (DHHS) has begun the process of recertifying Medicaid beneficiaries in North Carolina. Medicaid recipients need to contact their local Division of Social Services (DSS) office to ensure that it has their current contact information. While the process isn’t difficult, many North Carolinians stand to lose their Medicaid coverage if they don’t contact their local DSS office.

DHHS originally projected that as many as 300,000 North Carolinians – many of whom receive services from nonprofits – could lose their Medicaid benefits if they don’t recertify. Many of these North Carolinians may have begun participation in Medicaid during the pandemic and may be unfamiliar with the recertification process. A report from NC Health News indicates that the impact may be even worse than initially expected; in June alone, more than 35,000 North Carolinians lost their Medicaid coverage. Some of the people losing their Medicaid coverage may qualify again once Medicaid expansion begins in North Carolina (see the third item in today’s update for more details), but they will still have a gap in coverage at least through October 1.

Your nonprofit can help make sure that the people you serve keep their Medicaid coverage by sharing information with them about the recertification process and the need to confirm their contact information with their local DSS office. Three nonprofits – The Charlotte Center for Legal Advocacy, Pisgah Legal Services, and Legal Aid of North Carolina – launched NCMedHelp.org to answer questions about NC Medicaid services, including eligibility determination. The website has direct links to each county’s DSS office and information about legal help and health coverage options for people who have lost their Medicaid coverage through this process.

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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.