A bill (S.540) filed in the NC Senate on Monday would make a variety of improvements to the North Carolina Nonprofit Corporation Act, including:

This bill, which was recommended by the Center, was developed based on input the Center has received from nonprofits and attorneys representing tax-exempt organizations over the past several years. The Center appreciates Senator Mike Woodard (D-Durham), Senator Jim Burgin (R-Harnett), and Senator Julie Mayfield (D-Buncombe) for introducing this bill.

A bill (S.504) filed in the NC Senate on Monday would create a new state tax credit for charitable contributions by individuals who use the standard deduction. The tax credit would be for 25% of total donations made by a taxpayer each year. With the changes to the federal tax structure that took effect in 2018, very few North Carolinians now receive tax deductions for their charitable contributions. The Center recommended this bill to reduce the cost of donating to nonprofits by providing a tax benefit to all North Carolina taxpayers – particularly those with low and middle incomes – for their donations to nonprofits. The Center appreciates Senator Mike Woodard (D-Durham) for introducing this bill to promote charitable giving.

A bill (S.681) filed in the NC Senate on Wednesday would make a variety of improvements to the North Carolina charitable solicitation statute, including:

This bill, which was recommended by the Center, was developed based on input the Center has received from nonprofits and from accountants and attorneys representing tax-exempt organizations over the past several years. The Center appreciates Senator Mike Woodard (D-Durham) and Senator Julie Mayfield (D-Buncombe) for introducing this bill.

The Center is developing plans to advocate for legislators to include a nonprofit relief fund in the next state COVID-19 response package. Your input is essential in coming up with a plan to provide meaningful relief for nonprofits. Specifically, it would be helpful to know what type of economic hardships your nonprofit has experienced due to COVID-19, so a grant program can have appropriate eligibility criteria. Examples of possible criteria could include:

Let us know what type of eligibility criteria for a nonprofit relief fund would make the most sense for your nonprofit.

Three bills filed last week would help nonprofits save time and money and allow nonprofit boards and members to take actions more easily. These proposals include:

The Center recommended all three of these bills based on input we have received from nonprofits. We will continue to work with legislators to encourage them to pass these bills this session.

A bill (S.473) filed in the NC Senate on Monday would prohibit local government officials from making or administering contracts with nonprofits if they serve as officers or directors of the organizations. This requirement could help prevent conflicts of interest when local officials serve on nonprofit boards and could help improve public trust in the work of nonprofits. The Center is researching whether this proposal could have unintended consequences that create barriers for nonprofits in obtaining contracts with county or municipal governments.

Two bills filed in the NC Senate this week would create limits on the disclosure of donors to nonprofits. One bill (S.636), which was filed on Tuesday, would prohibit nonprofits from disclosing donors’ identities without board approval and would bar state officials from providing Schedule B of nonprofits’ Forms 990 or 990-EZ (that is the attachment that includes donor information) in public records requests.

Another bill (S.685), which was filed on Wednesday, would prohibit state agencies from adopting rules, regulations, or policies that:

These limits would not apply to requirements of federal or state law (such as IRS filings or charitable solicitation reports) or to criminal investigations, court orders, or income tax investigations.

While both bills appear to provide privacy protections for nonprofit donors, volunteers, and members, the Center is researching potential unintended consequences of these proposals before taking a position on either of them.

This Wednesday was the filing deadline for legislation to be considered in the NC Senate for the 2021-22 session. Over the past two weeks, state senators filed 346 new bills covering a wide range of topics. In addition to the nonprofit bills described above, legislators filed dozens of bills that could affect the work of charitable nonprofits. These include bills related to employment law changes, COVID relief, tax law changes, government reform and restructuring, legislative redistricting, and the state budget. The Center has posted summaries of these bills on our blog.

Last Friday, the IRS issued guidance for employers on how to calculate and claim the Employee Retention Tax Credit (ERTC) for the first two calendar quarters of 2021. The revisions to previous guidance are needed due to improvements in the law enacted in the year-end COVID relief law. The guidance explains the increase in the maximum credit amount – up to $7,000 per employee per quarter – and changes to the gross-receipts test and definition of qualified wages, among other issues. The IRS announced that it will be issuing additional guidance covering the third and fourth calendar quarters of 2021 that will reflect additional changes to the ERTC enacted as part of the American Rescue Plan Act.

The ERTC is a refundable tax credit (translation: nonprofits are eligible for it) that organizations can take if:

The National Council of Nonprofits has an excellent analysis of the ways the ERTC could help nonprofits.

Last week, President Biden released an outline of his American Jobs Plan, an infrastructure proposal calling for spending $2 trillion on transportation, water, housing, broadband, job training, and much more. President Biden proposes paying for the plan by increasing corporate taxes. The plan would provide $400 billion for health care and $100 billion for “workforce development,” including job training presumably provided in part by nonprofits. The proposal would also inject $140 billion for research and development for advanced technologies, $35 billion for climate change research, and a new tax credit for solar power. The plan calls for a growing priority among nonprofits: $100 billion to “bring affordable, reliable, high-speed broadband to every American, including the more than 35 percent of rural Americans who lack access to broadband at minimally acceptable speeds.”

On Thursday, President Biden released his Made in America Tax Plan, which would raise revenue to help pay for much of the proposed American Jobs Plan. Notably, the President’s tax proposal would increase the corporate income tax rate from 21% to 28%. This higher tax rate would apply to nonprofits that pay unrelated business income tax.

The initial draft of the American Jobs Plan does not include other nonprofit priorities, such as the WORK NOW Act nonprofit jobs program, improved unemployment reimbursement for nonprofits, and increased incentives for charitable giving. The Center and other nonprofits will continue to advocate for Congress to include these priorities in its infrastructure bill or other tax legislation this year.

President Biden is also expected to announce an additional $1 trillion-plus bill focused on “human infrastructure” that will likely include provisions like an expanded child tax credit program and healthcare insurance subsidies. The prospects for passage of the American Jobs Act and the “human infrastructure” plan increased this week when the Senate parliamentarian ruled the Senate can pass two more bills this year using the budget reconciliation rules that only need a majority vote to pass. Normally, 60 Senators must approve of a bill for it to pass.

This spring, the U.S. Supreme Court will hear two cases that could impact the law and operations of charitable nonprofits for decades to come. At issue is the requirement by California and other states that charitable organizations file a copy of the Schedule B (or its equivalent) of their IRS Form 990 on a confidential, non-public basis when filing their charitable solicitation registration forms. State Attorneys General use Schedule B to deter and detect fraud and misuse of charitable assets. The plaintiffs in the case refused to file their Schedule B in California, claiming that the First Amendment’s right of freedom of association allowed them to shield the identity of their major donors from state law enforcement officials – even on a confidential, non-public basis. The National Council of Nonprofits has filed an amicus curiae brief in support of the California law. The brief informs the Court about critical concerns of charitable nonprofits and urges the justices to be very careful when writing the opinion to avoid harming the work of the vast majority of charitable nonprofits. The National Council of Nonprofits has provided a helpful blog post explaining the reasoning behind its brief.

Last week, President Joe Biden signed into law a bill (H.R. 1799) extending the deadline for nonprofits and businesses to apply for Paycheck Protection Program (PPP) loans through May 31 and to allow the Small Business Administration (SBA) to continue to process loan applications through June 30. The Center encourages nonprofits seeking first-draw or second-draw PPP loans to apply soon, as funding is expected to run out well before the deadline.

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