Two bills filed in the NC House of Representatives on Tuesday would make a variety of improvements to state nonprofit statutes. One bill (H.B. 696) would modernize the NC Nonprofit Corporation Act to bring it into better alignment with best practices for nonprofit organizations. The other bill (H.B. 695) would improve the state charitable solicitation licensing statute by aligning filing extensions with 990 automatic extensions, eliminating notarization requirements for charitable solicitation applications and renewals, and exempting more small nonprofits from filing requirements.

Both bills were recommended by the Center and were developed based on input the Center has received from nonprofits and attorneys representing tax-exempt organizations over the past several years. The Center appreciates Representative Brandon Lofton (D-Mecklenburg), Representative Julia Howard (R-Davie), Representative Robert Reives (D-Chatham), and Representative Tim Moffitt (R-Henderson) for introducing these bills.

This week, two NC Senate committees approved a bill (S.473) that would prohibit local governing bodies (i.e. county boards of commissioners, city councils, and town councils) from making grants or appropriations to nonprofits if any member of the local governing body serves on the nonprofits’ board of directors. This prohibition would apply even if the officials with conflicts of interest recused themselves from the discussion and votes on the grants, contracts, or appropriations. The Center agrees that it would be problematic for a local governing official to award a grant or contract to a nonprofit on whose board they serve. However, the Center is concerned that the bill, as currently drafted, would create a serious barrier to local government investment in the work of nonprofits. The Center is working with state senators on amending the bill to fix this issue before the full Senate votes on it.

This year, the Center has been working with state lawmakers on seven legislative proposals to help strengthen nonprofits’ operations.

The Center recommended these ideas to legislators based on input we have received from nonprofits, and we will continue to work with lawmakers to encourage them to pass each of these proposals this session.

To help us understand which of these proposals would be most helpful to your nonprofit – and to help us make it easy for you to take meaningful action on these bills – we encourage you to take five minutes to complete a short survey about these policy solutions and your ability to speak with legislators about nonprofit sector policy issues.

Yesterday, the Senate Appropriations Committee approved a bill (S.172) that would formally create a State Fiscal Recovery Fund to spend the state’s $5.3 billion in aid from the American Rescue Plan Act (ARP), as well as creating a Local Fiscal Recovery Fund for $3.8 billion in ARP funding for local government in North Carolina. In describing the bill, the committee chair noted that aid for nonprofits would be an appropriate way for the state to spend some of its ARP funding.

The Center is advocating for legislators to include a nonprofit recovery 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 we can advocate for a grant program with 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 and other organizations in your community. Thank you if your nonprofit has already provided input. The Center has included input we have received in the information sheet on the need for a nonprofit recovery fund that we have shared with legislators.

A bill (H.B. 709) filed in the NC House of Representatives on Tuesday would place a constitutional amendment on the November 2022 ballot to limit the growth of state spending to a formula based on population growth and inflation. State legislators could only exceed this formula by a two-thirds vote of both the NC House of Representatives and the NC Senate (which would be unlikely to happen in most circumstances).

A similar bill (S.717) was introduced in the NC Senate earlier this month. In addition to limiting growth of state spending, the Senate version of the proposed constitutional amendment, known as the Taxpayer Bill of Rights or TABOR, would make two other changes:

The Center opposes TABOR because it could cause lasting harm to North Carolina’s nonprofit sector. If enacted, TABOR would limit the ability of state and local governments to pay for services provided by nonprofits, while at the same time relying on nonprofits to provide more public services that governments can no longer afford to offer. Colorado is the only state that has fully implemented a version of TABOR. According to the Colorado Nonprofit Association: “TABOR has undermined the ability of Colorado nonprofits to meet current demands for services and respond to future changes in economic conditions, population growth, and the costs of delivering public services.”

To become law, the constitutional amendment would need to pass both the House and Senate by 60% super-majority votes (meaning it would need bipartisan support). If legislators approve it, a majority of voters would need to vote in favor of it on the November 2022 ballot. Unlike most bills, the Governor cannot veto constitutional amendments (and does not need to sign them into law).

This week, two NC Senate committees approved a bill (S.228) that would allow North Carolina nonprofits and small businesses to offer exclusive provider benefit (EPO benefit) plans for their employees. EPO benefit plans are typically 15%-20% less expensive than other health insurance plans and allow participants to use a limited network of local health care providers while paying the full cost for any out-of-network health services other than emergency care. Potentially, this legislation could provide a meaningful and affordable health coverage option for some nonprofits. The bill would still need to pass one more committee before the full Senate votes on it.

This week Healthier Together, a partnership between the NC Department of Health and Human Services (DHHS) and the NC Counts Coalition, opened a new grant program that will provide resources to help community-based nonprofits provide equitable access to COVID-19 vaccines. Healthier Together will provide grants to organizations supporting North Carolina communities that experience health inequities to ensure that individuals from Black, Indigenous, and People of Color (BIPOC) and other historically marginalized populations are able to access vaccines. Grants will fund activities to conduct vaccine outreach and education efforts, help people schedule appointments and arrange transportation, coordinate local vaccine events at trusted and accessible locations, provide on-site interpretation services, and help ensure people get to second dose appointments. The application period runs through Friday, May 14 . For more information and to submit applications, check out the RFP webpage.

On Wednesday, the White House released the American Families Plan, a $1.8 trillion proposal to provide free education (pre-K and community college), paid family and medical leave, subsidized childcare, and other benefits to American families. President Joe Biden proposes paying for the plan through income tax rate increases on taxpayers earning more than $400,000 and increases in capital gains tax rates for people earning more than $1 million. Notably for nonprofits, the plan does not call for a limit in the value of itemized deductions. Many nonprofits have expressed concerns about previous tax proposals from President Obama (and from President Biden during his candidacy) that would have limited the value of the charitable deduction, fearing that a lower cap on itemized deductions would lead to less charitable giving from wealthy donors.

On Monday, the U.S. Supreme Court heard oral arguments in two cases challenging a California law that requires nonprofits soliciting in the state to disclose on a confidential basis the un-redacted Schedule B of their 990s (the schedule with donor information). Tax-exempt nonprofits already submit the same information to the IRS each year. 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 a helpful blog post explaining the reasoning behind its brief.

On Wednesday, Governor Roy Cooper issued Executive Order No. 209, which eases a variety of COVID restrictions in North Carolina. The executive order, which takes effect at 5 p.m. today, ends the outdoor mask mandate (although masks are still required at indoor gatherings) and eases restrictions on the number of people who may gather at various types of events and venues.

Under the new executive order, several types of venues may now operate at up to 50% of capacity. These include:

Other types of facilities may now open at 75% capacity, including:

Some types of facilities may now open at 100% capacity, including:

On Monday, the U.S. Census Bureau released its apportionment data based on total population counts in the 2020 Census. Because of its population growth relative to other states, North Carolina gained a 14^th seat in the U.S. House of Representatives for the next decade. Nonprofits’ efforts to get a complete and accurate Census count in their communities made a big difference in increasing North Carolina’s representation in Congress – thank you to all who engaged in this work!

On Wednesday, the NC Senate Finance Committee approved a bill (S.322) that would make a variety of changes to state tax laws. Most notably for nonprofits, the bill would allow North Carolinians who use the universal charitable deduction – and those who itemize their deductions and contribute more than 60% of their adjusted gross income to charitable nonprofits – to get the full benefit of these tax deductions on their state taxes in 2021. Last year, North Carolina “decoupled” from these two federal tax incentives for charitable giving, meaning that North Carolinians who gave generously didn’t get breaks on their state tax liability. The Senate Rules Committee would need to approve the bill before the full Senate votes on it.

On Wednesday, the NC House of Representatives unanimously approved a bill (H.B. 605) that would require the NC State Board of Elections to provide clear and easily available answers to a variety of frequently asked questions about election laws. It also would require these FAQs to be posted at voting sites throughout the state. The improved availability of clear, accurate, and nonpartisan information about elections would complement nonprofits’ voter education work. The bill now moves to the Senate for its consideration.

A bill (H.B. 751) filed in the NC House of Representatives yesterday would make a major change to employment standards in North Carolina by ending “at-will” employment in the state. If enacted, the bill would only allow employers to fire employees for just cause. Because North Carolina is an “at-will” employment state, any employer – including a nonprofit – can fire employees without cause, although employers are required to comply with federal and state anti-discrimination laws. The bill is unlikely to be approved this session.

Thank you for reading this update. Before you move on to your next email, please FORWARD it to a few nonprofit colleagues who you feel would value this information. Invite them to sign up to receive weekly policy updates throughout the pandemic or better yet, invite them to join the Center as a member to receive these and other regular updates, along with many other valuable resources.